Local and Regional Economic Competitiveness

Fast tracking local economic growth

Context

For a country composed of thousands of islands, attaining a cohesive local and regional economic development program appears to be a daunting task. Yet in 2004, Leyte Province rose to the challenge and introduced an approach known as the Local and Regional Economic Development (LRED) intending to transform a stagnant economy into a vibrant business and investment hub. With assistance from the Private Sector Promotion Program (SMEDSEP) of the Department of Trade and Industry (DTI) and the Deutsche Gesellschaft für Internationale Zussamenarbeit (GIZ), 16 of 43 local government units (LGUs) in the Province came up with “quick win” projects focused on enhancing the competitiveness of the local economy. With LRED’s flexible modes of delivery, the municipalities were able to adopt interventions appropriate to the unique conditions in their locality.

Approach

The Component Two of SMEDSEP seeks to achieve territorial competitiveness by means of the LRED approach. LRED is a participatory analysis, planning and implementation process wherein public and private stakeholders in a locality work together to improve conditions for economic growth and employment generation. LRED is about mobilizing people and making them work together to effect change. The Component focuses on the provision of capacity development, advice and support for national government agencies (NGAs), local government units (LGUs) and private sector organizations on how to achieve local and regional economic competitiveness and the further upscaling and institutionalization of the LRED approach in the Philippines beyond 2012. The Component, through the LRED approach, seeks to assist LGUs through locally organized technical working groups (TWGs) to create a favorable environment for businesses, promote competitiveness of firms and create opportunities for new businesses, be they external investors or local entrepreneurs.

The LRED approach is not a singular, one time intervention but rather a continuous process of analysis, planning and implementation. LGUs that have adopted the approach as part and parcel of their regular planning processes have found it to be effective in enhancing their economic development programs. The LGU based TWGs steer the process (at the local level with the support of the Provincial DTI offices). Jointly with local stakeholders, they identify and implement quick wins—projects that can be implemented with local resources, implemented quickly and shows immediate results—and catalytic projects—projects that will require major financial resources, expertise, strong political support and can change the dynamics of the location.

Results

Since 2004, LRED has been replicated in 84 Visayan LGUs and has also been successfully scaled up in Luzon (5 LGUs) and Mindanao (11 LGUs). Recent review workshops organized by GTZ with stakeholders from all island groups have shown that LRED has led to significant improvements in public private cooperation and in the revitalization of business membership organizations. LRED LGUs in Samar Province cite the active participation of the local chambers in their respective areas and the increased number of public private partnership arrangements in their localities. For LGUs where the tourism sector was identified as an economic growth area, they report on rising tourist arrivals and thus an increase in tourism income for MSMEs and the local population.

The Town of Palompon in Leyte Province focused their interventions on tourism development, by organizing training activities for the fishermen. They were able to maximize the use of their boats both for fishing and tourism activities. It did not only result in an increase in tourist arrivals, but also led to the establishment of new tourism related enterprises. Region 8 has the highest number of LRED LGUs, majority of whom identified tourism as a priority project. A Regional Tourism Coordinating Council (RTCC) was created to harmonize the tourism programs of the various LGUs, vis-a-vis the Central Philippines Tourism Strategy. This not only links up the local tourism plans with larger regional and national plans, but likewise opens opportunities for investments and access to financial support from the national government. Regional and provincial DTI officials confirm that through LRED the LGUs become more effective partners for DTI and that they are able to achieve their main objectives and goals easier, which include an increase in jobs, investments, exports and the competitiveness of MSMEs.

In the current and final phase of the Program, the Component aims to achieve a substantial increase (at least by 10 percent) in new investments in LRED cities and municipalities; henceforth generating more jobs and income for local residents and increased revenues for the LRED LGUs which can be utilized for improved service delivery and infrastructure development.