ICMA International / Services / Expertise & Capabilities / Local Economic Development & Competitiveness

Local Economic Development and Competitiveness

Cities can be the engines that drive a country's economic growth, providing an environment in which private-sector jobs can be created and maintained, but they can also become barriers to economic growth and competitiveness if they do not understand the extraordinary tools that lie within their grasp.

ICMA has worked with local governments in the United States and internationally to develop strategies that allow them to compete for business in a local, national, regional, and global environment. In ICMA's experience, improving local economic competitiveness requires the active participation of local governments, which are critical to the expansion and creation of jobs in the private sector.

Because local governments are the intersection through which most business creation must flow, this regulatory and administrative gateway needs to be supportive and transparent, and local governments need to create an environment conducive to businesses. In addition, local governments are best positioned to create realistic economic development strategies grounded in the specific strengths of the community, and to mobilize resources for their implementation.

Working in developing countries, ICMA has designed an Economic Development Continuum wherein local governments serve as the nexus between jobs and basic services, adequate infrastructure, and financial management, and realize how these basic elements are interdependent and contribute to a local government’s ability to create and implement proactive economic development strategies.

Once local authorities appreciate this, they are able to place into context the basic improvements that are needed to be competitive. To foster this understanding, ICMA has developed a Local Economic Development Score Card and worked closely with local governments worldwide to assess and improve municipal service delivery and physical infrastructure, create the political will for change, identify business opportunities, and develop public-private partnerships that foster economic and community growth and create more competitive cities.

ICMA's comprehensive Community-Based Economic Development (CBED) approach fosters an open, democratic process for public-private cooperation and mobilizes all community resources, including land, labor, capital, and technology, to improve the competitiveness of the community in the global market. The CBED approach recognizes that economic development programs involve many sectors—housing, education, labor force development, infrastructure, finance, law, health, civil society, and private sector development—and allows for the efficient use of resources in a way that benefits businesses and citizens alike. ICMA’s programs have focused primarily on the following areas: strategic economic development planning; community involvement; marketing communities; support for local enterprises; labor force development and job creation; public-private partnerships; and skill building and certification.

Strategic Economic Development Planning

Sound planning is crucial to economic development success, and ICMA works with cities, nongovernmental organizations, the business community, and other stakeholders to help create strategic plans that are based on assessment of local assets and capabilities and identification of realistic opportunities.

  • ICMA conducted economic development training for urban councils and chambers of commerce in two districts in Sri Lanka. The training was based on a gap analysis of the legal and regulatory environment of the districts, and the goal was to identify improvements that were needed in order to help stimulate economic development. After conducting a SWOT analysis (strengths, weaknesses, opportunities, threats), participants identified strategies that would improve the partnership between the local government and the business community. They then began outlining a strategic plan and concrete action steps.
  • In South Africa, with ICMA assistance, the city of Johannesburg successfully developed a strategic plan and a business plan for an urban development corporation; KwaDukuza developed a “sustainable community” framework; and Pietermaritzburg-Msunduzi adopted an economic development vision statement.
  • ICMA helped five major cities in Lebanon apply the community based economic development model. With this assistance the cities developed viable LED strategies by conducting SWOT (strengths-weaknesses-opportunities-threats) analyses and assessments to identify the sectors and projects that offered the greatest potential to create new jobs and attract investment.
  • In Ecuador, ICMA provided technical assistance for the creation of an economic development strategy as well as training on facilitating interaction among stakeholders who would play a role in developing the strategy.
  • In Bolivia, ICMA assisted the municipalities of La Paz, El Alto, and Cochabamba in the development of urban LED strategies developed with private entities. The strategies were approved by the municipal councils after an ample consultation process that involved key stakeholders.
  • In Hungary, ICMA helped the cities of Szentes and Oroshaza analyze their community assets and identify paths for future development; helped the Kis Balaton Area Association complete a strategic planning process to promote interlocal cooperation for tourism development and enhance opportunities for citizen participation; and facilitated a strategic planning process for Zalalovo that mobilized community resources. As a result, the community entered into agreements with Western European investors and capitalized on the government’s decision to reopen an international rail line in the city.

Community Involvement

Local economic development initiatives enhance the well-being of the entire community—and the entire community has a stake in LED decisions. ICMA's approach to LED involves multiple players in the decision-making process.

  • In Bulgaria, Lebanon, and Kazakhstan, ICMA facilitated the creation of economic development advisory boards or councils allowing multiple stakeholders in the community to have input into LED decision making; participants included representatives from the city council, business, nongovernmental organizations, and citizens, and significantly contributed in the prioritization of LED projects.
  • Advisors from Kansas City, Kansas, helped the city of Karlovac, Croatia, develop an inclusive approach to growth by identifying issues that had hindered public participation in and support of development initiatives and helping the city improve channels of communication with citizens.
  • In Georgia, ICMA conducted two courses on Principles and Practices of ICMA's Community-Based Economic Development (CBED), which explored how CBED can integrate the basic principles of economic development with the active involvement of citizens, nongovernmental organizations, community-based organizations, and businesses.
  • Novgorod, Russia, gave neighborhood groups the opportunity to determine what improvements were needed in the economic and physical conditions of their respective city zones as a result of ICMA's work with the city to improve the administrative systems that support increased private investment.
  • In Bolivia, ICMA introduced a performance measurement system that promoted discussion between the communities and municipalities in more than 15 municipalities to prioritize LED-related resources in the municipal budget and to monitor the use of those resources. 

Marketing Communities

Whether the goal of local economic development is business attraction or increased tourism, marketing is a crucial part of the overall strategy. ICMA has helped cities worldwide identify their assets, implement "branding," and market themselves to potential investors.

  • With ICMA assistance, partner cities in Bulgaria established a consortium of municipalities (Bulgarian Partnership for Local Economic Development, BPLED) to lead joint marketing efforts, including a Web site (www.invest.bg) that serves as a source of information and a point of contact for prospective investors.
  • In addition, ICMA worked with all member cities of BPLED in Bulgaria to develop marketing materials. Haskovo's package entails a catalog of firms, a brochure, a DVD presentation, and a tourist map of the city, and Blagoevgrad developed and launched an electronic marketing profile and created a video promoting the city’s strengths and business opportunities.
  • Faced with a declining fishing industry and a corresponding loss of population, the port city of Nevelsk, in the Russian Far East, identified tourism as an opportunity for development and began marketing its unique natural, historical, and recreational resources with the help of expertise shared by ICMA partners; the result was an increased number of visitors.
  • ICMA designed and implemented the LED component of the Municipal Economic Growth Activity (MEGA) program in Serbia, which included identification of investment opportunities, information dissemination to potential investors, and other marketing and promotion outreach.
  • In Bolivia, ICMA worked with highland municipalities (Curahuara de Carangas and Turco) to organize municipal fairs to market regional and nationwide livestock production (llamas). The fairs were organized by the municipality with participation of the communities that represent the private sector in that area of the country.

support for local enterprises

Among the mechanisms for supporting local enterprises are incubators, industrial parks, business improvement districts, business visitation programs, and access to finance. ICMA has worked with cities worldwide to put these mechanisms in place to encourage business retention, expansion, and attraction.

  • In Jordan, the USAID Local Enterprise Support Project is creating an enabling environment for growth and innovation among micro and small enterprises. ICMA is supporting changes in national policy and regularions that will facilitate better local economic development and building local capacity to design and implement successful local economic development strategies.
  • Working with economic development specialists from Kenai, Alaska, the city of Bolshoy Kamen in the Russian Far East established a business incubator to help increase the number of small businesses in the city, create markets for their products, and expand the tax base; the incubator helped the city become self-sustaining to prepare for the day when it ceases to have the federal subsidies that come with its "closed city" status.
  • Also in the Russian Far East, the city of Dolinsk formalized a concept for a business park, identified a potential site, took steps to identify potential tenants, and initiated a public relations campaign.
  • As the city of Pazardjik, Bulgaria, prepared for the transition to a market-driven economy, ICMA and the city of West Bend, Wisconsin, helped Pazardjik develop a practical LED strategy and develop a 40-acre industrial park using innovative lease techniques; the program continued advising on the marketing strategy, and the park attracted more than $5 million in private investment, created 400 new jobs, and helped reduce the city's unemployment rate from 24 percent to 12 percent in four years.
  • A traditional center for precision machining, Panagyurishte, Bulgaria, worked with ICMA and the city of West Carrollton, Ohio, to assess its economic opportunities and arrived at the conclusion that the best way to capitalize on its traditional strength was to create a high-tech industrial park and market the city as a center for high-tech industry. The project built on existing relationships with local businesses to create a proactive growth strategy that serves both public- and private-sector interests.
  • ICMA worked with the city of Adama, Ethiopia, to develop an industrial district that will emphasize agro-processing, providing an opportunity for local producers to process their products and market them to other regions of the country.
  • In Bolivia, ICMA trained small businesses with the potential to perform municipal projects and then provided an opportunity for the businesses to participate in "reverse procurement fairs" where the municipality showcases its demand for goods, services, and small infrastructure projects, and local businesses bid on them.

Labor Force Development and Job Creation

When a private enterprise considers relocation or expansion, it needs to be assured that the new location has a reliable labor force. Local governments can effectively assist in matching the labor demand and supply in the market. Well trained, educated labor will help expand existing or attract new businesses, bringing new jobs to the community.

  • A worker training program was an important component of ICMA's Afghanistan Municipal Strengthening Program. It targeted youth—a strategy that provides labor for small infrastructure projects and jobs for residents and also helps connect youth to the areas in which they live.
  • In Bulgaria, ICMA facilitated the development of the Gabrovo Youth Information Center and improved access to education and employment services for young people.
  • ICMA worked with Pancevo, Serbia, to maximize the economic development potential of the Port of Pancevo, where it was estimated that 28,000 jobs could be created through build-out of the port and surrounding acreage.
  • ICMA supported the efforts of Kragujevac, Serbia, to create a stable local economic base. When the main industrial company in Kragujevac was transitioning from state to private ownership, 15,000 jobs were threatened. ICMA created a business support strategy with the city to cultivate small businesses and programs to provide assistance to startup small businesses that accompanied the government loans given to workers whose jobs were eliminated.
  • ICMA supported the creation of more than 3,500 jobs in Bulgaria as a result of a comprehensive LED program that helped the partner municipalities establish new economic development offices, train new LED professional staff, create business visitation and expansion programs and effective marketing strategies, develop business incubators and industrial parks, and develop an LED certification program. 

Public-Private Partnerships

Local economic development initiatives can be significantly strengthened by the synergy that results when public and private organizations establish effective mechanisms to work together. ICMA has facilitated public-private partnerships worldwide.

  • In Mangaung (Bloemfontein), South Africa, ICMA facilitated the development of a plan that focused public and private tools and methods on the development of an industrial corridor to create jobs, public infrastructure improvements, and new and rehabilitated housing and retail opportunities.
  • Working closely with the city of Johannesburg, ICMA developed the framework for an Urban Development Corporation, called the Johannesburg Development Agency (JDA) responsible for directing the economic revitalization of the city. Specific components of the JDA design included a rationale for the establishment of the JDA, visioning documents, a three-year business plan, Johannesburg city center performance indicators, Johannesburg audit of city center cultural assets, and a financial plan.
  • In Bulgaria, with ICMA assistance, Stara Zagora formulated a new downtown development plan that featured public-private partnerships to encourage and control development and concessions by private developers to benefit the community at large; Blagoevgrad developed a public-private partnership model for operating an indoor market; and Gabrovo developed contracts between the city and three private firms for the construction of cardboard items, a café, two shops, and kiosks.
  • ICMA helped the government of Jamaica, the city of Kingston, the Jamaica Chamber of Commerce, and other public- and private-sector stakeholders articulate a clear vision for using World Cricket Cup 2007 to spur development and obtain a commitment of resources from the private sector, prioritize activities and projects, and create and train a committed management team that ensured implementation of the strategy.
  • In Bolivia, ICMA promoted tourism development committees at the municipal level in the Chiquitania region in the state of Santa Cruz that included the participation of the private sector, municipalities, and association of municipalities (mancomunidad de Chiquitania). The committees played an important role in the application of national and regional policies at the local level to increase infrastructure standards to market the area’s potential internationally.
  • Also in Bolivia, ICMA retained private consulting firms and engaged the chamber of commerce in the development of urban LED strategic plans for three of the five biggest cities of the country (El Alto, La Paz, and Cochabamba). The private contractors were selected through open competition and developed the plans under the guidance of the municipalities.

Skill Building and Certification

Developing professional LED staff at the local level is a critical need for most municipalities. To fill this gap, ICMA has developed comprehensive training courses, a workbook on Community-Based Economic Development (CBED), and LED Certification Programs. The LED training and skill building activities help ensure the long-term impact and sustainability of the LED initiatives ICMA has supported.

  • ICMA helped design and delivered a comprehensive LED training course for 10 Serbian municipalities as part of a program to streamline the environment for private investment and enterprise growth and develop LED capacity.
  • In the Democratic and Effective Municipalities Initiative (DEMI) in Kosovo, ICMA engaged economic development staff from U.S. cities to share their expertise by providing evaluations, recommendations, and training for Kosovo cities. A study tour showcased successful U.S. practices, and U.S. partners worked with local officials to finalize local development plans and strengthen the role of local government in LED by building staff capacity and development methodologies.
  • In the Russian Far East, ICMA trained more than 150 municipal officials in basic principles of effective municipal economic development, community action planning, business development, and creative marketing.
  • ICMA developed a comprehensive LED Training Curriculum, and established and worked with the Bulgarian Partnership for Economic Development, a consortium of more than 50 Bulgarian cities, to design and implement a Certification Program for LED Professionals and a two-level "Ready for Business" Certification Program for municipalities.
  • In Georgia, ICMA conducted two courses on the Principles and Practices of Community-Based Economic Development (CBED), which explored how CBED can integrate the basic principles of economic development with the active involvement of citizens, nongovernmental organizations, community-based organizations, and businesses.
  • ICMA implemented the Local Economic Development (LED) Speaker Series in partnership with the USAID Urban Programs Office. USAID staff and implementers learned from ICMA's member-practitioners about the critical aspects of LED and its applications in developing and transition country contexts with an emphasis on the cross-cutting nature of LED and opportunities for cross-sectoral synergies and collaboration.
  • USAID and ICMA co-sponsored the Local Economic Development in Europe and Eurasia: Strategies that Work workshop to take stock of USAID regional experience with LED and translate it into useful recommendations for future LED programming. ICMA framed, designed, and facilitated a four-day workshop for 60 regional USAID staff and implementing partners to share experience, results, and tools on LED programs and to discuss opportunities for greater synergies between USAID strategic objectives and sectors on LED related programs and projects.

Related Projects

Sustainable Urban Management (SUM) II

Strengthening Urban Resilience for Growth with Equity (USAID/SURGE)

Municipal Economic Growth Activity

Jordan Local Enterprise Support Project

Lebanon Local Economic Development Program

Facilitating Economic Growth

Regional/Municipal Services Strengthening Project

Democratic and Effective Municipalities Initiative

Karlovac - Kansas City, KS (CityLinks)

Adama and Addis Ababa - Portland, OR (CityLinks)

Veliko Turnovo - Golden, CO (Resource Cities)

Pietermaritzburg-Msunduzi - Hampton, VA (Resource Cities)

Pleven - Charlottesville, VA (CityLinks)

Rovinj/Umag - Port Townsend, WA (CityLinks)

Nis - Columbus, OH (Resource Cities)

Bukittinggi & Yogyakarta - Savannah, GA (CityLinks)

Silistra - Kettering, OH (Resource Cities)

Haskovo - Abington, PA (Resource Cities)

Blagoevgrad - Auburn, AL (Resource Cities)

Stara Zagora - Durham, NC (Resource Cities)

Gabrovo - Portage, MI (Resource Cities)

Hai Phong - Seattle, WA (Resource Cities)

Bulgarian and US Cities - Consortium for Local Economic Development (Resource Cities)

South Africa Cities Network - Virginia Beach, VA (CityLinks)

Russian Far East (RFE) - Alaskan Communities (CityLinks)

Yogyakarta - Savannah, GA (Resource Cities)

Pancevo - Cincinnati, OH (Resource Cities)

Bulgarian and US Cities - Local Economic Development Consortium Expansion (CityLinks)

Kragujevac - Springfield, OH (Resource Cities)

Razgrad - Brunswick, OH (Resource Cities)

Pazardjik - West Bend, WI (Resource Cities)

Rousse - Duluth, MN (Resource Cities)

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