This discussion note is prepared for practitioners, policy makers and decision takers involved in
issues around Local Economic Development (LED), based on a course given at Duke University.1
The discussion note does not focus exclusively on LED in Least Development Countries but instead provides a broader review of the topic. The objective is to promote discussion and awareness of the policy options and economic theory that surrounds the issue.

Local Economic Development (LED) is about development in a specific space and place. There are
circumstances in which public institutions can shape the economic and social destiny of the
territories and populations over which they have jurisdiction. There are also choices to be made in
the model of LED. Many central and local authorities develop plans and targets for promoting the
economic development of geographical areas – but this is not always the same as a coherent LED
strategy. In addition, the conditions under which institutions can successfully implement an
effective strategy are not always present.

In thinking about LED it is important to review whether the building blocks for its implementation are in place – and if not to develop measures for putting them in place as part of the strategy.
This document:

• Proposes a categorisation of the different types of LED in practice today that helps understanding of how LED works.
• Describes why effective LED requires a strong public sector and strong institutions, and why it can be combined with capacity building if those institutions are not in place.
• Discusses some methods for financing LED and links them with the principles of public financial management and fiscal decentralisation.