From Hope to Goals
October 9, 2019
Intergovernmental Dialogue and Consultation Lead to Better Policies
October 9, 2019

By Peter Clavelle

Governments (national and subnational) and citizens, in countries in all phases of the development process, are recognizing the paramount importance of sustainable development. While numerous definitions of sustainable development exist, the most popular is “to ensure that development meets the needs of the present without compromising the ability of future generations to meet their own needs”.

The growing understanding of sustainable development is being coupled with a global movement toward decentralization. Decentralization is most frequently defined as the transfer of power and resources from national to subnational governments. Decentralization holds the promise of enhancing local democracy, improving the delivery of public services, and promoting local economic development. The growing commitment to sustainable development and the trend toward decentralization are resulting in a redefinition of economic development-and the role of local government in attracting investment and creating jobs. Local governments are being given the explicit authority, and accepting new responsibilities, for economic development. With decentralization, much of the responsibility for economic development has shifted to the local level. Local Economic Development (LED) reflects this new reality and represents a community’s process to improve economic conditions and the overall quality of life.

Local Economic Development does not just happen. LED requires both a vision and a strategy. LED requires political leadership and the building of local capacity. It requires that the community as a whole, including traditionally marginalized populations, are represented in the LED process. LED requires that municipalities launch new efforts to engage the private sector in efforts to stimulate investment and create jobs.

The municipalities of Albania are uniquely suited to undertake Local Economic Development. The July 2014 Law enacting Territorial Administrative Reform (TAR) reduced the number of local governments from 374 to 61, providing an unprecedented opportunity to strengthen local governance. A new Law on Local Self-Governance (Organic Law) enacted in December 2015 entrusted the newly-consolidated municipalities with the authority and responsibility to serve their citizens better. The Organic Law explicitly states that local governments have the right and responsibility for conducting economic activities. The Law further states that the exclusive functions of municipalities in local economic development include: the preparation of programs for local economic development, support to small business development, the provision of financial grants to support small and medium sized business activities, and the performance of services in support of local economic development.

The Mayor’s role in Local Economic Development cannot be overstated. Mayoral Leadership includes a recognition that job creation and other Local Economic Development (LED) activities will benefit from a more intentional engagement of the Municipality with the private sector. Mayoral Leadership requires the building of local government capacity and improving the business enabling environment. The Leadership of the Mayor is required to link territorial planning and land development with economic development, creating new job opportunities and a better business climate. The Leadership of the Mayor is required to guarantee that local democracy is the underpinning of both planning and development. Mayoral Leadership is necessary to ensure the full participation of populations normally excluded from the political and economic mainstream.

Each municipality of Albania is unique. There are differences in economic challenges, community assets, and municipal capacity. Nevertheless, international best practices and the Albanian experience show that there are common themes and steps that produce stronger local economies and improvements to quality of life. Here are 10 things Mayors can do to lead LED efforts:

  • Implement General Local Territorial Plans-Mayors have the authority and responsibility to implement the GLTPs. Creating awareness and building consensus for the vision and goals set forth in the GLTP is a key role. Mayors must ensure that the Local Detailed Plans (LDPs) legally required for major developments are prepared and approved prior to the initiation of any development/building permit procedure by the Municipality. The LDP provides a platform for land development negotiations between interested stakeholders (the Municipality, developers, landowners, citizens). Under the Mayor’s leadership, a multi-disciplinary team of municipal officials (political, urban planning, economic development, and communication officials) should collaborate with private sector stakeholders to study the project’s technical and economic feasibility, weigh the costs and benefits of different development options, and select the preferred option.
  • Prepare Economic Development Strategies-Most Albanian municipalities do not have a specific economic development strategy. Under the leadership of the Mayor, a consultative process can be used to identify and prioritize LED projects pursuant to the Municipal Development Strategy of the General Local Territorial Plan. These projects-rather than simply being public infrastructure projects-should be projects that stimulate investment, engage the private sector, and create jobs. Potential funding sources for each priority project should be identified.
  • Apply Financial Instruments for Land Development (FILD)-It is increasingly recognized that for decentralization to succeed, infrastructure has to be provided and maintained, and someone has to pay for it. It makes sense and is fair that developers who are benefiting from private development contribute to the cost of the infrastructure required to support that development. Mayors can lead efforts to apply the financial instruments authorized by Albania’s 2014 Law on Territorial Planning and Development. The use of financial instruments-including Conditioned Building Intensity, Tax Increment Financing, Business Improvement Districts, Betterment Fees, and Special Assessment Districts-will significantly enhance efforts to achieve fiscal decentralization and financial sustainability. (See USAID/PLGP Policy Paper “Financial Instruments for Land Development”.)
  • Build Municipal Capacity for Local Economic Development-The Mayor’s leadership is essential to building the local government capacity required to successfully create a business-friendly environment and implement LED Activities. Municipalities need to accompany their new responsibilities for LED with increases in skills, capacity, and funding. Under a Mayor’s leadership an Economic Development Department (Directory) should be created with the charge to recommend and implement a comprehensive economic development strategy. The Department’s responsibilities should include: to work on behalf of the Municipality to stimulate investment, and to attract, retain, and encourage the development of both existing and new economic enterprises; to develop, coordinate, implement, and administer economic development strategies and projects for the Municipality; to recommend to the Mayor and Municipal Council, and solicit on behalf of the Municipality, grant-in-aid funds for the Municipality; to administer and manage such grant-in-aid programs in accordance with the laws and regulations thereto; to coordinate and facilitate participation in economic development with citizens, community organizations, and private sector actors. The Director of the Department should be appointed by the Mayor on the basis of professional competency and made responsible for the management, direction, and control of the Economic Development Department subject to the orders and laws of the Municipality. Building LED capacity will require an assessment of the existing institutional framework and current capacities of a local government to promote competitiveness and job creation.
  • Encourage Private Sector Engagement-Job creation and other LED activities require the engagement of the municipality with the private sector. Historically, there has been no structure in place to institutionalize consultation and communication between the private sector and municipality. A Mayor’s leadership is essential to strengthening and sustaining the municipality’s engagement with the private sector. One model is to create an Economic Development Advisory Council (EDAC). An EDAC will strengthen and institutionalize private sector engagement with the municipality. The EDAC will provide an ongoing opportunity for private sector actors to provide input and recommendations for municipal policies and priorities related to local economic development, including: improving the business enabling environment and supporting the recruitment of new businesses and the retention/ expansion of existing businesses in the Municipality. EDACs, with USAID/PLGP support, have been launched in a number of Albanian municipalities and are showing promise in increasing private sector engagement.
  • Support the Needs of Your Local Business Community-Local businesses, particularly small businesses, are essential to a stable and vibrant local economy. Cities around the world are shifting their focus away from attracting large firms from outside the community to growing businesses from within. Mayors play the lead role in attracting new businesses to the municipality and creating an environment that supports the growth and expansion of local businesses. Business leaders are likely unaware of the assistance and resources available to them. Business leaders also want to know that the municipal regulatory process is timely and predictable. Mayors can improve the enabling and regulatory environment for businesses by making them aware of available assistance and can ensure that the development review process is streamlined and transparent. One practical action is for the Municipality to prepare a “Guide to Doing Business”. (See “Guide to Doing Business in Berat”) The Guide would be a resource to starting and growing a business in the city. In addition to providing the Guide in print form, the Municipality could make this information available on its online portal.
  • Empower Marginalized Groups and Individuals -The Leadership of the Mayor is required to remove the barriers that have excluded certain populations (women, youth, Roma, and Egyptians) from the social, economic, and political mainstream. Women and girls are marginalized, disempowered, and disenfranchised. For example, unemployment among women and girls is higher than among men and boys. A Mayor’s role includes to understand the social and economic concerns of women and girls (youth). It is essential that Mayors support public and private initiatives that generate employment opportunities, promote social entrepreneurship, and economically empower women.
  • Connect LED with Other Municipal and Regional Policies-LED activities must be developed and implemented in conjunction with a municipality’s comprehensive planning process. The leadership of the Mayor is essential in determining how other municipal policies support or discourage your economic development goals. For example: Are your transportation initiatives supporting local retail and tourism? Are workforce training programs meeting the needs of local businesses? Is housing adequate to meet the needs of workers in your municipality? Is tax policy fair to business? Have you developed connections between economic vitality and environmental quality? Are there publicly owned land and buildings that can be used for LED? It is also important to know how your local economy fits into the broader regional economy. Local businesses rely on the resources available in the region, including workers, transportation, housing, and amenities. The Economic Development Advisory Council may be a useful platform to consider these issues.
  • Deliver a Strong and Clear Economic Development Message-Mayors need to be the “Chief Communicator” for their municipality. Vital to successful economic development are strong communications and a compelling message. Mayors can use public speeches, interviews, the municipality’s website, and social media to unify the community around economic development. Clear communications will assure developers and business owners that their investment has broad support among local leaders and citizens. Political campaigns provide a unique opportunity for Mayors and Mayoral candidates to articulate an economic development message that is non-partisan and transcends traditional political rhetoric.
  • Be Open and Transparent-A key ingredient for sustainable development, and a successful municipality, is trust and confidence. Through open and transparent processes and good communications a Mayor can secure the trust of citizens, civil society, and the private sector. There is no single way to ensure openness and transparency. However, among the tried and trusted mechanisms being used in Albania are: Citizen Advisory Panels (CAPs), Economic Development Advisory Councils (EDACs), Community Based Scorecards (CBS), Local Safety Councils, Youth Boards, and Participatory Budgeting. USAID/PLGP has created models for all of the above.

Mayors have the power, the authority, the responsibility, and the ability to improve the economic well-being of their communities. Hopefully, this paper offers specific and practical suggestions for actions that Mayors can take. Good luck!Peter Clavelle served as Mayor of Burlington, Vermont, USA for seven terms (1989-1993 & 1995-2006). Prior to being elected Mayor, he was Burlington’s Community and Economic Development Director-working for then Mayor Bernie Sanders. Since 2006 he has worked for Tetra Tech, an international development consulting firm. From 2012 to 2016 he served as Chief of Party for USAID’s Planning and Local Governance Project (PLGP).

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