Beruflich Dokumente
Kultur Dokumente
Technical Advisor
Emma Barbara Remitio
Technical Coordination
Maya Vandenbroeck
Writers
Chona Balagat
Anami Canag
Rizal Barandino
page 91
Contents
13
2
3
4
5
7
13
Foreword
Acknowledgments
Preface
Acronyms
Introduction
Chapter 1: Understanding the Local Economy
How a Local Economy Works
The Fundamental Components of the Local Economy
21
75
91
91
98
100
102
Foreword
Assalamo Alaikum Warahmatullahi Wabarakatuho!
Today many local governments are already looking beyond planning and the delivery of social welfare
services as priorities. LGUs are now findings ways of undertaking programs and improving capacities that
would enable constituents to take part in promoting and implementing initiatives that spur local economic
development. The transformation of communities from being recipients of services to becoming active
participants in economic development is gaining ground and wider acceptance among LGUs.
Strategic Local Economic Development: A Guide for Local Governments is a very timely publication considering
the growing clamor for local governments to take active part in promoting local economic development
both as a goal and as a program in local governance. This publication serves not only as an eye opener
but also as a guide for LGUs to understand and integrate local economic development processes and
mechanisms into local government functions. The LGU experiences featured in the publication are good
examples of how local leadership can steer economic progress through participatory, transparent and
accountable governance. The publication is also inspiring coming as it is from the experiences of local
governments in the Autonomous Region in Muslim Mindanao (ARMM). One important insight is that local
economic development can happen in any type or class of LGU.
This Guide also highlights the importance of LGU, community stakeholders and government agency
interaction as a critical element in achieving local economic development. Each one has a role to play in
the local economic development process. The steps provided in this Guide are not only useful to LGUs
but also to other stakeholders, especially to agencies such as the DTI-ARMM. Strategic Local Economic
Development: A Guide for Local Governments emboldens us to strengthen further our efforts in integrating
the LED process within the DTI-ARMMs mandate, plans and programs.
We trust that this publication will motivate and inspire more LGUs to embark on a meaningful, deliberate
and strategic LED process.
Our congratulations to the LGSPA for coming out with this relevant and most useful knowledge
resource!
Regional Secretary
Department of Trade and Industry-ARMM (DTI-ARMM)
2
Acknowledgements
This publication was made possible through the dedication and collective efforts of individuals and teams
who willingly shared their ideas and valuable time in conceptualizing and developing this Guide.
The Local Governance Support Program in ARMM thanks:
The local economic development stakeholders of the municipalities of Upi, Datu Odin Sinsuat, Sultan
Kudarat and Parang in Maguindanao; Wao and Tugaya in Lanao del Sur; Lamitan in Basilan, Bongao in TawiTawi; and Jolo in Sulu, whose experience in facilitating local economic development in their respective
areas inspired the writing of this Guide
LGSPA Program Officers Jaime Dumarpa, Jim Hassan, Veronica Quinday, Fatima Darwissa Yussah and
Assistant Manager Cecile Isubal for providing technical assistance to their respective LGUs in undertaking
the LED process
The DTI-ARMM LED coach team headed by ASec Maritess Maguindra for continuing the support to
LGUs and for integrating the LED process in their agencys programs
The technical team of this publication -- Chona Balagat, Anami Canag, Emma Barbara Remitio, Myn
Garcia, Rizal Barandino, Edgar Catalan, Mags Z. Maglana, Maya Vandenbroeck, Sef Carandang and Tata
Lao -- who passionately saw through the development and completion of this Guide
LGSPA managers and staff who contributed in many ways to promoting local economic development and
to producing this knowledge product
Preface
Strategic Local Economic Development: A Guide for Local Governments is the embodiment of the collective
experience of local government units, government agencies and the Local Governance Support Program
in ARMM (LGSPA) in promoting local economic development in the Autonomous Region in Muslim
Mindanao. Despite difficulties and conditions that were inimical to durable economic development and
peace, the work of LGSPA has produced a wealth of knowledge that contributes to the further evolution
of the framework and strategies in local economic development promotion that were initially pursued in
the second phase of the Local Government Support Program (LGSP II). In this connection, the electronic
file of the Local Economic Development: Stimulating Growth and Improving Quality of Life publication of LGSP
II has been included as a companion CD to this material.
Strategic Local Economic Development: A Guide for Local Governments is based on the field application
by LGSPA of existing local economic development (LED) general processes and guidelines. Using the
tenets of good governance as anchors, the LGSPA experience highlights the importance of participation,
transparency and accountability as very important elements in local government-facilitated economic
development. In the context of the ARMM, the experience underscores the importance of integrated,
collaborative and purposive undertakings among economic agencies, private stakeholders and local
government units in maximizing opportunities for local economic development.
This Guide hopes to fill in knowledge gaps in boosting the capacities of local governments to engage
stakeholders and players of local economic development. It emphasizes the industry approach,
promotes entrepreneurship for wealth and job creation and recommends more robust ways of assessing
competitiveness and crafting LED strategies. It also links LED to gender equality and poverty reduction,
themes that are equally important to LGUs and citizens. The Guide includes LED experiences in ARMM
through the work of LGSPA and of other areas in the Philippines.
With Strategic Local Economic Development: A Guide for Local Governments, LGSPA hopes to have shown
that local economic development can be implemented in the context of promoting good governance and
that good governance is vital to local economic development.
Local Governance Support Program in ARMM (LGSPA)
Acronyms
ABC
ADB
AI
AIP
ARD-GOLD
DSWD
DTI
ELA
EO
e-TRACS
EU
FARMC
GAD
GFI
GTZ
HVCC
IEC
ILO
IPAG
IRA
IT
KAS
LCE
LDC
LDIP
LDIS
LECA
LED
LGPMS
LGSP II
LGSPA
LGU
LRED
LRIA
M&E
MEDCo
MNDC
MPDC
MSME
MPDC
MSME
MSU-IIT
MTDP
NCCA
NCR
NEA
NEDA
NGO
NIA
NSO
OBOL
ODA
OECD
OFWs
OTOP
PAHRDF
PAssO
PBIA
PCARRD
PCE
PCC
PEE
PESO
PGMA
PMS
PO
PPP
PSP
PTEZ
6
Introduction
It is at the local level that the greatest potentials for spurring development for promoting investments,
creating jobs and boosting demand exist. With the decentralization of certain powers and functions
brought about by the Local Government Code of 1991, the role of local government units (LGUs) in
development have also expanded. It is for this reason that LGUs are now viewed not just as providers of
public goods and basic social services, but more importantly as promoters of local economic development
or LED. The LGUs have a critical role to play as agents of economic development in their respective
communities.
However, LGU support to LED for the most part has been ad hoc and limited to one-off livelihood
projects that have proven to be unsustainable and often counterproductive in attaining the overarching
goal of poverty reduction. Among the pressing concerns of the LGUs are limited economic activities,
especially in the rural areas. Since most LGUs belong to the 3rd to 5th income classes, they are faced with
the problem of limited local funds to finance economic projects and related activities. They also have
limited capacity and technology to manage or link with other resource institutions, markets and other
potential partners.
Strategic Local Economic Development: A Guide for Local Governments is intended to provide practical
steps and tools on the application of the LED process in Local Government Units (LGUs). These
procedures are based on the experiences of the Local Governance Support Program in ARMM (LGSPA),
the Local Government Support Program (LGSP) II and other pioneering LED-related interventions in
the Philippines. This knowledge product is a companion piece to the 2003 LGSP resource book, Local
Economic Development: Stimulating Growth and Improving Quality of Life.
The LGU-facilitated strategic LED process described in this Guide follows the five-stage strategic
planning process proposed in two excellent references published by the World Bank: the Local Economic
Development: A Primer - Developing and Implementing Local Economic Development Strategies and Action
Plans, and the Making Local Economic Development Strategies: A Trainers Manual. This Guide, however,
offers a new perspective on the LED process in three ways based on the experience of the LGSPA:
1.
2.
It describes the LGU-facilitated LED process as part of the economic sector development
function and integrated in the planning, implementation, monitoring, evaluation and policymaking systems of an LGU;
It gives emphasis to value chain and industry-based LED strategy formulation; and
STRATEGIC LOCAL ECONOMIC DEVELOPMENT:
A Guide for Local Governments
3.
It demonstrates the use of small, medium and enterprise development, performance management,
and poverty-sensitive and gender-responsive strategies in the implementation of the LED plan.
The specific steps, tools and examples under each stage are mostly drawn from the LGSPA experience
in the ARMM, which are also practical and relevant to any LGU in the Philippines wishing to undertake a
systematic and participatory process of formulating a LED strategy.
The Guide has five major parts:
x
x
x
x
x
Introduction
Chapter 1 Understanding the Local Economy
Chapter 2 Integrating LED in Local Government Processes
Chapter 3 LED in Practice
Chapter 4 Lessons Learned
The Introduction gives a synopsis of the fundamentals of LED rationale, nature, goals, principles, legal
framework, stakeholders and their roles and responsibilities which are expounded in the LED: Stimulating
Growth and Improving Quality of Life resource book. Having an appreciation of the concepts and merits of
undertaking the LED process is necessary before proceeding to its specific steps and methodologies.
Chapter 1 Understanding the Local Economy shows how the flow of money coming in,
circulating, and leaving a community impacts the economic development and wealth creation in the
locality. This chapter also discusses the five fundamental components of the local economy (labor,
technology, infrastructure, financial capital and leadership) and some of the issues related to these
components that LGUs may have to deal with in the LED process.
Chapter 2 Integrating LED in Local Government Processes translates the concepts and
principles of LED into concrete actions by presenting step by step procedures and tools in planning
and implementing the LED Strategy. This chapter discusses the five-stage Strategic LED process,
namely: 1) Organizing the LED Effort, 2) Doing the Local Economy and Competitiveness Assessment
or the LECA, 3) Formulating the LED strategy, 4) Implementing the LED Strategy, and 5) Reviewing
the LED Strategy.
Chapter 3 LED in Practice is a compendium of LED experiences, innovations and good practices
of selected LGUs in the Philippines including those of Wao and Tugaya in Lanao del Sur, and Upi
in Maguindanao, which are municipalities covered by the LGSPA. LED initiatives of the provincial
government of Bohol, the city government of Tuguegarao in Cagayan, the city government of Naga
8
in Camarines Sur and the municipal government of Baybay in Leyte are also featured. Useful insights
can be drawn from the different approaches and strategies resorted to by these LGUs in stimulating
economic growth in their respective areas of responsibility.
Chapter 4 Lessons Learned documents the learning gained from the LGSP II and LGSPA LED
projects. These include strategies that work or do not, as well as factors that facilitate or hinder
the LED process. These lessons are presented so that other LGUs can gain some ideas on which
approaches to avoid, adopt or modify based on local conditions.
What is Local Economic Development?
Essentially, economic development is a process and the practice of increasing the rate of wealth creation by
mobilizing human, financial, organizational, physical, and natural resources to generate more marketable goods
and services whereby the economic developer influences the process for the benefit of the whole community
(McSweeney, n.d.).
Countless economic policies and strategies have been initiated in the past by the national government
to address poverty and equitable growth but more focus was given on larger enterprises, urban and
urbanizing communities and centralized planning that overlooked the indispensable role of the LGUs.
As a result, rural economy where most Filipinos are living and working remained sluggish resulting to
increased poverty incidence and poorer quality of life (LGSP, 2003).
LED offers an alternative approach that aims to fill in the gaps of the previous initiatives. Local economic
development (LED) is the process by which actors (governments, private sector and civil society) within
localities, work collectively with the result that there are improved conditions for economic growth, employment
generation and quality of life for all (Adapted from the World Bank definition).
The term Local in the definition signifies that LED involves building the economic strength of a local
area by optimizing local resources and capacities; the prime movers or driving forces are economic
stakeholders in barangays, municipalities, cities and provinces singly or collectively; and it is territorial
(or area-based) in its approach. Although the focus is local, there are links to the regional, national and
international levels.
The Economic in local economic development drives home the importance of identifying and seizing
business opportunities, supporting entrepreneurial initiatives (whether formal or informal, micro or
large), facilitating market access and creating a climate conducive to investment and business activity.
STRATEGIC LOCAL ECONOMIC DEVELOPMENT:
A Guide for Local Governments
The term Development emphasizes that LED is holistic; it does not only cover the economic dimension
but also includes social, politico-administrative and cultural aspects. The quality and direction of growth
is as important as its quantity and size. Sustainable development is at the heart of LED which means
satisfying the needs of the present generation without sacrificing the future of succeeding ones (LGSP,
2003).
LED enables and promotes the coordination and optimization of scarce resources available in an area, the
integration of LED plans, priorities and programs into regional and national plans (with direction from the
bottom going up) and citizen participation and consensus building among stakeholders.
Goals and Principles of LED
The goals of LED are to create wealth, generate jobs, increase incomes and, ultimately, reduce poverty
and improve the quality of life in the locality.
LED operates on several principles. First, LED promotes equitable and sustainable economic growth.
Equitable means opportunities to wealth creation are open to both men and women of working-age, to
the rich and poor, to urban and rural dwellers, and to all ethnic and religious groups. To sustain economic
growth, local resources may be transformed to marketable goods for the current population but it must
be continuously regenerated so as not to deprive the future generation of the same resources.
Second, LED is a multi-stakeholder partnership. Those who are affected and can affect the economic
growth in the locality (such as government, business and civil society) have a stake and a role in LED.
Third, the private sector is the acknowledged engine of employment and growth and as such, LGUs
must be conscious of its enabler role, which is setting the right environment for the local economy to
grow. The LGU may, however, prudently decide to provide certain services in situations where there
are insufficient private or voluntary sector providers of such services or when cartels control the prices
of certain commodities in the locality.
Finally, good economy thrives when there is transparent and accountable governance a practice that
should permeate the political and economic structures in the community.
The LGU Mandates and Related Laws on LED
Some LGUs have already started economic programs and activities, drawing power and authority from
existing statutes. These laws and mandates are fully discussed in LED: Stimulating Growth and Improving
Quality of Life. Among these laws is the Local Government Code of 1991 (RA 7160) which has given the
10
LGUs more power and authority to accelerate local economic development and improve the quality of
life in their communities.
RA 8425 or the Social Reform and Poverty Alleviation Act also mandates LGUs through the Local
Development Councils (LDCs) to formulate, implement, monitor and evaluate poverty reduction
programs in their respective jurisdictions, which are consistent with the poverty reduction strategy of the
national government. These are further bolstered by the laws on the development of Small and MediumScale Enterprises (SMEs) such as the Magna Carta for Small Enterprises (RA 6977), Kalakalan 20 (RA
6810), An Act Providing Assistance to Women Entrepreneurs (RA 7882) and the Omnibus Investment
Code (EO 226).
The Department of the Interior and Local Government (DILG) has also issued memorandum circulars
to the local governments pertinent to the pursuit of local economic growth and poverty reduction. See
Annex A for a complete list of LGU mandates and related laws on LED.
The LED Stakeholders, their Roles and Responsibilities
The LED process calls for the collective efforts of local stakeholders to spur economic growth. They
bring with them different levels of knowledge and expertise, perspectives, resources or assets that would
render LED effective and successful in attaining its targets. No matter how small the role of a stakeholder is,
engaging it is important in spreading ownership of the communitys economic development strategies.
Actions of community and government leaders can change, alter and direct the condition of their local
economy. The economic quality of life of the residents and the success of businesses many times are
directly affected by the policies and leadership of those who have the influence and power to create a
climate conducive to economic growth (Fruth, W., n.d.).
The LGU takes the role of provider, enabler or facilitator of local economic development. As provider,
it sees to it that the infrastructure and subsidy requirements of existing and potential industries are in
place. As enabler or facilitator, it ensures the economic players access to information and advisory
services, formulates relevant and supportive policies and regulations, provides incentives, and works for
the stability of peace and order. In addition, it has to carry out regular functions that have bearing on
the success of LED, namely: policy making and taxation; regulatory functions; planning and budgeting;
information collection, storage and dissemination; procurement of goods and services; marketing and
public relations; investment and enterprise promotion; management of public economic enterprises
(PEE) and the provision of physical facilities; public safety and cultural heritage activities; and, provision of
social and environmental services.
11
The LGU may also take on the role of service provider in situations where there are insufficient private
or voluntary sector providers or when the capacities of these service providers are inadequate. This
option, however, must be weighed carefully and the extent of LGU intervention must be clearly qualified
considering its limited resources and array of social concerns other than infrastructure and economic
projects.
The private or business sector is represented by micro, small, medium and large-scale enterprises. With
their role as engine for local employment and growth, they are tasked to scan and seize opportunities,
take risks, develop markets and create economic value. Micro enterprises represent the informal
economy and though not a significant generator of employment, they are considered incubators of bigger
enterprises and fallback mechanism in times of economic crisis. Small and medium-scale enterprises are
employment generators, the largest taxpayers, users of the latest technologies, and sources of managerial,
technical and financial competencies.
Organized business groups like chambers of commerce, industry associations, craft and professional
associations and local guilds play a crucial role in setting and enforcing quality standards, upgrading human
and technological resources, product development, marketing, business development, financing and
creation of an LGU brand.
Cooperatives (producers, credit, consumers) and microfinance institutions serve as depositories of
community savings; providers of credit assistance, social protection measures such as health insurance,
mortuary packages, and emergency loans; and promoters of frugality, discipline, trust, self and mutual
help, and entrepreneurship.
Civil social organizations (CSOs) such as non-government organizations (NGOs) and peoples
organizations (POs) from the informal sector (vendors, tricycle drivers) and agriculture sector (farmers,
fishers), represent the grassroots sentiments, needs and views making them excellent collaborators in
planning, service delivery, community organizing and mobilization and in monitoring and evaluation of
projects thereby promoting transparency and accountability.
Educational institutions are providers of knowledge, developers and promoters of new technologies,
trainers, and providers of talents and services for business institutions.
National government agencies assist the LGU in the organization, planning, implementation and
evaluation of the LED strategy by providing technical assistance, helping in fund sourcing, advocating
LED among the stakeholders, developing and enforcing standards, and providing information and other
market and resource linkages.
12
Chapter
Understanding
the Local Economy
13
Economic Generators
Tourist & Visitors
Agri-aqua Production
=
P
=
P
=
P
Remittances of family
members working outside
the municipality
=
P
MUNICIPALITYS
LOCAL ECONOMY
=
P
Local Residents
Shopping in other Cities
=
P
=
P
Leakage Out of
the Municipality
=
P
LGU Expenditures
outside the Municipality
=
P
Crop Production
Inputs (Fertilizers,
Seeds, etc.)
Construction
Materials
=
P
Construction Labor
Printing &
Publishing Services
15
17
BUSINESS LEADERSHIP
LOCAL
GOVERNMENT
LEADERSHIP
Successful
Local Economic
Development
PROFESSIONAL
LEADERSHIP
19
20
Chapter
Integrating LED
in Local Government
Processes
21
The previous chapter discussed how the local economy works from a perspective of money flowing into,
circulating in and leaving a locality. It also presented the major components that affect the productive
capacity of a local economy: labor force, technology, infrastructure, financial capital, and leadership. These
factors and the strategies to create wealth are some of the issues that can be addressed within the LED
process. It must be recognized though that the leaking barrel of wealth model and the components of
economic growth as described in Chapter 1 may only be a partial representation of the economic reality
in a specific locality. In the course of undertaking the LED process, other factors that impact a community
or locality may unfold and will have to be considered in the formulation of the LED strategy.
In this chapter, the concepts and principles of LED are translated into concrete actions in an LGUfacilitated LED process. The components of the local economy presented in Chapter 1 provide the
bases for analysis and strategy formulation during the LED process. What critical issues in the localitys
labor force, technology and other components should be addressed and how?
One of the most important insights gained from the LGSP and LGSPA LED initiatives is that the success
and sustainability of LED rest on a participatory, strategic and planned approach. It should be a process
that is purposeful, deliberate and founded on sound analyses. Undertaking a strategic planning process is
22
23
24
25
Who?
Local Chief Executive/Mayor
Municipal Planning and
Development Coordinator
Municipal Agriculture Officer
Municipal Treasurer
Municipal Assessor
Municipal Budget Officer
Chairperson of the Legislative
Council Committee on Agriculture
Chairperson of the Legislative
Council Committee on Finance
Municipal Tourism Officer
Municipal Local Government
Operations Officer
Why?
Can provide leadership and political influence in the formulation
and establishment of structures and systems
LED planning is integral in municipal planning; can facilitate the
integration of the LED Strategy into the CDP, ELA and other LGU plans.
Most of the municipalitys economic activities are agri-based;
can facilitate implementation of agri-based LED programs and projects
Can provide information on the LGU resources that will be
available for the process.
Can provide information on the valuation of land and resources in the locality
Can provide information on the budget available for the LED activities.
Can recommend policies in support of local economic development
Can push for the appropriation of budget necessary for LED implementation.
Tourism is also a significant source of income of the municipality; can
facilitate the implementation of tourism programs and projects
Can help champion the LED process and guide team regarding LGU mandates
In establishing the LGU LED team, it is important to level off on the task and responsibilities of the team.
The following activities and decisions are therefore critical in establishing a coherent team:
a) Conduct orientation and preparatory meetings to level off on LED process, concepts
and objectives
STRATEGIC LOCAL ECONOMIC DEVELOPMENT:
A Guide for Local Governments
27
x A strategy for wealth creation, job and income generation, and, ultimately, alleviation of
poverty and improved quality of life.
x A process that promotes self-help, empowerment, innovation, public, private and civil
x
x
The following decision makers and department heads are relevant and must be present, where
applicable, in the team orientation:
x
x
x
x
x
x
x
x
x
x
x
x
It is important that the decision makers understand their individual and collective role in facilitating
the LED process. For instance, the Planning and Development Coordinator can facilitate the
technical and day-to-day LED process, in behalf of the LCE. It can also facilitate the discussion
with the members of the Local Development Council (LDC) as the secretariat of the council. On
the other hand, the Planning Coordinator, together with the Treasurer and Budget Officer are the
core members of the Local Finance Committee (LFC) which is the body task with determining LGU
finances and budget ceilings and therefore plays very important role in ensuring that LED projects
28
29
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31
a) Involving the Local Development Councils, relevant Local Special Bodies, and the Association of
Barangay Captains in the LED planning and implementation mechanisms.
b) Establishing monitoring, evaluation and reporting system and performance management system that
would include participation from stakeholders and relevant special bodies that would become a basis
for economic plan improvement and policy development
c) Ensuring that the LED process and strategy are given due importance and priority in the LGU annual
budget process
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Description of Interest
in LED
Partnership Assessment
Essential
Partner in implementation
Vendors Association
Essential
Farmers Cooperative
Important
Important
Program/project
implementation
Womens Federation
Important
Program/project
implementation
Electric Cooperative
Important
Program/project
implementation
Minor
35
Why?
Rural Bank
36
37
Results of performance and competitive assessments are also important sources of information that
the LGU can utilize. This includes information generated from the Local Governance Performance
Management System (LGPMS)2 and other systems such as the Competitive Assessment Program (used
mostly by cities), Balance Scorecard and others.
Understanding the data
The collected data are then organized according to Local Economy Profile outline. For data to be
meaningful, these have to be interpreted and presented in context. For example, if the volume of corn
production in a municipality is 100 tons annually, how does this compare against other crops in the area,
against corn production in other municipalities or against the provincial or regional performance?
In assessing the local economy, it is necessary to compare, contrast and evaluate local data with the
larger area of which the LGU is a part: nation, region and province. Understanding the communitys
relative competitiveness requires a comparison with other municipalities or communities located nearby,
perhaps within the same metropolitan area or region, or adjacent to the community. It is important to
evaluate local indicators and trends, and compare them with national data to determine differences and
commonalities. This can provide important information on the competitiveness of an LGU at a national
level. A local economy assessment also requires comparisons of trends over time. (World Bank & Cities
of Change, n.d.).
STRATEGIC LOCAL ECONOMIC DEVELOPMENT:
A Guide for Local Governments
39
Major land, sea and forest resources in the area under the three economic sectors: primary, secondary
and tertiary.
b) Location and size of each resource in terms of area covered and value and volume of production.
c) Existing local economic activities with regards to each resource
d) Forward and backward linkages of these industries/economic activities, including linkages outside
of the local economy. Production, trade and services linkages identified in the CDP formulation
can be used as a reference for this. Industry players and industry studies can also provide more
information.
e) Opportunities for development including regional, provincial, national programs and policies that
provide financial, technical, development services in support to the development of the resource
such as official development assistance and national agencies program assistance relevant to the
resource. These can be gleaned from the Provincial, Regional, and International Factors section of
the Local Economy Profile. Opportunities can also include potential markets for each resource.
Table 6. Example of Template for Local Resource Inventory and Assessment
Sector/Resource
Activities Done
in the Locality
Opportunities for
Development
Land Resources
Example:
Agriculture Sector
Corn
20 barangays
18,268 hectares 67%
of agricultural land
Corn farming
Corn shelling
Volume:
36,000 tons/year
Value:
PhP468 million/year
Forward:
Milling
Trading
Warehousing
Backward:
Seedling production
Pesticide production
Fertilizer production
Machinery fabrication
Sea/Aquamarine Resources
Forest and Mineral Resources
40
41
INTERNAL ANALYSIS
STRENGTHS
WEAKNESSES
Labor Market
Skills
Wage Rates
Availability
Financial Capital
Private capital
Public capital
Access to Markets
Proximity or distance to
market centers
Proximity to suppliers
Transportation
Access to major highways
Access to airports
Access to ports
Access to trains
Sites and facilities
Number of sites and size
Infrastructure
Utilities
Telecommunications
Number of existing structures
Knowledge Resources
Research/Development facilities
Industry or trade Association
Education and Training
Colleges or universities
Higher technical training
Vocational skills training
Business services and Technical
Support
Business Climate
Government responsiveness
(including capacity to carry out
LED functions)
Taxes
Regulations and controls
Cooperation/assistance with
private sector
Quality of Life
Cost of living
Culture and recreation
Public services (including peace
and order)
Attractiveness of city
Natural resources
Source: Adopted from World Bank & Cities of Change LED Trainers Manual
42
EXTERNAL ANALYSIS
OPPORTUNITIES
THREATS
x Identify market channels, market trends and market potentials within the value chain
x Identify the primary actors in the value chain, their number, roles, and interrelationships, including
the number of women industry players
x Identify constraints (weaknesses and threats) that are holding back growth and competitiveness of
local firms participating in the value chain
x Pinpoint priority areas for reform within the environment in which these industries or firms
operate
x Identify the strengths of the industry and opportunities for stimulating wealth creation and alleviating
poverty in the local economy
Table 8 describes the industry competitiveness factors (market demand, reach, presence of MSMEs,
forward and backward linkages, and participation of women) that can be analyzed using the value chain:
43
DESCRIPTION
Market Demand
2SLQLRQVDQGGDWDIURPNH\LQIRUPDQWVRQPDUNHWWUHQGVDQGLQGXVWU\FRPSHWLWLYHQHVV
,QIRUPDWLRQIURPH[LVWLQJVWDWLVWLFVVWXGLHV
([DPSOHVRIEXVLQHVVHVWKDWKDYHSUREOHPVPHHWLQJGHPDQG
&RPSDULVRQVZLWKLQWKHUHJLRQEDVHGRQRSLQLRQVIURPNH\LQIRUPDQWVRIPDUNHWLQIRUPDWLRQ
Reach
(VWLPDWHRIWKHQXPEHURIHQWHUSULVHVIRUHDFKW\SHRIILUPLQWKHYDOXHFKDLQLQSXWVXSSOLHUV
producers, wholesalers, etc.)
$YHUDJHILUPVL]HIRUWKHGLIIHUHQWW\SHVRIYDOXHFKDLQILUPVLQWHUPVRIFDSLWDOL]DWLRQDQGQXPEHURI
employees/employed
$YHUDJHVDODU\ZDJHVIRUHPSOR\HHVLQGLIIHUHQWW\SHVRIYDOXHFKDLQILUPV
Significant
Presence of
MSMEs in the
rural areas*
Significance of
'HVFULSWLRQRIWKHGLIIHUHQWNLQGRIWUDQVDFWLRQVWKDWWDNHSODFHDPRQJORFDOPDUNHWDFWRUVLQWKH
Forward and
value chain
Backward Linkages *HQHUDOGHVFULSWLRQRIWKHYROXPHDQGQXPEHURIWKHVHWUDQVDFWLRQVEHWZHHQDJLYHQQXPEHURI
among Local
firms
Market Actors
Participation of
Women
1XPEHURIZRPHQZKRDUHVHOIHPSOR\HGRZQEXVLQHVVHVRUZRUNDVHPSOR\HHVLQWKHYDOXHFKDLQ
(should include participation at all levels of the value chain)
*In this example, emphasis is given to the rural area it being the target of poverty reduction goals.
A good starting point for conducting any analysis is to access existing studies, reports, or statistics that
provide information on the targeted value chain. These can be found in government agencies, with
donors, and with implementing organizations. It is also important to identify key informants who
are particularly knowledgeable about the value chain as a whole (Lusby & Panlibuton, 2007). They can
include members of the LED stakeholders group. The value chain analysis activity can bring together
producers, government agencies and other stakeholders in the different segments of the value chain to
jointly seek solutions to overcome key impediments that affect the performance of the chain (The World
Bank Group, 2007).
A value chain map presents, in graphical form, all the major actors in a targeted value chain as illustrated
in Figure 3. The determination of forward and backward linkages that is done in the LRIA provides the
starting point for the value chain analysis.
44
D
O
M
E
S
T
I
C
M
A
R
K
E
T
SUPPORT INDUSTRIES
INFRA SUPPORT UTILITIES
Water, Power & Communication
FINANCING
HR DEVELOPMENT
Source: Wao, Lanao Sur Livestock and Poultry Industry Study, 2007.
45
Description/Remarks
A. Conditions of Factors of
Production
1. Human resources
Weight (%)
25
15
15
15
10
2. Physical resources
3. Capital resources
4. Knowledge resources
5. Infrastructure
7
7
2
4
B. Demand Conditionsc
20
Notes:
a
Most factors are based on Michael Porters Model for Industry Analysis.
b
Each industry is assigned a score per criterion ranging from 1 to 3, with 3 as the highest score.
c
Refer to results of the value chain analysis as illustrated in Table 7.
46
Industry
Scoreb
Weighted
Score
(Score x
Weight)
47
What critical gaps and issues or weaknesses and threats identified in the LECA need to be
STRATEGIC LOCAL ECONOMIC DEVELOPMENT:
A Guide for Local Governments
b)
c)
d)
e)
addressed?
What strengths and opportunities can the LED strategy seek to build on?
What conclusions can be made about the competitive position of the locality?
What can be realistically achieved in the timeframe of the LED strategy?
What groups in the community are perceived to be disadvantaged (e.g., rural poor, indigenous
people) and must be given special attention?
49
Goal
6WUHQJWKV YDVW ODQG UHVRXUFHV IRU IRUDJH DQG SDVWXUH GHYHORSPHQW DQG DEXQGDQW
supply of crops and agricultural by-products for feedstuffs
2SSRUWXQLWLHV SUR[LPLW\ WR VHYHUDO UHVHDUFK DQG WUDLQLQJ FHQWHUV RQ OLYHVWRFN
production, proximity to market centers outside of municipality through well paved
roads
/LYHVWRFNLQGXVWU\LVQXPEHULQWKH/(&$LQGXVWU\FRPSHWLWLYHQHVVUDQNLQJ
9DOXHFKDLQDQDO\VLVIHUWLOL]HUVVHHGVDQGSHVWLFLGHVDFFRXQWHGIRURIWKHYDOXH
of local corn production. Of the PhP500 million annual value of corn production,
PhP400 million were draining out of the local economy because farmers were buying
inputs from outside sources
/RFDO RUJDQLF IHUWLOL]HU SURGXFWLRQ ZLOO UHGXFH FRVW RI LQSXWV LQ FURS SURGXFWLRQ
provide income opportunities and protect the environment
To develop an efficient
municipal power supply system
:HDNQHVV ,QDGHTXDWH SRZHU VXSSO\ LQGLYLGXDO JHQHUDWRUV LQ EDUDQJD\V
are being used whenever electricity from the provincial electric cooperative is not
available
$GHTXDWHSRZHUVXSSO\LVQHFHVVDU\LQRUGHUWRLQFUHDVHSURGXFWLYLW\DQGTXDOLW\RI
metalcraft and woodcraft production
Clear regarding what is to be done and why it should be based on the LECA and flow directly from
the vision formulated in Step 1
b) Outcome oriented represents specific key result areas on which the LED strategy will focus to
achieve the vision. The specific key result areas will be the gaps and critical issues identified in the
SWOT Analysis
c) Robust - it leaves open a variety of possible means
d) Inclusive - reflects the voices of all people who are involved and the greatest needs and highest
economic priorities of the municipality
e) Concise
The set of goals can include statements that are industry-specific as well as goals that impact and cut
across all economic activities such as improved local business investment climate. What is important
is that these goals reflect the LGU priorities and addresses the major LED issues. Having industry-based
goals, however, provide focus or a clear sense of purpose to the LGU and these normally become the
50
x valid - they are valid in the eyes of the key participatory M&E stakeholders and should actually
measure what they set out to measure
x reliable - conclusions based on the indicators should be the same if measured by different people
x gender sensitive - indicators should be disaggregated by sex
x sensitive - they should be sensitive enough to measure important changes in the situation being
observed
x cost-effective - the information/learning should be well worth the time and money it costs to collect
the data
x timely - it should be possible to collect and analyze the data fairly quickly
x in-line with local capabilities/resources - they should not be overly complex and burdensome to
the project partners
x build on what exists - indicators should not reinvent the wheel and should draw on existing local
data collection activities, or from indicators used with other projects, where possible. For example,
local economic development performance indicators available in the Local Governance Performance
Management System (LGPMS) of the DILG can be used as a guide in framing performance
indicators.
51
Those participants/beneficiaries that are to be targeted at each different level - i.e., individuals,
groups, organizations and sectors, and/or broader systems. These targets should be linked to the
highlights of the LECA. They could be the economic players of the priority industries or of areas that
have been adjudged as economic strengths of the locality or opportunities.
x Personal factors can include: knowledge, beliefs, skills, education and training, experience,
cultural norms and practices, social status, cognitive or physical abilities, gender, age
x Environmental factors can include: social support, available resources and services, barriers
(including financial, physical, and communication), social approval, policies, environmental
hazards, living conditions
c)
Those who can contribute and how they can be reached or involved in the effort. Identify agents
of change or LED champions, i.e., those who may be in a position to contribute to the initiative or
commit to leading it.
It is a good practice to undertake programs and projects where clear champions are committed to
being involved in leading them. Project champions may come from local government, the private
sector, community or other sectors (e.g. research or educational institution) (Swinburn et al.,
2006).
52
A. Individuals
1.
2.
x.
1.
2.
x.
1.
2.
x.
C. Sectors
1.
2.
x.
1.
2.
x.
D. Broader Systems
1.
2.
x.
1.
2.
x.
53
54
The Manual on the Local Planning Process: Formulating CDP and ELA for ARMM, another LGSPA knowledge
product, presents in detail how the LGPMS can be used in both strategy formulation and monitoring and
evaluation.
55
x Providing locally those goods or services currently being purchased outside the area. This idea is
x
x
x
called import substitution. (For example: producing organic fertilizer locally in order to reduce
dependence on inorganic fertilizers from outside sources). This creates new businesses in the locality
and will entail improving linkages between local buyers and sellers
Encouraging people to invest their savings locally. This keeps the money circulating in the economy
and adds to the productive capacity of the local economy
Improving the communitys quality of life, which is important not only to retain and attract residents
but also outside investors
Putting the inefficiently utilized local resource to work more productively
The level of wealth is not only dependent on the volume of money inflows and outflows but also on
the productive capacity of all firms, households, government units and other producing and consuming
entities participating in the local economy. When these are functioning at full capacity, the level of
prosperity is high (Darling, 1991). Local firms will respond to changes in internal and external markets.
However, their ability to react to changes in markets will depend upon the condition of the fundamental
components of the economy within the locality, that is, the availability of resources such as investment
capital, skilled workers, and the know-how to produce at costs that are competitive, as well as the
presence of adequate infrastructure and an environment conducive to business.
LED planners should give emphasis to programs that would help grow the level of wealth in the locality
and that have a direct bearing on the results of the LECA those that would optimize local strengths and
available opportunities and develop the priority industries.
56
NUMBER OF EMPLOYEES
Micro-enterprises
3,000,000 or less
19
Small Enterprises
3,000,001 15,000,000
10 99
Medium Enterprise
15,000,001 100,000,000
100 199
The Plan presents four major SME development outcomes (DTI, n.d.), as follows:
(QKDQFLQJWKH%XVLQHVVDQG,QYHVWPHQW(QDEOLQJ(QYLURQPHQW%,((
(QKDQFLQJ$FFHVVWR)LQDQFH$)
(QKDQFLQJ$FFHVVWR0DUNHW$0
(QKDQFLQJ3URGXFWLYLW\DQG(IILFLHQF\3 (
LED planners should look at programs that would meet the requirements of the priority industries in
terms of materials, technology, finance, markets and policy support.
Table 13 shows a list of possible interventions to enhance the business and investment environment,
access to finance, access to markets, and productivity and efficiency of SMEs that can be incorporated in
the LED Strategic Plan.
57
PRIORITY STRATEGIES
(2)
RESPONSIBLE
GOVT OFFICE (3)
POTENTIAL
CHAMPIONS (4)
A. Individuals
1.
2.
x.
1.
2.
x.
1.
2.
x.
C. Sectors
1.
2.
x.
1.
2.
x.
D. Broader Systems
1.
2.
x.
1.
2.
x.
STRATEGIC LOCAL ECONOMIC DEVELOPMENT:
A Guide for Local Governments
59
60
GOALS
OBJECTIVES
PROGRAMS
PROJECTS
1.1 To increase
number of
livestock
and poultry
producers by
10% each year
Wao Livestock
and Poultry
Industry
Development
Program
/LYHVWRFNDQGSRXOWU\LQGXVWU\
enterprise profiling project
6WXG\7RXU
7UDLQLQJRI9LOODJHEDVHG$,
Technicians
*RDW'DLU\0RGXOH3URMHFW
2.1 To Increase
corn production
by 10% per
year
Wao Corn
Industry
Development
Program
2UJDQLF)HUWLOL]HU3URGXFWLRQ
Project
6HHGV3URGXFWLRQ3URMHFW
,QWHJUDWHG3HVW0DQDJHPHQW
Farmers Field School Project
3. To develop organic
fancy rice production in
order to conserve Waos
land resources
3.1 To increase
organic rice
production by
10% in 2010
Organic Rice
Production
Development
Program
2UJDQLF)DQF\5LFH3URGXFWLRQ
project
4. To develop Waos
rubber industry in order
to increase forest cover
and income of farmers
4.1To increase
rubber
production area
by 20% in 2010
Rubber Industry
Development
Program
5XEEHU1XUVHU\3URMHFW
5.1 To develop
2,000 hectares
planted to
HVCC by 2010
Wao HVCC
Production
Program
+9&&%DJVDNDQ&HQWHU
Project
+9&&6HHGOLQJV1XUVHU\
Development Project
6. To develop organic
fertilizer production in
order to provide farm
inputs that conserve Waos
land resources and provide
income opportunities for
the women sector.
6.1 To establish
one organic
fertilizer
processing plant
by year 2010
Wao
Commercial
Organic
Fertilizer
Industry
Program
&RPSRVWLQJ3URMHFWXQGHU
the Solid Waste Management
Program
2UJDQLF)HUWLOL]HU5DZ
Materials Production Training
Project
2UJDQLF)HUWLOL]HU3ODQW3URMHFW
Again, it is important that the LED stakeholders are involved in project selection. This way the potential
roles and contributions of the LGU and of relevant individual stakeholders, businesses or institutions,
in project implementation can be ascertained early on. Some projects may require private sector
investments with the local government providing enterprise organizing, linkages, training and other types
of assistance without necessarily infusing any equity capital to a business. In certain conditions, the LGU
STRATEGIC LOCAL ECONOMIC DEVELOPMENT:
A Guide for Local Governments
61
NATIONAL
Province
2UJDQLF)HUWLOL]HU
Production Project
x
x
6HHGV3URGXFWLRQ3URMHFW
,QWHJUDWHG3HVW0DQDJHPHQW
Farmers Field School Project
+9&&%DJVDNDQ&HQWHU
Project
x
x
&RPSRVWLQJ3URMHFWXQGHU
the Solid Waste Management
Program
x
x
x
+9&&6HHGOLQJV1XUVHU\
Development Project
2UJDQLF)HUWLOL]HU3ODQW
Project
62
PRIVATE
/LYHVWRFNDQGSRXOWU\
industry/ enterprise
profiling project
7UDLQLQJRI9LOODJHEDVHG
A.I. Technicians
LOCAL GOVERNMENT
Municipal
Barangay
x
x
x
x
63
x Will the impact on each of the basic needs or poverty dimensions be direct or indirect?
x What is the anticipated degree of impact of the program or project on each basic need: high, medium,
low?
x Will the benefits of the program or project be felt immediately, in the medium-term or the long
term?
Priority should be given to programs and projects with more direct, a higher degree and wider-reaching
impact on the ability of the community to meet its basic needs.
Step 8: Document the LED Strategic Plan and Integrate in LGU Plans and Processes
At this point, the LGU LED team has five important tasks:
a)
Put together the LED Strategic Plan according to an outline agreed upon by stakeholders(see
Box 3 for an example of the LED Strategic Plan Outline)
b) Plan for strategy presentation to and approval by the Local Development Council and Legislative
Council
c)
d) Prioritize the programs and projects identified in the LED plan in the LGUs 3-year Local
Development Investment Program (LDIP) and the Annual Investment Plan; and
e) Incorporate the LED plan and accomplishments in the LGU annual processes including the
preparation of the department or unit-level operations plans and budgets, the State of Local
Governance Reports (SLGR), Annual Reports and the LCEs State of the Municipality/City/
Province Address (SOMA/SOCA/SOPA)
In integrating the LED Strategic Plan, the planning team should also be able to make the links between
64
65
What are the institutional implications of the LED programs and projects, including internal
implications of the procedures and processes of the LGU?
h) What new departmental and staff coordination will be necessary to fulfill the project?
i) What are the new skills required for the implementation of programs and projects? (This is similar to
the LGUs Capacity Development Plan for ELA Implementation)
Step 2: Prepare Individual Project Action Plans
After program and project selection has been completed, it is necessary to detail the actions that need to
be undertaken to implement each project. Table 17 shows an example of a project action plan template
that can be used to organize project components and activities, the expected results, the target sector,
the possible stakeholders and their respective roles or contributions, the project manager, the source of
funding, and the timeframe, outputs and costs of each activity.
Table 17. Example of a Project Action Planning Template
Project Title:
LED Program Title:
Short Description of the Project (Project components and major activities):
Expected Results (Objectives):
Target individuals, groups, organizations and sectors, and/
1.
or broader systems:
2.
3.
4.
Stakeholders:
Contributions to the Project:
1.
2.
3.
4.
Project Manager:
Source(s) of Funding:
1.
2.
3.
4.
Activity
The individual action plans can then be discussed by the LGU LED team and select members of the
stakeholders group with the Local Finance Committee (LFC) for prioritization in the LGUs Annual
Investment Plan and for linking the actions plans to LGU budget. The LFC, together with the Local
Development Council (LDC), is a very important body in the LGU as it is in charge of setting up of the
level of annual expenditures and ceilings including that of the LED priority projects.
In making the case for LED programs and projects and seeking local government funding, it would be
STRATEGIC LOCAL ECONOMIC DEVELOPMENT:
A Guide for Local Governments
67
Organize the necessary policy, legislative and administrative support mechanisms needed to
implement the LED Strategic Plan. The LGU LED team and technical staff, in coordination with
the legislative council, should ensure that required legislations are included in the Legislative Agenda
of the Council. The LED team, together with the LCE and other elected officials, also need to
ensure that technical and legislative coordination and complementation are establish for programs
and projects that requires support at all levels (e.g., regional, provincial or barangay governments).
The political leaders can use their influence to initiate and build multi-level partnerships and networks
to support the LED process, and make the case for LED resource allocation (Swinburn et al., 2006).
They can engage the business sector and secure support from higher-level government agencies.
69
Regional Level
Provincial Level
L O C A L
L E V E L
A Project Manager is designated for each project. It is not necessary that the project manager
has a high level of expertise. However, he or she has to have a reasonable understanding of the
technical needs of the project. Political sensitivity, leadership and ability to handle stress are other
skills normally required of the project manager
b) Members of the TWGs, Project Implementation Teams or committees have a clear grasp of their
respective roles and responsibilities in the project implementation
c) A Business Plan is prepared for each enterprise development project
d) A memorandum of agreement (MOA) is forged with any institution the LGU wants to partner with
during project implementation. The LGU of Tugaya, Lanao del Sur, for example, has forged a MOA
with the Mindanao State University-Iligan Institute of Technology (MSU-IIT) whereby the latter will
provide technical assistance on the setting up and operations of a wood kiln dryer and metal foundry
for a period of five years
e) Regular project monitoring and evaluation is conducted through meetings, site inspections, and
progress reporting
70
71
Performance indicators and targets to measure progress towards the achievement of goals, objectives
and outputs developed in Stage 3
b) Data source to assess performance vis--vis target
c) Collection methods to gather data on each indicator
d) Frequency at which measurements will be made
e) Responsibility centers for monitoring progress towards each result
It can also include the frequency of reporting the M&E results and to whom. For example, M&E results
can be reported back to the LED stakeholders group during monthly or quarterly meetings as well
as to the Local Development Council. These can also be fed into the annual LGPMS database and,
consequently, to the State of Local Governance Report. Information on significant LED outputs or
outcomes may also be disseminated to the general public through the LCEs State of the Municipality/
City/Province Address (SOMA/SOCA/SOPA).
The LED M&E system should also build on and utilize existing monitoring and evaluation mechanisms
in the LGU. For instance, impact assessments can be assigned to the Local Planning and Development
Office together with the appropriate sectoral committee of the LDC. The LDCs Project Monitoring
Committee (PMC) can also be tapped for monitoring of LED projects funded by the LGU development
funds, ODA and national funds.
72
x
x
x
x
x
x
x
x
x
73
74
Chapter
LED in Practice
75
LED in Practice
This chapter presents some notable practices and positive results that were engendered in the application
of the LED process by selected LGUs. The first three cases follow the experiences of three LGUs in
the ARMM in the formulation of their LED strategies, their achievements to date (just one year into
the implementation of their LED plans) and the major factors that facilitated the LED process. The
last four stories feature local governments in other regions that also pursued economic development
initiatives through a strategic planning and participatory development process with assistance from other
development or foreign-funded programs. Hopefully, these success stories will motivate and inspire more
LGUs and LED practitioners to advocate LED both as a process and as a goal of good local governance.
Tugaya, Lanao Del Sur: Culture as an Engine of Local Economic Development
Tugaya is a small municipality along the western shore of Lake Lanao in the Province of Lanao del Sur,
with a population of 20,000 and a land area of a little over 4,000 hectares. The industry that fuels its
economy is its age-old arts and crafts that have been preserved and handed down through generations.
The whole town is virtually a workshop and a museum of Maranao arts and crafts all intricately and
painstakingly done using traditional tools and methods and indigenous decorative designs. In fact, due to
its cultural value that is fostered by the distinctive artistry and skills of its people, Tugaya has earned an
NCCA (National Commission for Culture and the Arts) nomination to the United Nations Educational,
Scientific and Cultural Organization (UNESCO) World Heritage List. Despite this recognition, Tugaya is
largely unknown in the country as the source of Maranao brasswares, handlooms, hand-carved wooden
chests (baor) and furniture which are being sold in native crafts and furniture stores.
Formulating and Implementing the LED Strategy
In 2006, through the LGSPAs LGU capacity-building project on facilitating LED, Tugaya completed its
LED Strategic Plan. As contained in the plan, the LGU envisions a prosperous and productive Tugaya
that is the center of Maranao Arts and Culture in the Philippines, as showcased by its metal and wood
craft industry. In its Local Economic and Competitiveness Assessment (LECA), the LGU LED Team,
together with the private sector and other LED stakeholders (including representatives from the Tugaya
Brassware Producers Association, Baor Producers Cooperative, Loom Weaving Association and the
Pandiaranao Womens Association), identified the following as the towns most competitive industries:
handloom weaving, iron works, brass wares, wood carving, and goldsmithing.
In 2007, LGSPA organized a study tour for the Tugaya LED team and private sector representatives to
LGUs in Luzon known for their metal and wood crafts. This opened more opportunities in terms of
networking and market and production expansion. It also turned out that Tugaya was the first LGU
to visit the NCCA. The commission was so impressed by Tugayas initiative that it offered to provide
technical and financial assistance for a cultural mapping to support its nomination as a World Heritage
76
LED in Practice
Site.
The LGU LED team then enhanced the wood and metal crafts industry development plan incorporating
the learnings and knowledge gained from the study tour. A multi-disciplinary committee composed of
representatives from POs, academic institutions and metal and woodcraft organizations was also formed
by the LGU to conduct the cultural mapping, i.e., the research and documentation of the Maranao
tradition and culture in the municipality.
In 2008, the LGU passed a municipal ordinance to preserve, conserve and protect all places, structures,
relics and the like that are part of the heritage of Tugaya, particularly its metal and woodcraft industry. It
also passed a municipal resolution declaring metal and wood craft as its priority product under the One
Town One Product (OTOP) program of the Department of Trade and Industry.
Of late, the LED stakeholders group developed a business plan for its metal and woodcrafts industry and is
in the process of establishing a multi-purpose wood kiln dryer, a melting furnace, and a blacksmithing facility
in order to improve productivity and product quality. Two more benchmarking tours were conducted
to observe the design and operations of such facilities in Mindanao. The LGU and the Mindanao State
University - Iligan Institute of Technology (MSU-IIT) also reached a Memorandum of Agreement whereby
MSU-IIT shall provide technical assistance in the design, setting up, and operations and maintenance of
the said facilities. However, as mandated by the municipal ordinance, sites that use traditional equipment
and methods will still be preserved.
Towards the end of the LED project, LGSPA assisted the LGU organize the artisans and craftsmen into
three cooperatives. The wood and metal craft cooperatives will operate their respective common service
facilities as a business. The handicrafts cooperative, composed mainly of women weavers, will set up a
microfinance facility and a consumer store, and undertake bulk buying of raw materials.
Prior to the LGSPA LED project, the LGU was focused mainly on expanding the market of its handicrafts,
particularly in the retail market. After undergoing the LECA and LED strategy formulation, the LGU
realized that the development of the industry required an integrated approach addressing all aspects of
an enterprise, including: a) ensuring a sustainable supply of raw materials through environmentally sound
utilization of resources and production methods, b) enhancing productivity and product quality through
new but appropriate technologies that keep cultural integrity intact, c) accessing or facilitating access
to financial resources such as the OTOP, d) building LGU brand recognition and breaking into new and
institutional markets such as hotels, restaurants and interior decorators, and, e) creating a business and
investment enabling environment including the provision of infrastructure and power and water utilities
required by the industry.
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LED in Practice
Factors that Facilitated the LED Process
The LED process by no means had a smooth start in Tugaya and only began to resonate to participants
when arts and culture, in which all of them had a common stake, was identified as the towns main economic driver. The participants also began to appreciate the process more when inputs and discussions
were translated or done in the Maranao language. Moreover, the nomination to the World Heritage List
produced a renewed sense of purpose to the LGU, private sector, academe and other government agencies. With this recognition, the LGU hopes to position the municipality as a cultural tourism destination
and attract more support and investments for the preservation and promotion of its arts and crafts. It has
already received an award for Culture-friendly Local Government from the Office of the President.
The arts have been instrumental in facilitating social cohesion, bringing tourism to unlikely places,
fostering a sense of belonging, and preserving collective memory (Creative City Network of Canada,
2005). Despite a long history of clan feuding and political rivalries, the arts and crafts have truly built
community identity and pride in Tugaya. In fact, due to a shared interest and passion for their art, the LED
process has brought together community members from different clans and of different political colors
(as evidenced by the profile of the LGU LED team, stakeholders group and PO members). With the
continued collaboration in the implementation of the LED strategy, Tugaya will be an excellent testament
that culture-based industries can also provide a strong impetus to achieving local economic development
and peace.
Wao, Lanao del Sur: Pursuing Food Security and Environmental Sustainability
through the LED Process
The municipality of Wao is one of the 37 municipalities of the province of Lanao del Sur and geographically
the farthest from the seat of the provincial government in Marawi City, which is 325 kilometers away via
the Bukidnon - Cagayan de Oro City - Iligan City route.
Formulating and Implementing the LED Strategy
In 2007, with technical assistance from the LGSPA, the Wao LED stakeholders completed the LGU LED
strategy that articulates their vision of food security and environmental sustainability and their industry
priorities: upgrading and increasing the local herd of cattle and carabao, goat and dairy production, organic
fertilizer production, organic rice production, rice and corn seeds production, and rubber tree farming.
(See Table 12 in Chapter 2 for a summary of the Wao LED strategy).
Livestock industry development was first on the LGUs LED implementation agenda. The LGU LED
team of Wao along with teams from two other LGUs in the ARMM went on a study tour organized by the
78
LED in Practice
LGSPA to LGU-managed livestock production centers and relevant government institutions in Mindanao.
As a result, Wao was able to enhance its LED strategy, refine its livestock industry action plan, and secure
technical support from the Philippine Carabao Center (PCC) at the Central Mindanao University (CMU)
in Bukidnon and from the livestock division of the Department of Agriculture - Region X in Cagayan de
Oro City. The partnership between LGU and PCC-CMU for the implementation of the Wao Livestock
Industry Development Program was formalized through a Memorandum of Agreement. Wao sent seven
technicians to the PCC-CMU for a month-long training on Artificial Insemination (AI) for large ruminants.
The PCC-CMU has also provided the LGU with AI equipment while the LGU has set aside budget for
liquid nitrogen and AI supplies. In addition, the LGU is conducting IEC activities and working with the
newly trained village-level technicians to promote the use of AI in large ruminants.
Technical Working Groups composed of members of the LGU LED team and the LED stakeholders
group are now finalizing business plans for the organic fertilizer production enterprise, goat production
enterprise and rubber production. The LGSPA organized a study tour for the team to visit organic fertilizer
producers in Mindanao and gain more knowledge about production and marketing. The organic fertilizer
enterprise will make use of compost from the LGUs materials recovery facility that has equipment to
convert the biodegradable component of collected municipal wastes into compost. The enterprise will
also be working closely with the peoples organizations and households in several barangays that have
already been taught vermicomposting by the Helen Keller Foundation. It will buy vermicast from these
households as feedstock to the organic fertilizer production. The LGU is studying two options as to the
enterprise organization: a public economic enterprise or a corporation wherein the LGU will own 40%
to 60% of the stock while the rest will be private investments.
Meanwhile, a supplemental budget for the operations of the goat production public economic enterprise
has already been approved by the Sangguniang Bayan. Goat housing facilities have already been set-up;
an order for 25 upgraded does and one Anglo-Nubian buck has already been booked with the CMU; and,
staffing and management group of the goat farm has already been drawn-up. As for rubber production,
a rubber nursery has been established and is being managed by the private sector.
Factors that Facilitated the LED Process
The integration of crosscutting themes, particularly poverty reduction, gender equality and environmental
sustainability, is evident in Wao LGUs priority programs and advances the principles of sustainable
development. To illustrate, the proposed organic fertilizer production ties with the LGUs concerns for
solid waste management, land conservation, job creation, and gender equality (since women are actively
involved in vermicomposting). The LGUs goat dairy production is envisioned to supply fresh milk to
the LGUs feeding program, an initiative to address the high rate of malnutrition in the locality, as well as
create an alternative source of income to livestock farmers. Goat raising and milk processing also provide
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LED in Practice
business opportunities for women. Rubber tree production, on the other hand, is not only a source of
income but can be used for reforestation purposes.
The momentum of the LED process was only disrupted once and this was around the time of the local
elections when a change in administration resulted in the shuffling of technical personnel from one
department to another. But despite the many local industry development action plans simultaneously
getting off the ground, the Wao LGU has been able to keep the LED strategy implementation moving due
to several factors:
6\VWHPVIRUSDUWLFLSDWRU\JRYHUQDQFHDUHLQSODFHIURPWKHEDUDQJD\WRWKHPXQLFLSDOOHYHO
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priority industries such as the PCC, CMU, and DA Region X
6XVWDLQHG FROODERUDWLRQ ZLWK SULYDWH VHFWRU EDQNV DFDGHPH 32V &62V IURP WKH SODQQLQJ WR
implementation stage
$GHGLFDWHG/*8/('7HDPDQGFUHDWLRQRIWHFKQLFDOZRUNLQJJURXSVIRUWKHFURSVOLYHVWRFNDQG
organic fertilizer projects. The Municipal Agriculture Office personnel in charge of crops and livestock
head the TWGs for the first two concerns. The Municipal Environment and Natural Resources Office,
on the other hand, is spearheading the organic fertilizer project
7KH9LFH0D\RUDQGWKH&KDLUSHUVRQRI6%&RPPLWWHHRQ$JULFXOWXUHDUHDFWLYH/('FKDPSLRQV
Thus, local funds for the LED projects are easily accessed
Upi, Maguindanao: Developing the Entrepreneurial LGU through the LED Process
Upi, a 3rd class municipality, is one of the more progressive municipalities in the province of Maguindanao
in ARMM. A community of tri-people, Upi is predominantly populated by Tedurays (44%), the native
inhabitant of the place, followed by the Maguindanaons (27%) and the Ilonggos and other settlers (17%).
It has a total land area of 74,295 hectares with 24, 350 hectares devoted to Forest area. It has a population
is at 51,650.
Economically, the municipality is known for its corn (18,268 hectares) and upland rice (6,724 hectares)
production. Based on its municipal agricultural profile, the area has 25,000 farmers with an average
annual income of P50, 000.00. Employment and business shares a small percentage. Native handicrafts
such as bags, baskets, decors made of rattan and bamboo craft are available and can be customized upon
request. Culturally, Upi promotes its tri-people approach to traditions through celebrations like the
Meguyaya Festival.
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LED in Practice
Formulating and Implementing the LED Strategy
The LED program of the municipality of Upi, Maguindanao started in 2005 during LGSP II. This was
followed up by LGSPA in 2008 with technical support for the implementation of the Upi LED Strategic
Plan. This particular assistance was aimed at a) deepening the Upi LED team and the Upi stakeholders
groups appreciation of the LED process and of the Upi LED program, b) building their knowledge and
skills in identifying priority industries or economic sectors, and c) enhancing their capacity to support and
assist local SMEs, especially in these priority sectors. The LED stakeholders group identified cereals,
high-value commercial crops, rubber, ecotourism and livestock as the municipalitys most competitive
industries. The group then undertook a series of planning workshops and study tours to enhance the
strategic plan and fine-tune individual project action plans.
While doing the value chain analysis of Upis corn industry, the LED stakeholders group discovered that
fertilizers, seeds, and pesticides accounted for 80% of the cost of local corn production. Of the PhP500
million annual value of corn production in Upi, PhP400 million was draining out of the local economy because
farmers were buying these inputs from outside sources. The LGU then saw an opportunity for import
substitution, job creation, and reduction in crop production cost in setting up a Halal organic fertilizer
enterprise. This enterprise eventually became a top priority in the LED strategy implementation. The
Upi LGU in partnership with the business sector has created the Upi Agricultural Ventures Corporation,
a SEC-registered company, that will own, operate and manage the organic fertilizer enterprise. The
business sector has invested PhP200,000 to the corporation while the LGU has put up PhP2 million for
the licensing fee of a particular organic fertilizer brand.
In 2007, the LGU created a Business Development Center (BDC), a unit under the Mayors Office, to
provide business development support services to entrepreneurs. LGSPA assisted Upi in the formulation
of the BDC operations manual and strengthened its capacity in mainstreaming gender equality in the
BDC services and the LED programs and projects. During a review of the BDC structure, systems
and operations plan in 2009, the Upi LED stakeholders group agreed that the BDC functions would
encompass the strategies for SME development (See Stage 4 of the LED Process), namely, business
investment and environment, facilitating access of Upi SMEs to finance and market, and providing support
services to enhance productivity including improvement of production of Upi SMEs. As of writing,
the BDC is working on establishing a one-stop office for business registration in partnership with the
DTI Maguindanao Provincial Office and organizing farmer-entrepreneurs, including the Upi Womens
Federation, as LGU partners in developing the ginger and other high value commercial crops production
and the organic fertilizer raw material production.
In addition, the LGU is negotiating with the Land Bank of the Philippines to establish the first ever banking
services in the municipality. It is also developing its tourism potential through the Tourism Council to
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LED in Practice
promote spelunking, waterfalls, and other outdoor challenge activities.
Factors that Facilitated the LED Process
Like other successful LED cases, the local chief Executive in Upi took primary responsibility for LED
planning and implementation. Guided by Mayor Ramon Piangs drive, leadership and analytical skills,
the LGU was able to make significant investments in the LED program in a short period of time. Other
helpful factors include the active participation of the private sector through the LED stakeholders group,
the LGUs judicious use of funds, and its strong linkages with higher levels of government.
Tuguegarao City, Cagayan: Enhancing the Business Enabling Environment for
Community-Based Enterprises
Tuguegarao City is the capital of the Province of Cagayan and the center of the Cagayan Valley Region,
located in Northeast Philippines. It is one of the cities included in Phase 2 of the City Development
Strategy4 (CDS) Program in the Philippines in 2002. The CDS is a participatory planning process that is
a combination of learnings derived from the CDS process developed by the World Bank and the Local
Environmental Planning and Management Program, which is based on the Sustainable Cities Approach of
UNDP. The objectives of the CDS are to:
a)
Guide the citys direction for economic development with the aim of creating more employment
opportunities;
b) Develop a consensus building process to establish the citys priorities, strategies and actions;
c) Assist the local authorities outline their financing and investment strategies; and
d) Build local capacity for more effective urban management.
4In the annual Cities Alliance
Public Policy Forum in 2007,
the League of Cities of the
Philippines (LCP) Secretary
General Mayor Mel Senen
Sarmiento of Calbayog City
said that Through the CDS,
cities have adopted a new
approach to managing their
cities. First and foremost is
the realization of the city as
an economic space. Cities are
identifying their competitive
advantages and maximizing
these in promoting local
economic
development.
(Retrieved
from
http://
www.lcp.org.ph/04142008_
PhilCities.htm).
82
Strategies Employed
In a speech given in a 2004 CDS Conference in Hanoi Vietnam, then Mayor Randoph S. Ting of Tuguegarao
shared that several tools were used in formulating their CDS. These include the Technology of Participation
(TOP), Strengths-Weaknesses-Opportunities-Threats (SWOT) Analysis, Priority Identification, Consensusbuilding, Strategy Formulation, Decision Analysis, Forecasting and Capital Investment Planning. He said
that CDS has taught the LGU to involve all stakeholders in developing their urban indicators, formulating
the City Vision, agreeing on strategies and priority projects, deciding on the best mix of resources and
reviewing their efforts together.
One of the LED programs adopted by Tuguegarao under its CDS is the One Barangay, One Livelihood
(OBOL) Program, which was inspired by the One Village, One Product Movement of the Oita Prefecture
STRATEGIC LOCAL ECONOMIC DEVELOPMENT:
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LED in Practice
of Japan. The program is aimed at enabling barangays to successfully operate economic activities, provide
gainful employment, boost the local economy, and create products that shall become their respective
trademarks.
In 2003, the LGU also launched the Tuguegarao City Technology and Livelihood Development Center
(TCTLDC), a knowledge and skills center in the countryside (Tuguegarao LGU, n.d.). It is tasked to
provide the needed technology and networks to transform Tuguegaraoeos into self-reliant and globally
competitive entrepreneurs. It offers the following services to the public:
x Technical Assistance (on-site trainings, post training services and techno forum)
x Business/Livelihood Technology Trainings (project development and packaging. Business counseling
and capability building
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LED in Practice
Naga City, Camarines Sur: Good Governance as Catalyst of Economic Growth
Naga City is located in the province of Camarines Sur, Bicol region (Region V) and is 450 kilometers
southeast of the National Capital Region (NCR). It has a total population of 160,516 as of 2007 (NSO
Census) and a land area of 8,448 hectares.
In the early 1980s, Naga City was not a desirable place to live in as gambling and other vices proliferated,
the city government was spending more than its resources and the quality of life was not getting any
better. This situation turned around when then 29 year-old Jesse Robredo was elected as city mayor in
the 1988 election (Mangahas, 2006).
Strategies Employed
Nagas achievements were not realized overnight. Its exemplary governance practices evolved over time
through the following initiatives (Mangahas, 2006):
Economic Governance - The city government propelled economic activities by instituting and nurturing
strong partnerships with organized sectors, encouraging peoples participation, taking the lead in strategic
planning, and empowering the private sector.
Improved Local Government Capability Personnel hiring and staffing is based on aptitude and
competence, not on patronage. A Productivity Improvement Program and a Merit and Promotion Board
were established to encourage innovation and productivity improvement.
Formation of the Metro Naga Development Council (MNDC) or Metro Naga The Council,
comprising of Naga City and 14 towns of Camarines Sur, is a mechanism that allows complementation of
limited resources and pooling of investment potentials and comparative advantages to ensure balanced
growth and sustainable development in the Metro Naga region. The city government of Naga served as
a competent and willing regional development catalyst by spearheading the formation of an economic
region out of disparate political units in the province.
Partnerships with the Private Sector - The city government encouraged private sector partnerships
by improving cost-efficiency in the construction of public works, practicing transparency in its operations,
and implementing other confidence-building measures.
Institutionalized Participatory and Inclusive Governance The city government organized and
authorized a Peoples Council (composed of accredited NGOs) to sit in every legislative committee and
local special body through Ordinance 95-092. It also published the Naga Citizens Charter that provides
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LED in Practice
step-by-step procedures for availing its 150 frontline services and has set up a website (www.naga.gov.
ph) that updates citizens on the citys finances, policies and activities.
Local Policies and Initiatives - By virtue of Ordinance No. 97-114, the city government grants incentives
to investors in preferred industries to generate jobs and promote balanced growth. The Investment
Promotions and Action Center implements the investment Boards objectives, markets Metro Naga as an
investment site, facilitates joint venture projects with local and external investors, and provides assistance
to investors.
Economic Planning and Analysis The Mayor transformed the planning process into one that is
participatory, need-focused, long-term and views the city as an economic space whose sustainability also
depends on conditions beyond its geographic environment.
Financing Development Development projects were financed from bank borrowings, mixed publicprivate financing, grants and local revenues (which account for over 40% of the citys total income).
Results Achieved
As a result, the city government income rose from $0.5 million in 1988 to about $6.0 million in 2001.
To date, Naga boasts of a dynamic economy made evident by its 6.5% average annual growth rate, an
average family income that is 126% and 42% higher than the national and regional averages, lower
unemployment rate of 5.2%, and a lower poverty incidence of 29% compared to 50% of the region. It
accounts for 21% of total investments in the Bicol region. It has garnered more then 100 international,
national, and regional awards. The most notable of which are being one of the Philippines most livable
cities (Interface Newsmagazine), one of four most improved cities in Asia (Asiaweek,1999), and having
one of the Top 10 Best Practices worldwide (Dubai International Award, 1998). Naga City is now one
of the countrys brightest economic spots, a model local government unit and a center for innovation in
local governance (Naga LGU, n.d.).
The Naga Governance Model has been tested and fine-tuned over the years and rests on three key
elements, namely: progressive development perspective, functional partnerships and people participation.
Growth-oriented and equity-building strategies were particularly employed to forge and nurture city
government and private sector partnership (Naga LGU, n.d.). Growth-oriented strategies promote
economic development and expand investment opportunities while equity-building strategies ensure that
the poor benefit from the fruits of development. These are service delivery mechanisms that fulfill the
promise of development for all, particularly the poorest sectors of society.
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LED in Practice
Baybay, Leyte: Setting the LED Direction through Participatory Economic
Planning5
Baybay is one of the 41 towns of Leyte Province. It has 92 barangays with a total land area of 46,050
hectares, making it the largest town in Eastern Visayas (Region VIII). Based on the 2007 NSO census,
Baybay registered a total population of 102,526. It is home to the world renowned Visayas State
University (VSU), the biggest agricultural school in the Philippines. It is an agricultural community with a
high potential for agro-industries. Specialty Pulp Manufacturing, the largest abaca pulp mill in Asia, two
coconut mills and a big activated carbon plant are some of Baybays
industry locators.
Strategies Employed
The local government unit (LGU) of Baybay believed that huge resources are required for local economic
projects to be successful. This mindset plus the traditional practice of implementing projects from a list
prepared and prioritized by department heads characterized the development outlook of the LGU prior to
the Department of Trade and Industry (DTI) and German Technical Cooperation (GTZ) interventions.
In 2005, consultation workshops were held to build a consensus on the economic issues, local needs
and doable strategies that would stimulate economic growth in the municipality. The participatory
planning process of the Local and Regional Economic Development (LRED) approach was introduced
to the participants who came from both public and private sectors. Emphasis on building private-public
partnerships, motivation and engagement of the stakeholders, encouraging learning and creativity, shifting
ways of thinking, building local ownership and securing buy-in of key stakeholders to actively cooperate
for a common economic good were emphasized.
This initiative was made possible through the Small and Medium Enterprise Development for Sustainable
Employment Program (SMEDSEP), a development cooperation project between the Republic of the
Philippines and the Federal Republic of Germany that aims to improve the Business and Investment
Climate for Small and Medium Enterprises (SMEs) in the Philippines, especially in the Visayas. SMEDSEP
is implemented in partnership with the DTI at the national, regional and provincial levels and the GTZ on
behalf of the German Federal Ministry for Economic Cooperation and Development (BMZ).
5This account is largely based
on the Small and Medium
Enterprise
Development
for Sustainable Employment
Programs
(SMEDSEP)
success story on Baybay
written by Ria Adapon (n.d.).
86
The participatory planning process was appreciated by the participants representing stakeholders from
the private sector, community residents, local partner NGOs and the local government. As a result, a
strong sense of ownership of the Local Economic Development (LED) Action Plan of Baybay emerged
and motivated the stakeholders group into action.
STRATEGIC LOCAL ECONOMIC DEVELOPMENT:
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LED in Practice
The LGU ensured the smooth implementation of the LED Action Plan by having four representatives
from the public and private sectors trained and coached by GTZ SMEDSEP and DTI on specific tools for
planning, implementation, monitoring and assessing the progress of the Action Plan and communicating
its results not only within the municipality but also to other areas in the Eastern Visayas Region. These
facilitators guided the local stakeholders in the LRED process with DTI and GTZ providing coaching
support. Mayor Jose Carlos Cari and Councilor Vic Veloso championed the process and their active
involvement facilitated the realization of the plan. Mayor Cari advocated the LRED in Knowledge Sharing
Fora and in Sensitizing Workshops in the Eastern Visayas. The LGU and private sector representatives
jointly monitored the progress of the Action Plan every month. The progress meetings, most often
attended by the Mayor, discussed key milestones, issues and next steps.
The LED Action Plan focused on tourism and investment promotion as its priority development areas.
The LGU reactivated the Tourism and Investment Council which established the Tourism and Investment
Promotion Office (TIPO). The position of Tourism and Investment Officer (TIO) was created and was
tasked to operate the TIPO. The TIO also acted as the LGUs focal person for the LRED initiatives closely
coordinating with the GTZ and the regional office of the Department of Tourism.
Results Achieved
Consequently, Baybay was recognized for its effectiveness in tourism and investment promotion through
its promotion materials, participation in outbound investment and benchmarking missions to Malaysia and
Singapore, and active participation to Tourism Fairs outside the Leyte Province. Better coordination with
the regional Department of Tourism (DOT) has likewise resulted to the inclusion of Baybay in the regions
promotional materials, activities and in the Tourism Map of Eastern Visayas.
The Baybay Tourism and Investment Promotion Office has also aggressively promoted the municipality as
a location for business and a tourist destination in its website and has established links directly with hotels
and tourism operators in the Visayas. Since 2005, approximately PhP 125 million was invested in Baybay,
a clear demonstration that Baybay has improved its business climate and institutional environment. As a
result, the Philippine Chamber of Commerce and Industrys Most Business Friendly LGU Award Program
cited LGU Baybay in 2006 for its efficient Investment Promotion.
While the LGU recognizes the quick wins, specifically in the areas of Tourism and Investment Promotion, it
has further taken the following steps in 2007 to sustain the gains: integrating the short term LRED Action
Plan to its Comprehensive Development Plan and applying the participatory planning approach of LRED
in all planning activities. The LGU is also committed to institutionalize the planning approach through
iterative capacity building, allocation of financial resources to sustain LRED initiatives and creation of
monitoring mechanisms.
STRATEGIC LOCAL ECONOMIC DEVELOPMENT:
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LED in Practice
Bohol: Local Economic Development (LED) through Investments Promotion and
Good Governance
Bohol is the tenth largest island in the country, located between the islands of Cebu and Leyte (Gawad
Galing Pook, 2001). It has a population of 1,230,110 (2007 NSO Census) and a land area of 4,117 square
kilometers. It consists of 47 municipalities and one city.
Bohol was one of the provinces that experienced severe unemployment and massive out-migration
due to lack of countryside opportunities. This led to a low population growth rate (average of 0.89%
yearly) (Gawad Galing Pook, 2001), underinvestment and brain drain. Then Governor Rene Relampagos
initiated the Bohol Investment Promotion Program (BIPP) to promote Bohol as an investment and
tourist destination; to encourage business and finance projects; involve citizens in policy formulation
on investment promotion; and establish and maintain an information base to aid policy formulation and
technical assistance.
Strategies Employed
A brief account of BIPCs humble beginnings was documented by Gawad Galing Pook (2001), as
follows:
1. Public Consultation -The provincial government with the assistance of the ARD-GOLD of the
USAID conducted a series of consultation-workshops from October 1995 to December 1996 using the
Technology of Participation. These were participated in by provincial and municipal officials, selected
national agencies, NGOs and private sector. Participants were clustered by municipalities based on the
grouping of the League of Municipalities. Determining the provinces preferred growth focus, the strategic
public and private investments and project requirements per growth focus were done. A Technical
Working Group (TWG) was created to define the direction of the province, followed by the formation
of the multi-sectoral Bohol Investment Promotion Advisory Group (IPAG) which took on the functions
identified by the TWG. The consultations identified three drivers of economic growth: eco-cultural
tourism, agro-industrialization and light manufacturing.
2. Creation of the Bohol Investment Promotion Center - The program capacitated the technical
support group called Bohol Investment Promotion team on investment promotion through cross-visits,
formal orientations on special skills, production of promotion collaterals and project packaging. The
provincial government provided office space, equipment and materials amounting to PhP1.4 million.
A series of Industry Assessment Workshops on the agro-industrial sector were also conducted that led
to the identification of nine priority agricultural sub-sectors. The Bohol Investment Promotion Team was
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LED in Practice
replaced by the Bohol Investment Promotion Center (BIPC), which is tasked to facilitate the immediate
setting up of investors projects. In October 1998, BIPC was created through an Executive Order by the
Provincial Governor. It was formally established on February 1999 by virtue of a Sangguniang Panlalawigan
ordinance.
The BIPC embarked on promotion activities such as materials production for the investors, infrastructuresupport organizations, government agencies and private sector; participation in travel marts, investment
exhibits, study and promotion missions to CALABARZON, Laguna, Cavite, United States and Osaka, Japan
to gain more insights on promotion and marketing, operation, and management. BIPC also developed a
website to provide access to international information-seekers.
3. Creation of a Livelihood Promotion Unit In March 2000, a Livelihood Unit was created under the
BIPC to respond to the needs of existing and would-be small entrepreneurs.
4. Adoption of the Bohol Investment Code The Sangguniang Panlalawigan adopted the Investment
Code that serves as a guide in the granting of fiscal and non-fiscal incentives.
5. Financing the Program The Bohol Investment Promotion Program was financed by the Provincial
Government from various sources.
Results Achieved
After 13 years of persistent participatory and transparent home-grown initiatives, Bohol has successfully
extricated itself from Club 20, i.e., the 20 poorest provinces in the country. Bohol has been a recipient
of various awards and citations for its exemplary performance in poverty reduction and economic
growth. In 2008, it was cited by the Konrad Adenauer Stiftung (KAS) for its excellence in governance
and sustainable development. Incumbent Governor Erico Aumentado was awarded a KAS Medal of
Excellence for piloting Bohols phenomenal growth and sustained development (Blanco, 2008a).
Gawad Galing Pook has been consistently giving out awards from 2000 to 2005 to the Provincial
Government of Bohol for its programs. It cited as Trailblazing Programs Bohols Investment Promotion
Program Providing Barangay Livestock Assistance for Income Generation and Sustainable Livelihood in
2000 and the Poverty Reduction, Peace and Development Program in 2005. Included in Gawad Galing
Pooks Top Ten Programs in the country were Bohols Cultural Renaissance: Towards Synergy of Heritage,
Arts and Eco-cultural Tourism Development in 2002; the Bohol Coastal Law Enforcement Council in
2003; and, Bohol Ecotourism Development Program in 2004 (Gawad Galing Pook, 2005).
Bohol has hugely attracted both public and private investors in the country and abroad. ODA, national
STRATEGIC LOCAL ECONOMIC DEVELOPMENT:
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89
government funding, private sector investments, and grants from foundations or NGOs have been
pouring in to finance and stimulate Bohols economic drivers. Funding for hard infrastructure such as
roads, bridges, international airport, irrigation, mini hydro-electric plant, school buildings among others
has been sourced out. Likewise, technical assistance, job placements, human resource development and
other soft infrastructure are being provided by foreign-funded programs and international agencies like
the ADB, WB, GTZ, WFO, UNWTO, PAHRDF, USAID, EU; the governments of South Korea, Austria,
Bulgaria, China; national agencies like the PMS, DPWH, NEA, DA, NIA, DepEd, DTI, DAR, DOH, DSWD
and DOST; and, NGOs and foundations.
90
Chapter
Lessons
Learned
documents the learning gained from the LGSP II and LGSPA LED
projects. These include strategies that work or do not, as well
as factors that facilitate or hinder the LED process. These
lessons are presented so that other LGUs can gain some
ideas on which approaches to avoid, adopt or modify
based on local conditions.
91
Lessons Learned
This chapter presents some insights drawn from the LGSP II and LGSPA LED experiences. It includes
the factors that contribute to or hinder the successful implementation of the LED process as well as the
strategies that were found effective and those that were not. These LED experiences offer the following
lessons that will hopefully prove invaluable in enhancing approaches and strategies in advocating and
facilitating the LED process.
1. The prospect of community wealth creation is the major selling point
that has motivated LGUs and stakeholders to buy into and commit to the LED
Process.
In all communities, especially where there is chronic inability to meet basic needs, the proposition of
generating jobs, creating wealth and, ultimately, reducing poverty by embarking on the LED process
appeals to government and ordinary citizens alike. These are the themes that resonate to all stakeholders
the poor and the vulnerable sector, civil society organizations, learning institutions, the business sector,
and all tiers of government. Some local leaders also recognize that a successful LGU-facilitated LED,
with its anticipated impact on the poorer and larger segment of the population, makes for good political
platform.
It is thus important that individuals and organizations advocating the LED process should be able to
communicate its connection to wealth creation, empowerment, sustainable development and other good
governance principles to be able to gain the attention and cooperation of LGUs and other stakeholders.
One way this can be concretely done is to make the links to economic and poverty data from the LECA,
the LGPMS and sectoral plans such as the Local Poverty Reduction Action Plan.
2. Any LGU can undertake the LED process.
The LED process can be done in or by any LGU, whether a municipality, city or province, and regardless
of income classification, as long as it is interested and willing to pursue local economic development
following the principles and procedures presented in this Guide. There are no other requirements or
criteria that an LGU should meet in order to begin the LED process or to qualify for technical assistance
from any program, institution or individual that provide capacity-building interventions to LGUs on LED.
3. A new initiative requires champions and new structures for implementation.
One of the immediate objectives of LED is to marshal the stakeholders and gain their acceptance and
cooperation to undertake the LED process. Championing this initiative primarily rests with the local chief
executive (LCE) who holds the greatest influence and authority among the local actors. Among LGSPA92
Lessons Learned
assisted LGUs, the ones that have made significant strides in LED are those with LCEs that have bought
into and shown commitment to the LED process. It is also essential to get the cooperation of members
of the legislature so that ordinances and resolutions toward a favorable business climate can be passed
and fund allocation for LED programs and project can be facilitated. LED champions may also come
from the private sector and the community. The more advocates, the greater the likelihood of success
in achieving the LED goals.
Developing systems and structures for LED implementation begins with the organization of the LGU LED
team and the LED stakeholders group. These structures provide the foundation for more formal and
long-term collaboration to include public-private enterprise partnerships among representatives of
the three economic leaderships (Figure 2) in carrying out LED programs and projects. It is also important
to note that the municipal LGUs in LGSPA areas appreciated and recognized structures formed through
participatory analysis and planning processes, such as the LED stakeholders group, than they do existing
but inactive local bodies that were mostly created simply to comply with a national law.
4. LED success and sustainability rests on a strategic and planned approach.
The foundation of a good LED program is a sound participatory planning process. LED stakeholders are
able to come up with informed and resolute decisions through a deliberate, organized and systematic
strategic planning.
Undertaking the Local Economic Competitiveness Assessment (LECA) or Stage 2 of the LED process is
critical to be able to formulate LED strategies that are appropriate to the conditions and responsive to
the issues in the locality. Recent studies also show that an areas competitive advantage is determined not
so much by one-shot, step-by-step planning but more so by an iterative process of self-discovery and
searching and learning consisting of both flexible planning and entrepreneurial risk-taking.
As shown in Figure 5, Examples of LGU Behavior Models in LED, a sustainable and purposeful LED
program or project is characterized by a high concern for both system (orderliness) and risk. A wellplanned LED stems from a highly systematic approach and an enthusiasm for innovation.
93
Lessons Learned
Figure 5. Examples of LGU Behavior Models in LED
TRADITIONAL LED
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5. There is not one exclusive approach for LGUs to facilitate LED. In fact, one of
the lessons from LED initiatives has been that duplication of initiatives is rarely
successful. Each locality is unique and LGUs are themselves entrepreneurial and
innovative.
Economic interventions should be customized according to the conditions unique to each target
community. Although two localities may have the same leading industries or resources, these industries
may differ in scale (e.g., volume of production and area covered), technologies used, access to support
facilities and markets, and other factors. LED strategies should take into consideration the physical,
natural, financial and human resource factors peculiar to each LGU.
LED programs proved to be successful in LGUs that are entrepreneurial and innovative. Such LGUs
promote competition between service providers. They empower citizens by pushing control out of
the bureaucracy, into the community. They measure the performance of their agencies, focusing not
on inputs but on outcomes. They are driven by their goals their missions not by their rules and
regulations. They prefer market mechanisms to bureaucratic mechanisms. They redefine their clients as
customers and offer them choices, e.g., between schools, between training programs, between housing
options. They prevent problems before they emerge, rather than simply offering solutions afterward.
94
Lessons Learned
They put their energies into earning money, not simply spending it. They decentralize authority and
embrace participatory management. And they do not simply focus on providing public services, but also
on catalyzing all sectors (public, private, and voluntary) into action (Osborne & Gaebler, 1992).
6. LED gains credibility when planned initiatives are immediately carried out.
After strategy formulation, it is necessary to immediately move to the implementation of priority LED
projects in order that the momentum and the energy created from the previous LED stages can be
carried over into implementation, and also for the LED process and its implementers to gain the trust and
confidence of stakeholders and the larger community. Concrete results early in the strategy execution
will ensure continued support and participation from local and external development partners. Pursuing
and sustaining LED then becomes high on the agenda not only of the LGU but of all LED stakeholders.
7. LED gives focus and direction to other programs of the local government.
All activities of the LGU influence the local economy. Social programs on health, education and
welfare as well as gender and development services impact the productive capacity of the labor sector.
Environmental projects protect and improve the localitys natural resource base that is necessary for
sustainable economic activities. Infrastructure development facilitates production and marketing of
goods. Having a LED strategy, however, provides the various LGU programs a clear basis and focus. For
example, identifying organic fertilizer production as a LED priority in Wao provided direction to the solid
waste management program of the LGU. Prioritizing the metal craft and woodcraft industry in Tugaya
led to the development of programs for biomass fuel production (for kiln drying and firing purposes) and
support infrastructure and underscored the need for sustainable forest management.
8. The benefits of LED can be effectively reaped when the partnership between
the local government and the community translates into concrete and day-to-day
actions the principles of participation, responsiveness, equity, accountability and
transparency throughout the LED process.
Any LGU committed to LED must put in practice the principles of participation, responsiveness, equity,
accountability and transparency.
For the LED process to be inclusive and participatory, the LGU must seek the broad representation of
the economic sector stakeholders to ensure that economic development strategies capture the interests
and have the approval of everyone concerned. The convergence of the stakeholders ideas, resources
and networks is critical in successfully pushing economic growth. It also ensures the responsiveness of
strategies, programs and projects to the needs and core competitiveness of the community. On the
STRATEGIC LOCAL ECONOMIC DEVELOPMENT:
A Guide for Local Governments
95
Lessons Learned
contrary, economic strategies that are left to the hands of a privileged and influential few promote elitism
and often fail.
Equity is crystallized when economic gains, privileges, rights and responsibilities are, as much as possible,
equitably distributed. Economic growth should not only be characterized by increasing total earnings in
the local economy (such as growth in the Gross Community Product) but also by a narrowing of the
income gap between the rich and the poor.
Accountability should also be established for every deliverable in the LED process in order to get things
done right, on time and within budget. That is why the roles, duties and responsibilities of the stakeholders
group, LGU LED team and TWGs should be clearly defined from the very start but modifications and
innovations can be done later or when necessary. Economic interventions can go to waste due to
unorganized and uncoordinated implementation.
No less important among these principles is transparency, which promotes mutual trust among stakeholders.
This entails instituting mechanisms for information-sharing, making available economic sector information
to the general public and clarifying government economic rules, regulations, and decisions. Transparency
mechanisms include regular LED program or project performance (including financial) reporting to LED
stakeholders and the Local Development Council, community feedback mechanisms, and participatory
decision-making and monitoring.
9. Analyzing LED strategies through the gender lens promotes womens
economic empowerment
Women play an important role in community building and local economic development. As cited in
Chapter 2, although more women than men have the propensity to start a business venture, more
women-owned enterprises fold prematurely. This phenomenon should be one of the concerns to be
addressed within the LED process. Gender equality should be analyzed in the LECA and espoused and
integrated in LED strategic plans. The LED process can serve as the springboard for womens economic
empowerment.
10. There is a need to ensure that the LED process is supported and that key
outputs are achieved.
In undertaking the activities in the LED process, specific LED technical expert maybe required to ensure
the accomplishment of the activity. For instance, based on the LGSPA experience LGUs need technical
assistance in determining their comparative advantage and in formulating strategies to harness this (tools,
information requirements, an entrepreneurial mindset, replicable practices, new models). LED experts
96
Lessons Learned
may come from government agencies (e.g., DTI), from the private sector (e.g. consulting firms or even
entrepreneurs), and from the academe.
Appropriate technical support is also needed in guiding the LGUs in various approaches in implementing
the LED Plan (start-up versus scaling up; including agricultural, ensuring an entrepreneurial and value
chain-oriented approach; opting for a strategic response: enabling or facilitative; if direct service provider,
with a clear exit strategy).
97
Reference List
Adapon, R. (n.d.) Success Stories: Managing the Promotion of
Capacities for Sustainable Development. Retrieved from
http://www.smedsep.ph/Download/SS%20LRED%20
v3%2027Nov07.pdf
Blanco, J. S. (2008a, October - November). KAS cites Bohol for
Excellence. The Capitol News. The official publication of the
Provincial Government of Bohol. 5 (1), p. 10. Retrieved from
http://www.bohol.gov.ph/downloads/october-november.
pdf
Blanco, J. S. (2008b, October - November). Guv assures no
casualty in Capitol reengineering. The Capitol News. The
official publication of the Provincial Government of Bohol. 5
(1), pp. 4, 8. Retrieved from http://www.bohol.gov.ph/
downloads/october-november.pdf
Creative City Network of Canada. (2005) Making the Case for
Culture - Building Community Identity And Pride. Vancouver,
BC: Author. Retrieved from http://creativecity.ca/makingthe-case/building-comm-identity-pride.pdf
Darling, D., Jr. (1991, May). Understanding Your Communitys
Economy. Community Development Series, L-775. Kansas
State University Agricultural Experiment Station and
Cooperative Extension Service.
Department of the Interior and Local Government, Philippines
(2008). Guide to Comprehensive Development Plan (CDP)
Preparation. Retrieved from http://www.dilg.gov.ph/
attachments/0000/1349/CDP_GUIDE_-_Updated.pdf
Fajardo, F. R. (1990). Economic Development (Revised Edition).
Navotas City, Philippines: National Book Store, Inc.
Fruth, W. H. (n.d.) The Flow of Money and Its Impact on Local
Economies. Retrieved from http://www.naiop.org/
governmentaffairs/growth/fruth_report.pdf.
Gawad Galing Pook (2001). Kaban Galing: The Philippine
Case Bank on Innovation and Exemplary Practices in Local
Governance. Volume No. 3: Transforming the Local
Economy.
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Naga LGU (n.d.) Naga: Innovations and Best Practices. Retrieved
from http://www.naga.gov.ph
Nagy, J. & Fawcett, S. (n.d.). An Overview of Strategic Planning or
VMOSA (Vision, Mission, Objectives, Strategies, and Action
Plans). Retrieved June 9, 2009 from http://ctb.ku.edu/en/
tablecontents/sub_section_main_1085.htm
Osborne, D. and Gaebler, T. (1992). Reinventing Government:
How the Entrepreneurial Spirit is Transforming the Public
Sector. Addison-Wesley, Reading.
99
ANNEX A
The LGU Mandates and Related Laws on LED
1. Local Government Code
Republic Act 7160 or the Local Government Code has given
the local government units (LGUs) more power and authority
to accelerate local economic development and improve the
quality of life in our communities. The following provisions are
the most relevant to LED:
SEC. 16
Every local government unit shall exercise its powers which
are essential to the promotion of the general welfare. Within
their respective jurisdictions, local government units shall
promote full employment among their residents
SEC. 17 (B)(2)(IX)
Public markets, slaughterhouses
enterprises.
and
other
municipal
SEC. 17 (B)(2)(XI)
Tourism facilities and other tourist attractions, including the
acquisition of equipment, regulation and supervision of business
concessions, the security services for such facilities.
6(&%,;
Investment support services, including access to credit
financing
6(&
Local government units may enter into joint ventures and
such other cooperative arrangements with peoples and nongovernmental organizations to develop local enterprise
to improve productivity and income, diversity agriculture, spur
rural industrialization and enhance the economic and social
well-being of the people.
6(&
A local government unit may provide assistance to such
peoples and non-governmental organizations, for economic,
socially-oriented projects to be implemented within its
territorial jurisdiction.
100
6(&
Functions of Local Development Councils.
2. The Social Reform and Poverty Alleviation Act
RA 8425 or the Social Reform and Poverty Alleviation Act
stipulates that it is the declared policy of the State to adopt
an area-based, sectoral and focused intervention to poverty
alleviation wherein every poor Filipino family shall be
empowered to meet its minimum basic needs of health, food
and nutrition, water and environmental sanitation, income
security, shelter and decent housing, peace and order, education
and functional literacy, participation in governance, and family
care and psycho-social integrity. It mandates LGUs through the
Local Development Councils (LDCs) to formulate, implement,
monitor and evaluate poverty reduction programs in their
respective jurisdictions, consistent with the poverty reduction
strategy of the national government.
3. Laws on the Development of Small and Medium
Enterprises (SMES)
0$*1$&$57$)2560$//(17(535,6(65$
The law requires the creation of the Small and Medium
Enterprise Development Council (SMEDC) so that there is
close coordination between government institutions involved
in SME development and the private sector for coherence in
both policy thrusts and implementation of action programs. To
address the problem of access to financing, the Magna Carta
requires all lending institutions, whether public or private, to
set aside at least 6% and 2%, respectively, of their total loan
portfolio for SME credit for a period of 10 years from August
12, 1997 to August 9, 2007.
.$/$.$/$15$
Assistance is provided to countryside barangay and business
enterprises through minimum regulation, and provision of
financing and other government services and assistance.
7+(201,%86,19(670(17&2'((2
SMEs that are engaged in the priority areas of the investment
priorities plan are entitled to the standard incentives under the
code such as income tax holiday for 4-6 years, tax and duty free
importation of capital equipment, additional deduction from
taxable income for labor expense, exemption from contractors
tax, unrestricted use of consigned equipment, and access to
bonded manufacturing warehouses. Additional incentives are
given to SMEs that locate in less developed areas. SMEs that
are registered with the Board of Investments (BOI) may avail
of technical and other support services provided by the agency.
The LGUs can also draw authority from the following DILG
Memorandum Circulars and the Joint Memorandum of DILG,
DBM and NCRFW when pursuing LED: (For a detailed
description, refer to the LGSP Resource Book, Local Economic
Development: Stimulating Growth and Improving Quality of
Life).
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for Local Governments
0& 12 2UJDQL]DWLRQ DQGRU 6WUHQJWKHQLQJ RI
Local Small and Medium Enterprise Development Councils
(SMEDCS)
0& 12 ,PSOHPHQWDWLRQ RI WKH /*8&OXVWHU
Development Approach Project (LGU-CLAP) as a Strategy in
the Adoption of One Village, One-Product Movement
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for Local Governments
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Program Action Officers and the Functions of the LPRAO
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Council
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Arts Councils
101
ANNEX B
Data for Local Economy Profiling
1. Demographic
1.1
Population
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3RSXODWLRQ*URZWKUDWHFRPSDUHZLWKRWKHUPXQLFLSDOLWLHVLQWKHSURYLQFHDQGLQWKHUHJLRQ
3RSXODWLRQ'HQVLW\FRPSDUHZLWKWKHRWKHUPXQLFLSDOLWLHVLQWKHSURYLQFH
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- 0-14 yrs old
- 15-64
- 65 above
2. Economic Profile
2.1. Primary Sector (Agriculture)
102
a. Crops (other than fruits and vegetables, e.g., rice, corn, coconut, sugarcane, cassava, coffee, rubber tree, etc.)
3URGXFWLRQKHFWDUHVSODQWHGWRWRWDOPXQLFLSDODUHDWRWRWDODJULFXOWXUDOODQGORFDWLRQEDUDQJD\V
average yearly volume and value of production (Compare with other municipalities in the province and in
the region), average yield per hectare (Compare with provincial or regional figures from the Department of
Agriculture Bureau of Agricultural Statistics)
3HU&DSLWD&RQVXPSWLRQ8VHDYHUDJHSURYLQFLDOSHUFDSLWDFRQVXPSWLRQDQGFRPSDUHLWZLWKUHJLRQDODQG
national. Important for staple food crops like rice, corn, and cassava.
1XPEHURIIDUPHUVILUPVHQJDJHGLQWKHSURGXFWLRQ
103
7D[DWLRQRIEXVLQHVVHV
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([LVWHQFHRIEXVLQHVVVXSSRUWQHWZRUNVDQGLQVWLWXWLRQVVXFKDV&KDPEHUVRI&RPPHUFH
/RFDOJRYHUQPHQWHFRQRPLFGHYHORSPHQWVXSSRUWVHUYLFHVRIIHUHGRUVXEVLGL]HGHJ%XVLQHVV'HYHORSPHQW
Services)
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assets, capacity of the structures, skills of key LGU officials on LED planning and implementation, existence of
approved CLUP).
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4. Infrastructure
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3URYLVLRQRIODQGUHDOHVWDWHRIILFHVSDFHIRUHFRQRPLFGHYHORSPHQWDFWLYLWLHVLQFOXGLQJPDUNHWVDQG&HQWUDO
Business Districts
$YDLODELOLW\DQGTXDOLW\RIURDGDQGRWKHUWUDQVSRUWPRGDOLWLHVWRQHDUHVWPDMRUPDUNHWVHJSRUWVDLUSRUWV
railroads, fishports, etc.)
$YDLODELOLW\RIWHOHFRPPXQLFDWLRQVLQIUDVWUXFWXUH
'HVFULSWLRQRIDJULFXOWXUHGHYHORSPHQWLQIUDVWUXFWXUHVXSSRUWHJLUULJDWLRQV\VWHPIDUPWRPDUNHWURDGVVRODU
dryers, water impounding system, public markets/trading post/food terminals, etc.)
5. Provincial, Regional, and International Factors - Presents Provincial, Regional and National information that
impact the local economy.
104
:KDWQHLJKERULQJPXQLFLSDOLWLHVDUHGRLQJLQWHUPVRIWKHLUORFDOHFRQRPLFGHYHORSPHQW
+RZQHLJKERUVDUHFRPSHWLQJ
+RZWKH\FDQFROODERUDWH
:KDWLVKDSSHQLQJDWWKHQDWLRQDOOHYHO
:KDWDUHSURYLQFLDOUHJLRQDODQGQDWLRQDOSURJUDPVWKDWKDYHORFDOLPSDFWSRVLWLYHRUQHJDWLYH
0DMRULQWHUQDWLRQDOJOREDOWUHQGVWKDWPD\LPSDFWWKHORFDODUHD
2'$VELODWHUDOSURJUDPVHWFWKDWKDYHORFDOLPSDFW
7KHRSSRUWXQLWLHVSURYLGHGE\QDWLRQDOGHYHORSPHQWSURJUDPV60('(93ODQ+9&&SURJUDPV%)$5SURJUDPV
PCA programs, National Dairy Development program, etc.)
105
106
107
108