Introduction

To get a sense of the scale and pace of the growth in L&RED activity, it has been estimated that worldwide the number of RDAs leapt from perhaps 400 in the mid-1980s to at least ten times that number by the late 1990s (Lovering, 1999). Lovering has almost certainly underestimated the number of L&RED agencies both in the 1980s and now, but his assessment does capture the rate and pace of growth in this field. At the local level, the change has been even more dramatic: in the late 1970s many places in the case study countries did not have a formal economic development agency, today most do. Moreover, in any area with more than 100,000 people there are likely to be several agencies engaged in complementary or competing activities. This in part reflects both specialisation among agencies and a broadening of L&RED policy (Haughton, 1999a).

This chapter sets out to examine four sets of interrelated issues. First, why has there been a growth in the number of economic development institutions? Second, why have we witnessed growth in the range and type of activities which constitute local economic development? Third, how and why do certain types of approach to local economic policy come to be dominant at particular points in time? Fourth, how can we best make sense of the similarities and differences across nations in the way local economic development is pursued?

Governance, institutions and the state

Most L&RED activity is sponsored by the state, which provides the legal framework, legitimacy and resources for most institutions, from direct funding and matched funding for government and various partnership bodies, to granting tax breaks and charitable status for independent private and community-based institutions. The state has long had an interest in supporting local development policies: what has changed over time are the rationales, expectations, magnitude and modus operandi of local development activity. This section examines how the state has operated strategically and selectively in the forms of approach that it has been willing to support, examining the rationales for these in the context of changing macro-level approaches to managing economic growth.

It is not our intention to provide a detailed history of local development, taking into account the many different national approaches. Rather, the more limited aim is to highlight how current approaches build from previous experience of local development.