For the last five years or so, part of my job has been to talk to local government and organised business about the need to take a process (as opposed to a project) approach to local economic development. The GTZ LED project, that employed me for a while in this role, had supported the development of a number of LED tools and process. Many of which most LED practitioners in South Africa will be aware of.
Last week I was a participant in an LED induction workshop when it struck me that while processes are fundamental to successful LED, there is something even more fundamental that seems to have fallen off the radar viz. economic literacy.
By this I don't mean the ability to perform the advanced calculus necessary to determine the slope of Kurz curves etc. I mean BASIC economic literacy such as a how incentives drive behaviour, the notion of opportunity cost and how markets work and once that has been grasped, why markets fail.
Understanding how economic incentives drive decision making is critical to understanding how businesses in your locality think when they take investment decisions - decisions that determine whether they stay/leave/downsize and the impact that those decisions have on jobs. A basic understanding of how and why business make the choices they do would go along way towards developing realistic and implementable LED strategies.
I suspect that many people have covered these basic concepts in the economic courses they did at university but have failed to realise that these concepts describe real life - granted not in its entirety but well enough to enable LED practitioners to understand the economies of localities in ways that enable them to make implementable interventions with real impact. Time to dig out that old Ecos I textbook, alternatively get hold of a book like the Economic Naturalist or Freakonomics and get reading.
