Doi: 10.36172/EKONOMISTI.2021.XVII.04.Kristine.Uglava

Expanded Summary 

The Local Economic Development  (LED) is a holistic approach of development based on cooperation and participation of local actors and on integration of local resources. It does not focus on the development of only one sector or on the welfare of one social group. It should be noted that successful LED strategies are not created by just one stakeholder. The uniqueness of LED lies in the fact that it would combine the efforts and resources of all local actors under a common vision of local development to ensure inclusive growth at local level. LED strategies are more effective when LED projects are funded by many local stakeholders, for which the willing of local actors is crucial to work in a collaborative and partnership format. It should be noted that if we give all the responsibility of local development to one local actor, for example only to the local government or the local private sector or just one other local actor, this strategic approach will not work as effectively and efficiently as it does in the terms of cooperation. Also the cooperation and partnership of local actors brings benefits to all.

Relationships in the form of partnership of development forces and involvement of actors in local dialogue can significantly encourage the identification and implementation of innovative initiatives, promote the efficient use of local resources, resource-efficient entrepreneurship, Recycling, waste minimization, value chain development, social equalization, employment, SME develpment, knowledge transfer, creating a competitive environment to attract investment and target groups and can promote knowledge-based sustainable local economic development.

Often in developing countries, including Georgia, LED is significantly hampered by a lack of cooperation and trust between local actors. There is few practice of data and information sharing between local stakeholders about local issues and they separately own the fragmented information about local economic, social, political and environmental factors and dynamics. Consequently, developing countries have less expariance in dialogue managing  and consensus building between local actors and also PPP projects are few.

An important platform for strengthening economic cooperation between local actors are Local Economic Development Forums (LED Forums) and Local Economic Development Agencies (LEDA, which are often created as a result of the institutionalization of LED forums). In order to increase the involvement of local actors in LED forums and LEDAs, it is important to carry out sensitizing process, which includes various activities to raise awareness and give informing to local actors and stakeholders about LED issues and to prepare them for LED strategy engagement. Sensitizing is important for ensuring consensus building of local actors and synergistic cooperation in achieving the objectives of the LED. During this process meetings, consultations, workshops, presentations are held for local stakeholders, study tours are organized, information booklets are distributed about LED approach and strategy.

In LED processes all local actors have significant importance and different roles. For example local government has an important role in ensuring the involvement of local actors in local dialogue and the development of cooperation between them. Local government can play the role of facilitator in local dialogue. The private sector is well awared in problems and situation of the local economy. Civil society brings knowledge. International organizations can provide Expert and financial support in LED promotion and implementation processes.

At the level of Georgian municipalities and regions, the involvement of local actors in the development and implementation of existing strategic documents about local and regional development issues (Regional Development Strategies, LED Plans, etc.) was insignificant and these processes were mainly carried out with financial and expert assistance of international organizations (including EU, UNDP, GIZ) and with cooperation of municipal government agencies and state trustee administrations.

Georgian municipalities also have little experience of managing LED forums. Forums on LED issues in Georgian municipalities focused more on attracting investment than on developing dialogue between local actors.

It should be noted that Georgian municipalities also have little experience of working with organizations like LEDAs. In several municipalities, there are organizations working on LED strategy and LED issues. However, they are mainly established by municipal City Halls  as non-profit legal entities, and their functions and responsibilities are more similar to those of economic departments of City Halls than the classical model of LEDA suggests.

It is noteworthy that the Law of Georgia on Public-Private Partnership (PPP) was adopted in 2018 to encourage the cooperation of Development Actors but this law needs changes to redistribute responsibilities and risks more fairly. The existence of problems in this regard is also indicated by the fact that there are very few PPP projects in Georgia and they almost don’t exist in municipalities except the capital.

Nevertheless, it should be noted that the steps taken so far for the cooperation and partnership of local actors for local economic development are appreciated, and it is important that the interest in these issues is constantly growing.

For Georgia, especially in the crisis and post-crisis periods caused by COVID-19, the most important task is to refine legal regulations and policies to promote cooperation, partnership and involvement of local actors in LED issues and encourage PPP projects, because with cooperation and partnership formats and platforms it is possible to effectively and efficiently solve local economic problems and ensure development much faster. Also it is important to provide methodological support to municipalities for the successful sensitizing and dialogue development processes on LED issues and for institutional strengthening of local government agencies, in which the help from central government and international organizations is crucial. 

Key words: Local Economic Development (LED), local actors, partnership, Local Dialogue