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Local Economic Development

nef - the new economics foundation, identifies resource drain as a key problem in the development of peripheral regions, using the analogies of an umbrella and a leaky bucket.

These analogies represent problematic situations in which large governmental investments in regional development either fail to reach the local communities or leak out to external suppliers. Under these circumstances, significant resources flow into the area but the conditions of the local population do not improve, or they may even deteriorate. The LSED development approach seeks to turn the umbrella into a funnel such that the resources put into development are directed towards strengthening the existing local economyThis development strategy calls for, among other things, the strengthening of local economic infrastructure or favoring small-local suppliers over large external corporations. The way to deal with the second problematic situation, in which resources leak out of the bucket, is through “irrigation canals” that enable outside capital to reach the area and help cultivate local economic activity that improve the lives of the local population. Another way to deal with leaks is to “recirculate the water” in the bucket which describes the reuse of resources in a manner that fertilizes the local economy. This principle of reuse of resources is also called a local multiplier and is one of the fundamental strategies for developing a sustainable local economy.

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