JMS_What is PACA - Local Economic Development Network of

Stimulating Local and Regional Economic Development

A Summary of PACA Christian Schoen Jörg Meyer-Stamer

Types of initiatives to stimulate local/regional economic development  improvisation / fragmentation of activities conducted by various organizations  one big project = fixed idea  strategic planning  Participatory Appraisal of Competitive Advantage (PACA)

What is Participatory Appraisal of Competitive Advantage (PACA)? Participatory

 Involve local stakeholders  Motivate local stakeholders to take an active role in an LED initiative  Transfer know-how to local stakeholders and businesses

Appraisal of

 Do a quick scan of the local economy  Assess and refocus ongoing local economic development activities

Competitive Advantage

 Identify strengths, skills, talents and opportunities  Identify business and LED opportunities

PACA is an activity ...  ... which seeks answers to a critical question: how can the local economy, by means of collective action, create a competitive advantage?

What is a local economy? For instance, it may be like this: Farmers and small food processors Wood value chain Textile + garments value chain

An integrated furniture cluster A garment cluster A large metalworking company Regional service providers: • Health care • University • Wholesale trade Local producer services: IT, transport, construction, ... Local consumer services: Retail, beauty, ...

Global buyers Training institutions Business promotion Finance institutions Government

What is Local Economic Development (LED)? Activities by  local government  local business associations  local companies  other stakeholders which  remove bureaucratic obstacles and transaction costs for local firms  strengthen the competitiveness of local firms  create a unique advantage for the locality and its firms

How does local economic development relate to other activities? Local development Local economic development

Infrastructure

Community development Employment creation

Transport

SMME SME promotion development

Energy

Investment promotion

Technology

Health

Poverty alleviation

Schools

Water / sewage

Skills development

Housing Urbanization Education

Leading principles in local economic promotion  Creating a specific locational advantage  Strengthening strengths, dynamizing existing potentials -- instead of fruitlessly addressing the biggest possible challenges  Networking among local firms and between firms and supporting institutions to create collective efficiency and effective markets  Active integration into international value chains Build on locally available resources Do something instead of writing a strategy document Go for quick, visible impact

What is the objective of PACA?  Identify, with a rapid appraisal, the main strengths and weaknesses of the local economy and its main sectors (duration: 1 - 2 weeks)  Identify options for practical activities to strengthen the competitiveness of firms -Criteria: – feasible with local resources – quickly implementable (starting next week) – quick, visible results (with 3 months)

Who is involved in a PACA?  A “Champion” who suggests and coordinates the PACA – provincial or local government agency, Chamber, NGO, somebody else  Other local organizations who take an active role – financing – making staff available for the PACA Team  The PACA Team  Various local stakeholders who participate in the kick-off workshop, interviews, mini-workshops and the presentation

What is the PACA Team?  1 - 2 external consultants who are familiar with the PACA method and LED – to introduce a fresh view at the local reality – to transfer their know-how to local members of the team  3 - 5 local members – for instance: professionals from the local business promotion agency, the local Chamber, the local university – not too young, too junior – with experience in economic promotion and in dealing with private business

What is the sequence of activities in a PACA?

Preparation: Kick* Advance off info work* Hypotheses shop

Interviews

Mini-workshops

FindingsWorkshop: Elaboration of Diagnostic + Proposals

Fieldwork (1-2 weeks)

PACA-Exercise (2-3 weeks)

PACA-Project

Presentation of Diagnostic + Proposals

Implementation

What about the fieldwork? Formats:  Qualitative interviews (“conversation”)

 Mini-workshops

Tools:  Guideline (always)  Mapping (sometimes)  Life-line (sometimes)

    

Diamond Five Forces Transaction Matrix SWOT Metaplan to define possible action – if participants are strongly motivated

Diagnostic and proposals  Results workshop to elaborate diagnostic a proposals = 1-2 day exercise of the PACA Team  Immediate presentation of findings to local audience

Elaboration of diagnostic and proposals

What is the immediate result of a PACA?  A diagnostic of the local economy  A set of proposals for practical activities – to strengthen the local economy – to stimulate the competitiveness of companies – to create new business opportunities  Numerous local stakeholders who have a clearer idea about Local Economic Development

What about the follow-up?  immediate workshop with local stakeholders to define priorities, activities and responsibilities for implementation and monitoring  implementation of activities by local stakeholders  workshops for evaluation and definition of further activities, possibly facilitated by external consultants

Implementation  creation of working groups – for given sectors – around project ideas  working groups initially operate independently  coordination between activities – initially informally – later, as complexity increases, via a Stakeholder Forum or similar fora

What again was the basic idea of Local Economic Development?  Create a business-friendly environment  Improve the quality of the location for firms  Stimulate upgrading in companies – through inter-firm learning – through support in fields like training, management, technology • refocus and strengthen supporting institutions • stimulate closer interaction between companies and supporting institutions  Attract new companies, stimulate entrepreneurship

Understanding local competitiveness: Michael Porter‘s „Diamond“ Main companies and rivalry

Supporting institutions Factor (input) conditions * training * technology * finance * infrastructure

* A local context that encourages appropriate forms of investment and sustained upgrading * Vigorous competition among locally based rivals

Related and supporting industries * A critical mass of capable local suppliers * Clusters instead of isolated industries

Demand conditions * A core group of sophisticated and demanding local customers * Unusual local demand in specialized segments that can be served globally * Customers whose needs anticipate those elsewhere

Assessing the Local Economy of Lukhanji Municipality What are the Strong and the Weak Points of the Local Economy / Main Sectors in Lukhanji ?