According to the International Labor Organization, local economic development is defined as a development process that promotes partnership agreements between private and public actors in a given territory, allowing the design and joint implementation of a common development strategy and the use of local resources and comparative advantages.
Local economic development has become a fundamental axis in the social and urban policy agenda, distancing itself from its previous position as a secondary policy. Currently, it is recognized as a key strategy to promote sustainable growth in cities and territories.
This change in focus has emerged in response to a series of challenges and transformations, both globally and locally. The emergence of economic crises, national policies not adapted to the real needs of society, and institutional decentralization processes have unleashed a series of demands from local communities, while increasing the responsibility of local and regional governments in terms of attracting investments, generating employment and improving the quality of life of its inhabitants.
As a result of a series of factors that have increased territorial disparity in several countries – such as changes in the labor market, the informal economy and the erosion of traditional sources of employment – the importance of adopting participatory policies that respond to the specific needs of local communities.
And a current context of polycrisis marks a moment of reflection around the development paradigm and priorities such as employment and, more generally, in the search for instruments that allow generating and managing local economic development policies.
Thus, local economic development emerges as a fundamental strategy to take advantage of the unique advantages and distinctive characteristics of each territory, with the purpose of strengthening its economy and generating employment more effectively. By focusing on development at the local level, these policies can better adapt to the needs and potential of each community, which contrasts with national measures that often do not consider regional particularities.
The implementation of decentralization policies provides a unique opportunity to boost the growth of local economies and connect them with value chains and markets both nationally and internationally. This decentralization not only encourages greater coherence between policies at the national and local levels, but also grants greater autonomy to local authorities to make decisions that better fit the needs and realities of their communities.
An effective approach in this regard can boost job creation, reduce social inequality and facilitate access to information for investors, thus promoting greater private investment, productivity and competitiveness for cities and territories.
It is not possible to promote local development without addressing it in a comprehensive manner, without taking into account the economic dimension, hence local economic development plays a determining role in generating better well-being for citizens by energizing the local economy.