A Summary of PACAA Summary of PACA

Christian Schoen

Jörg Meyer-Stamer

Stimulating Local and Regional Economic Development

Types of initiatives to stimulate Types of initiatives to stimulate local/regional economic local/regional economic developmentdevelopment

improvisation / fragmentation of activities conducted by various organizations

one big project = fixed ideastrategic planningParticipatory Appraisal of Competitive Advantage

(PACA)

What is Participatory Appraisal of What is Participatory Appraisal of Competitive Advantage (PACA)?Competitive Advantage (PACA)?

Participatory

Appraisal of

Competitive Advantage

Involve local stakeholders Motivate local stakeholders to take an

active role in an LED initiative Transfer know-how to local stakeholders

and businesses

Do a quick scan of the local economy Assess and refocus ongoing local

economic development activities

Identify strengths, skills, talents and opportunities

Identify business and LED opportunities

PACA is an activity ...PACA is an activity ...

... which seeks answers to a critical question: how can the local economy, by means of collective action, create a competitive advantage?

What is a local economy? For What is a local economy? For instance, it may be like this:instance, it may be like this:

An integrated furniture cluster

A garmentcluster

A large metal-working company

Regional service providers:• Health care• University• Wholesale trade

Farmers and small food processors

Local producer services:IT, transport, construction, ...

Local consumer services:Retail, beauty, ...

Government

Wood valuechain

Textile + garmentsvalue chain

Global buyers

Traininginstitutions

Businesspromotion

Financeinstitutions

What is Local Economic What is Local Economic Development (LED)?Development (LED)?

Activities by local government local business associations local companiesother stakeholders

which remove bureaucratic obstacles and transaction

costs for local firmsstrengthen the competitiveness of local firmscreate a unique advantage for the locality and its

firms

How does local economic How does local economic development relate to other development relate to other activities?activities?

Local development

Infrastructure

Transport

Energy

Technology

Health

Schools

Water / sewage

Community development

Employmentcreation

Poverty alleviation

Housing

Education

Urbanization

SMMEpromotion

Local economicdevelopment

Investmentpromotion

Skillsdevelopment

SMEdevelopment

Leading principles in local Leading principles in local economic promotioneconomic promotion

Creating a specific locational advantageStrengthening strengths, dynamizing existing

potentials -- instead of fruitlessly addressing the biggest possible challenges

Networking among local firms and between firms and supporting institutions to create collective efficiency and effective markets

Active integration into international value chains

Build on locally available resourcesDo something instead of writing a strategy documentGo for quick, visible impact

What is the objective of PACA?What is the objective of PACA?

Identify, with a rapid appraisal, the main strengths and weaknesses of the local economy and its main sectors (duration: 1 - 2 weeks)

Identify options for practical activities to strengthen the competitiveness of firms -- Criteria:– feasible with local resources– quickly implementable (starting next week)– quick, visible results (with 3 months)

Who is involved in a PACA?Who is involved in a PACA?

A “Champion” who suggests and coordinates the PACA– provincial or local government agency,

Chamber, NGO, somebody elseOther local organizations who take an active role

– financing– making staff available for the PACA Team

The PACA TeamVarious local stakeholders who participate in the

kick-off workshop, interviews, mini-workshops and the presentation

What is the PACA Team?What is the PACA Team?

1 - 2 external consultants who are familiar with the PACA method and LED– to introduce a fresh view at the local reality– to transfer their know-how to local members of

the team3 - 5 local members

– for instance: professionals from the local business promotion agency, the local Chamber, the local university

– not too young, too junior– with experience in economic promotion and in

dealing with private business

What is the sequence of activitiesWhat is the sequence of activitiesin a PACA?in a PACA?

Preparation:* Advance

info* Hypotheses

Kick-off

work-shop

Findings-Workshop:Elaboration

of Diagnostic + Proposals

Interviews

Mini-workshops

Presen-tation

of Diag-nostic +

Pro-posals

Imple-mentation

PACA-Exercise (2-3 weeks)

PACA-Project

Fieldwork (1-2 weeks)

What about the fieldwork?What about the fieldwork?

Formats: Qualitative interviews

(“conversation”)

Mini-workshops

Tools: Guideline (always) Mapping (sometimes) Life-line (sometimes)

Diamond Five Forces Transaction Matrix SWOT Metaplan to define

possible action – if participants are

strongly motivated

Diagnostic and proposalsDiagnostic and proposals

Results workshop to elaborate diagnostic a proposals = 1-2 day exercise of the PACA Team

Immediate presentation of findings to local audience

Elaboration of diagnostic and Elaboration of diagnostic and proposalsproposals

What is the immediate result of a What is the immediate result of a PACA?PACA?

A diagnostic of the local economyA set of proposals for practical activities

– to strengthen the local economy– to stimulate the competitiveness of companies– to create new business opportunities

Numerous local stakeholders who have a clearer idea about Local Economic Development

What about the follow-up?What about the follow-up?

immediate workshop with local stakeholders to define priorities, activities and responsibilities for implementation and monitoring

implementation of activities by local stakeholdersworkshops for evaluation and definition of further

activities, possibly facilitated by external consultants

ImplementationImplementation

creation of working groups– for given sectors– around project ideas

working groups initially operate independentlycoordination between activities

– initially informally– later, as complexity increases, via a

Stakeholder Forum or similar fora

What again was the basic idea of What again was the basic idea of Local Economic Development?Local Economic Development?

Create a business-friendly environment Improve the quality of the location for firmsStimulate upgrading in companies

– through inter-firm learning– through support in fields like training,

management, technology• refocus and strengthen supporting

institutions• stimulate closer interaction between

companies and supporting institutionsAttract new companies, stimulate

entrepreneurship

Understanding local Understanding local competitiveness:competitiveness:Michael Porter‘s „Diamond“Michael Porter‘s „Diamond“

Supporting institutions

Main companies and rivalry

Demandconditions

Related andsupporting industries

* A local context that encourages appropriate forms of investment and sustained upgrading* Vigorous competition among locally based rivals

* A core group of sophisticated and demanding local customers* Unusual local demand in specia- lized segments that can be served globally* Customers whose needs anticipate those elsewhere

* A critical mass of capable local suppliers* Clusters instead of isolated industries

Factor (input)conditions* training* technology* finance* infrastructure

Assessing the Local Economy of Assessing the Local Economy of Lukhanji MunicipalityLukhanji Municipality

What are the Strong and the Weak What are the Strong and the Weak Points of the Local Economy / Main Points of the Local Economy / Main Sectors in Lukhanji ?Sectors in Lukhanji ?