Start at home: promoting local economic development to stem the global economic crisis

From ILO Online

Much policy advice has been given to facilitate global finance, trade and investments to connect with the global economy.

But much less to reinforce local communities and local markets where people live and want to stay if given the opportunity. Strengthening local communities in developing countries is also a means to help those who will suffer most from the global economic and jobs crisis.

International Labor Organization Online spoke with Local Economic Development Specialists Kees van der Ree and Matthieu Cognac.

Why does the ILO engage in local economic development activities?

Kees van der Ree: Communities, cities and governments around the world increasingly turn to Local Economic Development (LED) strategies in response to the challenges of globalization and the drive for decentralization. LED means more than just economic growth. It is promoting participation and local dialogue, connecting people and their resources for better employment and a higher quality of life for both men and women. The ILO is assisting its constituents in developing and implementing LED strategies in a wide range of economic, social and political settings across the world. This includes countries emerging from crisis, indigenous peoples, rural areas with child labour, city slums as well as growth-oriented clusters.

What are the challenges for LED in the context of the current economic and social crisis?

Kees van der Ree: The crisis is spreading globally, unemployment is increasing, in developing countries formal jobs are being lost and informal employment is rising, with lower incomes and more poverty. Worldwide there are about 90 million new entrants to the labour market every year. At the local level, the effect of the crisis is being felt heavily in localities due to – among others – difficulties for SME to access finance, massive layoffs of large enterprises operating in affected economic sectors, lower demand for locally produced products embedded in global supply chains, etc. While the formulation of stimulus packages and other rescue measures takes place at the global and national level, the implementation of these measures will pose challenges and opportunities at the local level.

How can these activities help to stem the crisis?

Kees van der Ree: LED activities provide targeted support to vulnerable groups and sectors, such as for instance, building the capacity of local governments to put in place local labour market intermediation mechanisms to respond to higher supply of labour, stimulating alternative business opportunities in community services and agriculture among others, introducing temporary youth employment programmes, etc. Such programmes reinforce local communities and local markets, thus helping those who will suffer most from the current global economic and jobs crisis. An LED process therefore brings together various local actors who decide on a local economic strategy to boost enterprises and create decent jobs: this has the potential of being a dynamic and customised local response to the current crisis. To bring it to the point: There cannot be a successful globalization without a successful “localization”. Much the same, national compensation and rescue measures should also be tailored to the specific local needs and opportunities. A global jobs pact as proposed by the ILO should inspire local employment deals.

Do LED activities also contribute to the protection of the environment and the creation of green jobs?

Matthieu Cognac: Indonesia has some of the most extensive and biologically diverse forests in the world. However, the sustainability of the forestry sector has come into question with illegal logging destroying around 10 million hectares of forests. It is against this background that the ILO is working with government and stakeholders to improve the livelihoods of those working in the forestry sector, especially to ensure that they perform their functions in a more environmentally friendly and sustainable manner. This involves the facilitation of a biogas program which the Indonesian Royal Netherlands Embassy has agreed to fund with 8 million Euros, starting with JOY (Job Opportunities for Youth) districts of operation. The programme will help thousands of households to save an average of 2 hours per day they used to dedicate to buying or cutting wood and producing fire for cooking and lighting purposes. In addition to the productivity improvement and to the cost benefit, using biogas will also contribute to a cleaner environment and to the production of better and more efficient fertilizer for agricultural crops. Together with a similar LED project in Nepal, ILO activities in East Java provide a good example on how LED helps protect the environment and create green jobs.

Does LED also promote innovative approaches to the development of local tourism?

Matthieu Cognac: In Indonesia, the ILO operates in two districts of East Java, Malang and Pasuruan, where LED forums have been created and include members of the private sector, government and civil societies. Following the recommendations of a LED feasibility study on tourism presented in June 2008, the idea of organizing short-term package tours for visitors to Surabaya on the Indonesian island of Java was born. The first package tour was successfully launched in December 2008 with a group of 50 tourists from Brunei and Singapore. The project takes advantage of Surabaya as a prime destination for MICE (Meetings, Incentives, Conventions and Exhibitions) travel and offers a one or two-day package tour to Bromo volcano. It has already created a significant number of jobs, including staff of restaurants, souvenir shops and tourist guides. The launch of these packages is a result of a strategic alliance between the ILO-JOY (Job Opportunities for Youth) Project and the national association of travel agents – ASITA. What is unique about this venture is that it has mobilized communities to share a common vision of future tourism development reaching out to the public and private sectors.

You just met with the representative of a French volcano theme park – what do you expect from this meeting?

Matthieu Cognac: Following up on the above-mentioned project, we contacted Vulcania, a unique and successful volcano theme park in the French province Auvergne, where visitors are invited to learn about earth sciences while having fun. The French park is entirely publicly funded but managed under a public-private partnership, which fits into the spirit of the LED model in East Java. Since its creation, Vulcania has helped Auvergne to jump from the 15th to the 8th position among the 22 French provinces in terms of numbers of visitors. Moreover, every dollar spent by visitors in the park implies an injection of 10 dollars to the local economy through a multiplier effect, since people need to sleep, eat and finally spend money in the course of their visit. According to the Scientific Director of Vulcania, Mr. Francois Dominique de Larouziere, the tourism potential in the Province of East Java, including the Bromo-Semeru-Tengger national park, is extraordinary, and the creation of a theme park dedicated to volcanoes and earth sciences would attract more people to visit the national park. The governor office of the province of East Java thus decided to proceed with a formal feasibility study.

The International Labor Organization was created in 1919, as part of the Treaty of Versailles that ended World War I, to reflect the belief that universal and lasting peace can be accomplished only if it is based on social justice.

The ILO brings together governments, workers and employers, as the world’s only tripartite multilateral agency. It is dedicated to bringing decent work and livelihoods, job-related security and better living standards to the people of both poor and rich countries.