Local Economic Development: a Review Assessment of Its Current Status in South Africa

In recent years Local Economic Development (LED) has become a widely practised development strategy in the countries of the North at both the local government and community levels. LED is less widely implemented in the South where, in most instances, it appears to still be in an incipient phase. This paper investigates the current status of LED in South Africa, where, over the last decade, local governments, community groups and non-governmental organizations (NGO) have become significantly more active in locality based economic development. Several local governments have established comprehensive LED programmes including the establishment of LED units and the pursuit of a range of developmental strategies, whilst in parallel, an array of community and NGO initiatives are in place. In almost all cases however results are still of a rather limited nature and this paper assesses of the reasons for this situation. INTRODUCTION: THE EMERGENCE OF LOCAL ECONOMIC DEVELOPMENT South Africa’s remarkable political rebirth in the 1990s rightly captured world attention and admiration for the phenomenal process of reconciliation and nation building which took place. Less well known internationally is the severity of the economic and employment crisis which South Africa has inherited. Officially, unemployment stands at nearly 40%, although figures of up to 80% have been recorded in certain rural districts. Inherited racially-based inequalities still largely persist, whilst the country has not attracted the amount of foreign investment hoped hope, instead. It is estimated that nearly one million jobs were lost in the 1990s, as a result of poor economic performance, global competition and deindustrialisation, which affected the gold mining industry particularly severely (Lester et al , 2000; Wakeford, 2000). Within this context a variety of employment generating strategies are being investigated and experimented with by the state and private organizations. One which has enjoyed considerable attention, though it has yet to really prove itself in practise is that of Local Economic Development (LED). This paper details and assesses the emerging reality of LED in South Africa. The development strategy of Local Economic Development or LED has been widely practised in the countries of the North for several decades now. In the South, by contrast, in a formal sense, it appears to be a relatively recent phenomenon and one, which in an era of economic crisis needs to be evaluated in terms of its potential to help address the challenges of poverty and unemployment and to simultaneously encourage growth. Reasons for the emergence of LED in the North and the South differ as detailed below. In the countries of the North, although there have been elements of place marketing and boosterism evident in local government policy for many decades (Ward, 1990; Erie, 1992), it would seem that in the last 20 to 30 years the incidence of LED has become more prolific. This is not only in terms of local government action, but also the activities of central governments seeking to catalyse growth at the local level and the endeavours of various community development organizations striving to improve economic and social conditions within specific neighbourhoods (Rich, 1992, Wilson, 1996a). The importance of the so-called ‘rolling-back of the frontiers of the state’ (Roberts, 1993, p.759) after the 1970s economic crises, the pursuit of ‘Reaganomics’ and ‘Thatcherism’, the dubious results achieved by traditional, regional development interventions and the widespread incidence of locality specific crises of deindustrialization have all played their part (Nel, 1999). LED is one response to the so-called ‘development impasse’ referred to by Schuurman (1993) and has parallels with the anti-development argument about the need to focus on innovative grassroots movements (Escobar, 1995). The action of various community economic