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POLÍTICAS PÚBLICAS PARA ECONOMÍAS LOCALES RESILIENTES PUBLIC POLICIES FOR RESILIENT LOCAL ECONOMIES

Autore Oriol Estela Barnet

e-mail: oeb32@hotmail.com

Website: https://estelabo.wordpress.com/

Key words

Local Development Resilience Economy Policy

Abstract (english)

Local economic development policies are part of the areas of intervention of local

governments in Spain for three decades. However, the trajectory of these policies

has been conditioned, among other factors, by a lack of legal powers and

dependence on external resources and programs. Therefore the prevailing concept

of local economic development is often limited to fostering entrepreneurship,

business support and employment services in the exclusive setting of the capitalist

market economy, and does not integrate a much broader and diverse perspective

of both development and economy.

A local economic development strategy that is able to integrate its three

dimensions (attraction, projection and networking) according to local possibilities

and aspirations provides a much better basis for governing the development

model and its evolution in each territory. On the other side, the application of the

term "resilience" to local economies, although controversial, provides a powerful

framework to build a renewed agenda for local economic development strategies

and policies.

Abstract (italiano)

Le politiche di sviluppo economico local sono parte delle aree di intervento dei

governi locali in Spagna per tre decenni. Tuttavia, la traiettoria di queste politiche è

stata condizionata, tra gli altri fattori, dalla mancanza di poteri formali e

dipendenza dalle risorse e programmi esterni. Quindi il concetto prevalente di

sviluppo economico locale è spesso limitato a promuovere l'imprenditorialità,

sostegno alle imprese e servizi per l'impiego in ambiente esclusivo dell'economia

di mercato capitalistica, e non integra una prospettiva molto più ampia e

diversificata di sia lo sviluppo e l'economia.

Una strategia locale di sviluppo economico che sia in grado di integrare le sue tre

dimensioni (attrazione, proiezione e networking) in base alle possibilità e

aspirazioni locali fornisce una base molto migliore per governare il modello di

sviluppo e la sua evoluzione in ciascun territorio. D'altra parte, l'applicazione del

termine "resilienza" alle economie locali, anche se controverso, fornisce un quadro

potente per costruire una rinnovata agenda per le strategie e le politiche di

sviluppo economico locale.

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1. Introduction

"Nuestra sociedad es extraordinaria en los

medios y en la eficencia, en todo aquello

relacionado con cómo conseguir algo. Pero a

menudo ignoramus el context y el sentido

ultimo de lo que hacemos, el por qué y el para

qué."1

Pigem (2013): 69

Local economic development policies in effect for past three decades in Spain

began during a period of deep economic crisis, industrial restructuring, and freshly

minted democratic councils that necessarily focused their political agenda on

providing infrastructure and basic services mostly neglected under the Franco

regime.

To regulate the foundations of local government, Act 7 was passed on April 2 1985

to enforce local authorities' competence framework and hence their scope for

action. Areas such as employment policies or industrial policies were outside that

framework, as well as more general or broad formulations as "economic

development" or "local economic development."

The National Employment Institute (INEM) had to support local governments

promoting employment programs to offer alternatives to people who daily came

knocking on the council’s door after losing their jobs. Supported by INEM, local

authorities allocated resources and programs without having yet established its

own set of policies in this area.

The reason why local Spanish authorities originally intervened in local economic

development was the pressuring from the growing unemployment rate caused by

the crisis, while the what for was to enable people access to enough resources to

find a new job and, failing that, a minimal income.

This approach, originally reactive and based on external resources of local

economic development, has been present ever since in the background of current

policies. Moreover, we can see that the coherent sequence "Vision > Strategies >

Policies > Programs" in practice was not only altered but fully reversed. This legacy

continues to haunt today's local economic development policies in our country,

still weak in terms of vision and strategic capacity, so that the what for and why of

such policies still does not provide entirely satisfactory answers.

In this context, the crisis has provided evidence of certain problems, from the poor

control public administrations exert on the market economy, especially in the

financial sector, to the apparent helplessness of localities and regions against the

ravages of globalization. This image has been transmitted and amplified by the lack

1 “Our society is extraordinary in technical resources and efficiency, in everything related to how to get

something. But we often ignore the context and the ultimate meaning of what we do, the what for and

why.”

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of answers, as well as by the inability shown by certain local governments under

pressure from rising unemployment rates which have themselves embraced

speculative projects, becoming active players of the model that caused the crisis.

We assert, however, that this is only an illusion, since local economic development

is a valid alternative to allow localities better control over their economic drift,

focusing their policies on a new what for and why.

In the first part of this article we review local economic development approaches

and ascertain the intended intervention of local governments: the why. In the

second part we introduce the concept of "resilient local economy" as a possible

reference point, providing local development policies with a more consistent what

for. In the third part we propose a local economic development policy agenda

derived from the above considerations. In conclusion, we target specific challenges

requiring further analysis.

2. Local economic development and local governments

Local economic development policies must overcome their biases of origin and

subsequent evolution and consider a much broader approach, not only with regard to

existing economic alternatives – as we shall see later – but also in terms of the

intervention areas they should cover. Some authors defend the notion of territorial

development to relativize localities’ economic weight and propose a greater policy

scope in terms of improvement of living conditions (Albuquerque 2014): something

consistent with the limited means of some local governments, many of which are not

always equipped with a wide range of competencies, and better fitted on paper for

territorial (and, therefore, integral) interventions than for sectorial.

In any case, from the most strictly economic point of view, a local economic

development strategy must provide three properly articulated dimensions (Estela

2011: 38-39):

• the dimension called local participation in global economic development, which

means understanding the land and its resources as a platform serving the

global economy. It is the most classic dimension of economic promotion:

attracting investment from multinational companies, in large infrastructure and

equipment, etc.

• the global projection dimension – currently the dominant dimension – which is

based on mobilization of the territory’s resources, whereby promotion of

entrepreneurship and innovation leverages local production’s access to global

markets. This dimension, however, is strongly influenced by access to external

financing; European funds have thus far proven crucial.

• the self-centered local economic development dimension, which seeks to

mobilize local resources to meet the needs and aspirations of the locality itself,

neither concerned with nor directly connected to global economic cycles. The

fundamental mission of such policies is to increase social capital and joint

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networking which recognizes, encourages, enhances, and interconnects civil

society economic initiatives of all kinds.

This articulation of local economic development in three dimensions calls for better

coordination between the various levels of intervention: in the first dimension, the

municipal level is clearly insufficient, but the regional – or metropolitan, if appropriate

– may be most effective for planning, ordinance, and management. The

supramunicipal level is most suitable for policies related to the second dimension, as it

can reach the critical mass necessary to optimize resources and generate significant

impacts. The third dimension is the one best fitted to local capabilities, manageable

within community structures, from small neighborhood or village to regions and

beyond (Estela 2011: 39).

Paradoxically, this third dimension of self-centered local development is the most

neglected in the implemented policies of local economic development. As an example:

“Too many of the strategies we examined focused on ‘hard’ economics – small

business start-ups, inward investment, availability of land and premises for

business – rather than ‘softer’ aspects of place, such as neighborhood renewal,

environmental sustainability, and levels of community empowerment and

participation” (McInroy & Longlands 2010: 10) and that “despite all that is known

about the importance of the big society, in terms of community assets, social

enterprise, and quality of life, economic development is still overly concerned with

variables that it thinks can be controlled, such as employment, investment, and

business support” (McInroy & Longlands 2010: 23).

On the other hand, involvement in local economic development has moved from the

first dimension (policies to attract investments in the 1980s and 1990s) to the second

one (policies to support entrepreneurs and innovation from late 1990s to the present

day) and only very recently approached the third dimension, i.e. with policies

promoting social economy. The logic has been to attract rather than enhance value

even if social capital and an appropriate governance system have not yet been built.

Again, this is the exact opposite of the reasonable sequence: first articulate territorial

networks in order to identify the needs and capacities for valorization of endogenous

resources, thereby attracting investments to fill gaps between local needs and

available resources. In this sense, “local economies aren’t simply an isolated silo of

private sector activity that can be encouraged and shaped. They are made up of a

network of social, public, and commercial economic activity. These aspects are

interconnected and dependent on one another” (McInroy & Longlands 2010: 11)

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Fig. 1 – Three dimensions of Local Economic Development strategies

Economic development strategies that local administrations should adopt should

be reorganized in order to increase their impact in the third dimension and

simultaneously equip themselves with more integral and solid policies, especially

in global times of crisis.

Considering instead the values that should guide public actions in economic

matters points us in the same direction. As shown by Pike et al. (2007: 1260)

“What are considered ‘appropriate,’ ‘bad,’ ‘good,’ ‘failed,’ or ‘successful’ forms of

local and regional development are shaped by principles and values socially and

politically determined in different places and time periods”, in such a way that “[…]

answers to the question of what kind of local and regional development and for

whom require one to annunciate explicitly the principles and values that should

underpin local and regional development” (2007: 1262). These principles and

values are forged in the community, in its everyday practices and relationships,

institutions, and forms of governance and therefore arise mainly from the third of

the aforementioned dimensions.

In short, strategies and local economic development policies must be built from a

holistic (beyond the economy), progressive (incorporating values and

transformational readiness) and sustainable approach, also in terms of equity

(Pike, Rodriguez-Pose & Tomaney 2007). It is the reason why governments

intervene in economic development: the need to control development in

accordance with community aspirations, counteracting the homogenizing trends of

globalization.

3. Resilient local economies "Resilience" has emerged as one of the recurring concepts when outlining exits

from the economic crisis. The concept was borrowed from the fields of physics and

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material science, found its way through psychology, landing successfully from

ecosystem ecology into the social sciences.

According to the Dictionary of the Royal Spanish Academy of Language, resilience

is in an engineering sense the ability of an elastic material to absorb and store strain

energy, i.e. its ability to recover its initial form after facing external pressure. From

a psychological perspective, the same dictionary defines it as the human ability to

properly face and adapt to extreme situations and overcome them. Applied to social-

ecological systems, it is defined as “the ability of a system to absorb disturbance

and still retain its basic function and structure” (Walker & Salt 2006: 1).

Resilience’s translation into socioeconomic spheres has not come without

controversy. Thus, Diprose (2015) denounces the concept’s appropriation by

economic institutions in covering austerity and structural adjustment

programmes. This interpretation is defined by the OECD and deals with resilience

in macroeconomic terms (Caldera, Rasmussen & Rohn 2015), pitted against those

who believe that “If the recent recession has taught us anything, it is […] that many

aspects of resilience are best built at the local level where economic relations are

founded on direct interaction and the ‘real economy’” (Broadbridge & Raikes 2015:

1).

Other authors sharing this interpretive approach primarily link resilience to

economic growth capacity recovery (Aiginger 2009; Martin & Sunley 2014; Martin,

Sunley & Tyler 2015). Therefore, they do not question the functioning of today’s

dominant economic model – the globalized capitalist market economy – but look

for recipes to allow localities to adapt to any occurring turbulences.

Other interpretations closer to the socioecological concept question the

functioning of the economic system and aim for its transformation: “La résilience

est un levier majeur des démarches de transition vers un nouveau modèle de

développement” (RNPC 2013: 16)2.

In this way, if we consider that “[A] resilient social-ecological system has a greater

capacity to avoid unwelcome surprises […] in the face of external disturbances, and

so has a greater capacity to continue to provide us with the goods and services that

support our quality of life” (Walker & Salt 2006: 37), we can sense here an

invitation to create local economies which are less dependent on the global

economy. Such is the case in the French region of Nord-Pas de Calais: “Une

approche en termes de resilience permet de mettre en évidence les leviers d’action

dont disposent les acteurs locaux, pour combattre le sentiment d’impuissance qui

peut être ressenti face à des phénomènes globaux dépassant les capacités de

chacun” (RNPC 2013: 10).3

Other authors, for instance Canadian economist Gilles Paquet, go even further,

denying any possibility of resilience in the current economic system: “Pour Paquet,

la résilience socio-économique s’appuie prioritairement sur les deux valeurs que

2 Resilience is a major lever of the transitions towards a new development model.

3 An approach in terms of relisience higlights the levers at the disposal of local stakeholders to stand

against the feeling of powerlessness in front of global phenomena exceedeing their capacities.

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sont la confiance et l’entraide, qui font particulièrement défaut dans le système

économique libéral” (CGDD 2014: 5).4

Thus, considering all the above, we identify the following primary goals of resilient

local economies (the what for) for their local economic development policies:

• Resilient local economies should be able to absorb disturbances and still

maintain their basic functions and structure (as we saw in the Walker et al.

2006 definition) – that is, to maintain at all times a minimum capacity to

meet basic community needs.

From this perspective the generic definition of economics becomes important,

understood as the different ways in which societies organize themselves to meet

their needs by allocating resources at their disposal. In terms of local economic

development policies, this will require greater policy attention to promotion of

social economy and, in general, alternative economic practices that contribute to

meeting those needs, eventually bypassing the market (Conill & Cardenas et al.

2012) and moving forward toward an economic model integrating various

economic understandings and practices in order to balance the clearly hegemonic

market capitalist practices in our society with an essential diversity: “A resilient

world would promote and sustain diversity in all forms (biological, landscape,

social, and economic)” (Walker & Salt, 2006: 145).

• Furthermore, they should do so while smartly managing their endogenous

resources.

We must incorporate a concept of sustainability that not only stands for more

efficiency in resource consumption or more consistency in natural processes

(organic farming, renewable energy, etc.), but also rethinks global resource

consumption in the middle and long term (Linz, Riechmann & Sempere 2007),

establishing parameters of proficiency.

• And finally, they must focus on prioritizing strategies and policies

consistent with local needs, as they are the administration they are closest

to and can attend them at their best.

As such, this means supporting the idea of economic subsidiarity requiring greater

localization of needs fulfillment. Such is the case of locally-sourced food production

and consumption (km0), energy (changing the energy model), services to

individuals, or even the financial sector; reinterpreting Keynes: “I sympathize with

those who would minimize, rather than those who would maximize economic

entanglements among nations. Ideas, knowledge, science, hospitality, travel – these

are things that of their nature should be international. But let goods be homespun

wherever it is reasonable and conveniently possible, and above all, let finance be

primarily national” (Keynes 1993: 757).

4 For Paquet, socio-economic resilience is primarly based on the values of trust and mutual support,

particularly lacking in the liberal economic system

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Fig. 2 – Elements for a resilient local economy

4. Agenda proposal for local policies

First, this new agenda must be built on the recovery of society as the main player in

the economy as a whole, in the same way that the main role of society in politics is

increasingly being considered, understanding that both economics and politics are

instruments to serve society and not vice versa (Sunyer 2015). In this regard, the role

of local governments changes significantly: “[… a] leadership role can take many forms

but the most common is where the local authority plays a facilitating role, working to

broker relationships between different parts of the private, public, and social

economies” (McInroy & Longlands 2010: 23).

Second, a thorough knowledge of the functioning of the local economy is required,

especially the links between public, commercial, and social economy and how income

enters and circulates in and out of the territory (Boyle & Simms 2009). Resilience

demands diversity and therefore requires accurate identification and management of

interdependencies between various actors in the local economy.

Thirdly, resilience requires the ability to anticipate. This anticipation is related to a

deeply rooted practice in the French tradition known as the prospective analysis: “La

resilience oblige à se projecter dans l’avenir et dans les événements qui pourraient

arriver. Elle encourage à anticiper. […] C’est dans le cadre d’une démarche de

prospective prenant en compte tendances et ruptures, phénomènes émergents et

analyse systémique, que la résilience territoriale prend tout son sens” (RNPC 2013: 9)5.

In the following section, we briefly propose a set of policies that should be part of

the basic agenda of any local economic development strategy to strengthen the

5 Resilience requires projection into the future and the events to come. It encourages anticipation. […]

Resilience makes the most sense in a prospective context taking trends and disruptions, emergint

phenomena and System analysis into account.

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third of the aforementioned dimensions and thus supplement existing local

economic development and employment promotion policies driven by local

governments.

Furthermore, we want to highlight their importance, as many of them should be

co-produced with the community (rather than being delivered for the community),

regarding the aforementioned subsidiarity, with social fabric as a key factor (Boyle

& Simms 2009).

Housing policies

Access to (rather than the mere construction of) housing should become the

mainstay of local economic development. Needless to say that having a roof over

one’s head and the security of being able to maintain this status is a must in order

to achieve the minimum welfare of and integration into society, which in turn is

essential to any employment or business project. At the same time, local labor

market function is deeply related to existing housing options, especially in the case

of young people. Moreover, if we consider the high percentage of income dedicated

to ensuring housing and its maintenance, it is not hard to imagine the opportunity

cost in terms of consumption of goods and services that not having more

affordable housing means.

The difficulties currently faced by local governments in implementing policies

promoting public housing are large, and it is therefore more necessary than ever to

take into account proposals and experiences arising from citizens: leasing

cooperatives, urban sharecropping, leaseholding, condominiums, cloud housing,

etc.

Food policies

In recent years, due to environmental and health issues, there is growing interest

in everything related to food in general and food production in particular that has

led to a boom of different practices in urban and peripheral agriculture.

Agriculture and livestock products have long led green consumer markets. A

growing part of the population is opting for self-production or getting involved in

ecological consumption cooperatives.

Besides health and environmental benefits, consumption of local agricultural

products accrues significant advantages from a local economy perspective,

primarily in terms of income circulating within a region, lower transportation or

generation costs, and waste treatment.

Food policies must aim to achieve greater control of food sovereignty in cities,

adopting a holistic approach that considers both production spaces and processes

and distribution and food consumption, bestowing proximity a more significant

role.

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Fig. 3 – Food Policy in Milan

Energy self-sufficiency policy

The shift to an energy model free of fossil fuels impacts the three primary

environmental challenges: climate change, non-renewable resource depletion, and

ecological footprint. Continuous advances in renewables technology have opened

the door to local self-production of "clean" energy. Additionally, investment in

technologies for the reuse of renewable energies should significantly contribute to

economic recovery efforts and the creation of new jobs, whereby the framework of

the so-called green economy may contribute to an end to the crisis in the mid- to

long-term.

Local governments should consider energy supply one of their key strategic local

economic development priorities, clearly encouraging progressive tendencies

toward self-sufficiency.

Financial relocation policy

As a matter of rationality and security, finances should move primarily short

distances: a locality, like any other business agent – including families – should be

able to operate essentially with the savings it generates, as foreign debt implies a

huge risk of dependence. Further, from the point of view of economic activity, what

if 30% of a territory’s savings were invested in local production activities within a

100 km range?

Financial resilience is only possible from a wide and close network of entities and

financial instruments of various kinds (Cortese 2011). Proximity banking has won

wide acceptance among citizens as a result of the crisis. Personal savings

management tools following ethical and sustainability criteria as well as

fundraising for social solidarity economy projects have attracted an increasing

number of supporters and amount of resources, showing great strength in an era

of distrust in traditional banking. Renewed interest in local or social currencies is

part of this trend, but there is still much to be done in this area.

Development of maker culture policy

Promoting reuse and recycling as well as specific areas of the sharing economy as

opportunities to exchange and share resources and durable goods contributes to

the transformation of consumer habits and would increase options to satisfy the

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needs of a significant portion of the population, especially the lower-income

segment.

We must consider, however, that increasingly societal knowledge and technology

is tied to the loss of the ability to do certain things with our own hands, the very

essence of human nature (Sennett 2009). Local economic development policy must

actively promote the recovery of these skills for all citizens so that we would all be

able to repair, recycle, and reuse what we already have. More autonomy in this

respect means increased resilience.

Today this does not conflict with technology. The so-called maker culture and

progress in the field of 3D printing can spell revolution in the industrial field,

renewing the productive capabilities of many localities, for now bound to the

experiences of Fab Labs.

5. Conclusions

Throughout this article we have tried to show how resilience as applied to local

economies can be an interesting guideline for local governments when considering

their local economic development strategies and policies while acknowledging the

weaknesses of policies implemented to-date.

Its practical application depends on many and varied challenges, starting with the

construction of the transition process both in terms of redesigning both the policy

and function of local administrations too used to work focused on particular

sectors.

Another issue clashing with established procedures and their mindset is the

relationship between resilience and efficiency. The diversity required by resilience

implies the existence of redundancies, i.e. alternatives ensuring the normal

operation of the system (in our analysis, the local economy) in case of the failure of

any single component. On the contrary, “a drive for an efficient optimal state

outcome has the effect of making the total system more vulnerable to shocks and

disturbances” (Walker & Salt 2006: 9). The question is how far we can take

efficiency (which in economics is linked to aspects such as productivity) without

endangering the economy as a whole.

Given the central role of the concept of "threshold” in the context of resilience,

another major challenge is the ability to identify existing critical points in local

economies: at what point a local economy reaches a certain degree of self-

sustainability, or which factors can lead into a downward spiral (Walker & Salt

2006: 53-73).

A real sense of local economic development provides a much more solid why such

strategies should be adopted over the status quo. It shows that relationships are

woven in the local sphere. Such relationships make possible every kind of

economic process and, therefore, local governments together with their

communities can act and influence them.

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Interpretation of a resilient local economy offers us the imperative what for

intervention in local economic development, which primarily consists of widening

and diversifying the options for the community to meet their needs and achieve

higher levels of individual and collective welfare.

Finally, it is time to rethink local economic policies in depth. Broadening the vision of

what constitutes an economy allows us to use all the instruments at our disposal while

allowing all social initiatives to cater to the needs of people. We may adapt

intervention levels to the challenges that arise. Local governments may be more

receptive to alternative citizens’ proposals. True innovation and experimentation with

participation-based local economic development policies will enhance the value of

diversity, proximity, and the extent of heterodoxy that being the closest administration

citizens and their interests and capabilities grants.

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IMAGES SOURCES

Figure n. 1, 2: Oriol Estela

Figura 3: http://www.foodpolicymilano.org/

Oriol Estela Barnet

oeb32@hotmail.com; https://estelabo.wordpress.com/

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Oriol Estela Barnet is Graduated in Economy (University of Barcelona) and Geography

(Autonomous University of Barcelona). He has worked as a consultant for a private firm

and since 2005 he works for Diputació (Provincial Council) of Barcelona. In 2012 he was

named Head of Economic Development Strategies. He also is a lecturer in local

governance, strategic planning and local economic development for Polytechnic University

of Catalonia and collaborates with the Iberoamerican Centre for Urban Strategic

Development.