I.
A WHAT IS LED
• 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). Offers an
alternative approach that aims to fill in the gaps of the previous initiatives.
• 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.
• 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.
• 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.
I.B. Goals and Principles of L.E.D.?
• improves the situation of a community not just economically, but as a strong
functioning community itself – capacity building can create jobs, increase income,
and enhance infrastructure. LED also builds the capacity of communities to
become fundamentally better able to manage change.
I.C. LGU Mandates and Related Laws on LED
Ra 7160 LOCAL GOVERNMENT CODE OF 1991
- It provides for a more responsive local government structure instituted through a system
of decentralization whereby Local Government Units are delegated more powers,
authority, responsibilities and resources.
RA 8425 – SOCIAL REFORM AND POVERTY ALLEVIATION ACT
– THE LGU shall be responsible for the formulation, implementation, monitoring and
evaluation of the National Anti-Poverty Action Agenda in their respective jurisdictions.
RA 6977 - AN ACT TO PROMOTE, DEVELOP AND ASSIST SMALL AND MEDIUM
SCALE ENTERPRISES THROUGH THE CREATION OF A SMALL AND MEDIUM
ENTERPRISE DEVELOPMENT (SMED) COUNCIL, AND THE RATIONALIZATION OF
GOVERNMENT ASSISTANCE, PROGRAMS AND AGENCIES CONCERNED WITH
THE DEVELOPMENT OF SMALL AND MEDIUM ENTERPRISES, AND FOR OTHER
PURPOSES.
R.A. 6810 or Kalakalan 20
, a law which gives exemptions and benefits to Countryside and Barangay Business
Enterprises. This law proves that the country’s elected representatives are sensitive to
the needs of the people and are willing to respond to those needs.
Republic Act No. 7882
An act providing assistance to women engaging in micro and
Cottage business enterprises, and for other purposes. — it is hereby declared to
be the objective of this act to. Provide all possible assistance to filipino women in
their pursuit of owning, operating and Managing small business enterprises.
EO 226 – OMNIBUS INVESTMENT CODE
1. The State shall encourage private Filipino and foreign investments in industry,
agriculture, forestry, mining, tourism and other sectors of the economy which shall:
provide significant employment opportunities relative to the amount of the capital being
invested; increase productivity of the land, minerals, forestry, aquatic and other resources
of the country, and improve utilization of the products thereof; improve technical skills of
the people employed in the enterprise; provide a fountain for the future development of
the economy; meet the tests of international competitiveness; accelerate development of
less developed regions of the country; and result in increased volume and value of exports
for the economy.
2. The State shall ensure the holistic development by safeguarding the well-being of the
social, cultural and ecological life of the people. For this purpose, consultation with
affected communities will be conducted whenever necessary.
3. The State shall extend to projects which will significantly contribute to the attainment
of these objectives, fiscal incentives without which said projects may not be established
in the locales, number and/or pace required for optimum national economic development.
Fiscal incentive system shall be devised to compensate for market imperfections, to
reward performance contributing to economic development, be cost-efficient and be
simple to administer.
4. The State considers the private sector as the prime mover for economic growth. In this
regard, private initiative is to be encouraged, with deregulation and self-regulation of
business activities to be generally adopted where dictated by urgent social concerns.
5. The State shall principally play a supportive role, rather than a competitive one,
providing the framework, the climate and the incentives within which business activity is
to take place.
6. The State recognize that there are appropriate roles for local and foreign capital to play
in the development of the Philippine economy and that it is the responsibility of
Government to define these roles and provide the climate for their entry and growth.
7. The State recognizes that industrial peace is an essential element of economic growth
and that it is a principal responsibility of the State to ensure that such condition prevails.
8. Fiscal incentives shall be extended to stimulate the establishment and assist initial
operations of the enterprise, and shall terminate after a period of not more than 10 years
from registration or start-up of operation unless a specific period is otherwise stated. The
foregoing declaration of investment policies shall apply to all investment incentive
schemes.
I.D. LED operates on several principles:
1. promotes equitable and sustainable economic growth.
Equitable = opportunities to job creation are open to both men and women of working
age.
Sustainable = 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.
2. 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.
3. private sector = 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.
I.E. 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.
• Local Government Units
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 = formulates relevant and supportive policies and
regulations, provides incentives, and works for the stability of peace and
order.
• Private or Business Sector
micro, small, medium and large-scale enterprises. they are tasked to scan
and seize opportunities, take risks, develop markets and create economic
value.
• 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 Society Organizations (CSO’s)
non-government organizations (NGOs) and people’s 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 Institution
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
II. 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. it is important to have an
appreciation of how the local economy works and the factors that determine economic
growth. As used in this Guide, the local economy refers to the geographic area within a
political unit which could be a province, city or municipality.
II.A. How a Local Economy Work
• A local economy is a geographic area where people predominantly live and work
and also earn and spend (Fruth, W., n.d.).
II.B. FUNDAMENTAL COMPONENTS OF THE LOCAL ECONOMY?
five fundamental components of the local economy
1. Labor = as a factor of production, pertains to the community’s most precious and
abundant resource – its workforce.
2. Technology = refers to better techniques or methods of production. The
development of a new technique is an invention and its application to production
is called innovation. Technological advances impact the local economy by
changing the nature of products and production techniques and improving
productivity so that the economy remains competitive. Industry and business have
become so knowledge-driven that the cost of products, particularly those requiring
advanced technology, are driven by investments on knowledge or research rather
than by actual production costs.
3. Infrastructure = are large-scale public systems, services and facilities that are
necessary for economic activities, including power and water supplies, public
transportation, telecommunications, roads, schools, training and research centers,
and health care facilities.
4. Financial Capital = fuels businesses. The first type is debt which is the lending or
loaning of money with interest. It involves minimal risk to the lender because it is
being secured by requiring collateral from the business or its owner. It requires
regular payments of the loan principal and the interest. The second type of financial
capital is equity which is money invested without interest. It involves a higher risk
since it is unsecured by assets. In return for his or her investment, the investor
acquires shares of ownership and sometimes is involved in the management of
the business
5. Leadership = These are the
local government or political leadership,
regulates the environment, provides or facilitates economic development
incentives and programs, develops and manages human and financial resources
and provides basic infrastructure.
the business community leadership, and the
s represented by the industry players, the Small and Medium Enterprise
Development Council (SMEDC) and the Chamber of Commerce, if any. They take
the lead in creating wealth by generating marketable goods and services.
professional leadership
are those that provide technical assistance (on small and medium enterprises,
business planning, feasibility studies) such as LED and business consultants,
Department of Trade and Industry (DTI) specialists, economic agencies, academic
institutions, and other organizations with economic development mandates.
INTEGRATING THE LED IN LOCAL GOVERNMENT PROCESS
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.
STRATEGIC PLANNING FOR LOCAL ECONOMIC DEVELOPMENT? A LED
Strategic Plan is an overall plan which clarifies the process of building a local
foundation for economic development.
III.A. When does an LGU do the Strategic LED Process?
LGUs in the Philippines are mandated to prepare two major plans – the
Comprehensive Land Use Plan (CLUP) and the Comprehensive Development
Plan (CDP). The CLUP is a long-term plan that outlines strategies for managing
the local territory in terms of its physical land use. The CDP, on the other hand, set
out the vision, goals, objectives, programs, projects and activities relevant to five
development sectors, namely, social, economic, infrastructure, environmental and
institutional.
is a systematic process of defining a common direction and making decisions on
allocating resources to pursue this direction. It identifies important issues and how
to resolve them and implies forward thinking and anticipation of the future. It is a
cyclical and dynamic process that requires monitoring, modifying, and periodic
updating.
III.B. The Five-Stages of Strategic LED Process
• Stage 1: Organizing the LED Effort
• The main activity here is organizing institutional arrangements and stakeholder
involvement to successfully develop and implement a LED strategy. At this stage,
an LGU LED team is created to provide leadership and establish systems and
structures in undertaking the LED process.
Stage 2: Doing the Local Economy and Competitiveness Assessment (LECA)
• is the foundation of a solid LED strategy. In the context of the LGSPA experience,
the LECA is a valuable process in the LGU specifically in the economic sector
planning and in identifying the industry sector that would contribute to the wealth
creation program of the LGU. The LECA is anchored on the value chain and
industry competitive assessment.
• Stage 3: Formulating the LED Strategy
the LGU LED team together with the LED stakeholders group develops the LED
Strategic Plan in order to set out the economic future of the locality and to address
the issues identified in the LECA. The LED Strategic Plan has following key
elements: vision, goals, objectives, programs and projects.
• Stage 4: Implementing the LED Strategy
• For the LED process to gain credibility and for the LGU and other LED stakeholders
to demonstrate their commitment to this endeavor, implementation should be
carried out immediately after the LED Strategic Plan is completed.
• Stage 5: Reviewing the LED Strategy
• The implementation of the LED strategy should go through a more rigorous annual
assessment. This review should make use of established monitoring and
evaluation indicators of the local economy and resources available for the strategy
effort.
