Local Enterprises in the Global Economy

Local Enterprises in the Global Economy

Issues of Governance and Upgrading

Edited by Hubert Schmitz

This book opens a fresh chapter in the debate on local enterprise clusters and their strategies for upgrading in the global economy. The authors employ a novel conceptual framework in their research on industrial clusters in Europe, Latin America and Asia and provide new perspectives and insights for researchers and policymakers alike.

Chapter 12: Paradoxes and ironies of locational policy in the new global economy

Jörg Meyer-Stamer

Subjects: development studies, development economics, economics and finance, development economics, geography, economic geography, innovation and technology, innovation policy


Jörg Meyer-Stamer 1. INTRODUCTION: WHAT IS LOCATIONAL POLICY? This chapter addresses the options for, and limitations to, localized efforts to stimulate and shape economic development, both in industrialized and in advanced developing countries.1 I define locational policy as the effort of local stakeholders, both from government and non-government, to create a favourable environment for business activities. It aims at improving the locational quality of a region, so that existing companies may become more competitive, entrepreneurs will find it an attractive location to establish a business, and external investors will prioritize it when making locational decisions. Moreover, it may include proactive measures to stimulate and support the competitiveness of companies, and shape structural change. Traditional locational policy addressed three issues: (i) making real estate available and improving the infrastructure; (ii) attracting external investors; and, (iii) facilitating communication between the business community and the public sector (Hollbach-Grömig, 1996). As locational competition became more intense and unemployment levels rose, local actors in industrialized as well as developing and transformation countries started to pursue a more ambitious approach2 which included at least one of the following elements: ● ● ● the creation of roundtables, partnerships (including public–private partnerships) or alliances for local economic development (LED) in order to formulate and implement a strategy to improve the locational advantage or revitalize old locations (OECD, 2001; Wallis, 1996; Küpper, 2000); the implementation of cluster initiatives (Raines, 2000; Enright, 2000); the creation of dedicated local economic development agencies to coordinate and organize local...

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