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Economic competitiveness

[ Summary ]

 

Chapter 3:
Implementing a strategy to boost economic competitiveness

 



3.4 Examples of LEADER group strategies

 

In an endogenous development model such as LEADER’s, the chosen strategies are adapted on a case-by-case basis. This makes for a wide range of measures, the results of which are all the more difficult to gauge since they apply to rural areas each differing markedly from one another.

We therefore confine ourselves to presenting a few examples of possible strategies for each of the nine types of area identified at the start of this part of the series, bearing in mind that within each individual area of intervention it is common to find a combination of different situations.

 

3.4.1 Examples of strategies for Type 1 areas
(areas where agriculture employs a sizeable proportion of the working population and still forms the basis of the economy)


In such areas, which are generally characterised by single-crop farming and highly seasonal labour, as in numerous Mediterranean areas, LEADER’s experience has highlighted how difficult it is to organise measures that balance the use of human resources, create synergies with other sectors upstream and downstream of the same sector and also keep young people in the area.

In this type of area, the demands of market competitiveness often lead to two types of imbalance: massive production wastage in the single-crop farming sector (rejection of non-standard or undersized products, etc.); over-utilisation of seasonal labour in harvesting, selection and processing; conversely, under-utilisation of other occupational skills and profiles, which then become scarcer in the area. Such imbalances can be corrected by diversifying by-products of the lead product or by setting up other sectors to complement the existing sector.


a) Diversification strategies based around the lead product

    Below is an example of a strategy to boost the ability to generate value added in an area based on the lead product.


      Example

      In the Valle del Jerte region (Extremadura, Spain), which is known throughout Spain for its cherries, the production of aguardiente, to make use of substandard cherries or cherries which are difficult to sell on the fresh fruit market when there are widespread surpluses, required considerable research and development efforts over a number of years. Under LEADER I, the promotion and marketing of aguardiente had been significantly developed. The LEADER group went on to launch training courses for entrepreneurs from other agribusiness and tourism sectors. Since then, the image of the valley’s flowering cherry trees is used to promote not only aguardiente, but also the area as a whole.


b) Diversification strategies based on creating complementary activities

    This involves creating new economic and cultural nuclei in the area.


      Example

      In the Sierra de Francia area (Castilla-Leon, Spain), where the chief product is “Pata Negra”, one of the most sought-after raw- cured hams, the LAG implemented a strategy to structure other smaller local sectors and to expand the area’s offering, based on the reintroduction of traditional production methods and the population’s hospitality. This led to the creation of “ARTESA”, a cooperatively run community training centre designed to preserve and develop traditional skills, and provide tourist information.

 

3.4.2 Examples of strategies for Type 2 areas
(areas with rich, not very labour-intensive agriculture)


In such areas, where agriculture has generally reached very high levels of productivity, in the short term, increasing economic competitiveness inevitably means repositioning products on less anonymous markets and meeting new consumer requirements. In the longer term, such areas may face problems of social and/or environmental competitiveness, as illustrated below.


a) Strategies for repositioning products in niche markets


      Example

      The two objectives of a cooperation project between the Pays de Gâtine (Poitou-Charentes, France) and Torridge (England, United Kingdom) LEADER areas are to set up the electronic identification of cattle and to develop new agricultural technologies in small-scale dairy cooperatives positioned in niche markets. By means of a joint marketing strategy, they also cooperate to improve the market positioning of their products.


b) Strategies to improve product traceability


      Example

      Improving the quality of beef and lamb by enhancing product traceability is the objective of a cooperation project between producers from the South Kerry (Ireland) and Garfagnana (Tuscany, Italy) LEADER areas. A quality charter and other joint measures have been set up to improve communication with buyers (some of whom are not located in Ireland or Italy).

 

3.4.3 Examples of strategies for Type 3 areas
(areas where traditional large-scale landholdings still predominate)


Such areas face a problem of social competitiveness rather than economic competitiveness: lack of initiative and very few enterprises. This stems from the social and cultural background of such areas: a working population comprised chiefly of former farm labourers with no financial resources and no entrepreneurial tradition, together with absentee landowners. Part 2 of this series, dealing with social competitiveness, suggests a few possible strategies for this type of area. One of its findings is that acquiring social competitiveness, as a prerequisite for regaining true economic competitiveness, is a long-term process.

The key issue is therefore to decide what to do in the short term in order to ensure basic economic revival. The LEADER groups operating in such areas must focus their activities on certain very specific areas and social groups. This might include involving a few landowners who are relatively amenable to local investment and innovation in other sectors such as tourism. One advantage upon which LEADER groups have generally been able to rely is a well- preserved and highly distinctive architectural and cultural heritage.


    Example

    The Terras Dentro group (Alentejo, Portugal) based its LEADER I intervention on promoting the area’s identity and local culture around the image of the “Terras do Cante” (Land of Song). This made it possible to harness support from a number of project promoters for investment in up-market tourism. However, since the LAG was also aware of the limitations of this strategy, which primarily benefited just a few of the wealthiest, it followed this up with measures to recreate long-term social competitiveness (awareness and vocational training for the unemployed, a communication strategy based on extensive house-to-house deliveries of a newspaper, etc.).

 

3.4.4 Examples of strategies for Type 4 areas
(areas where natural or protected habitat plays a key role)


Clearly, in this type of area the acquisition of environmental competitiveness is an essential prerequisite to economic competitiveness. In fact it is environmental competitiveness that will enable such areas to exploit the full potential of their local resources and to build their economy [6].

In cases like this, economic competitiveness is feasible only when environmental competitiveness is relatively well established, i.e. once the conditions have been created for preserving and fully developing the area’s natural resources, habitat and physical heritage (and when such values are wholeheartedly shared by the local players). After this, the situation will depend on the economic context and will tie in with one or other of the types of area defined in this booklet, i.e. type 5, 6, 7 or 8 below.

 

3.4.5 Examples of strategies for Type 5 areas
(areas geared towards tourist accommodation, with small-scale facilities)


In general the economic competitiveness of such areas is well established. However, competition from new tourist destinations is forcing them to assert their distinctiveness more forcefully and to target their offering at specific market niches, such as family tourism or specialist tourism.


    Example:
    Targeting tourism

    In the Upper Tauern National Park (Austria), a number of tourist operators have specialised in family tourism, partly supported by the LEADER group. In order to do so, special facilities were set up to cater for children of all ages, as well as parents. They diversified family activities, both outdoors (woodland play areas, swimming pools, animals, walks and pony trekking, collecting minerals, etc.) and indoors (individual play and group games, cooking, etc.). Each element of the architecture and infrastructure has been specifically designed to appeal to children and their families, and staff have been specially trained to serve this type of clientele.

 

3.4.6 Examples of strategies for Type 6 areas
(areas dominated by second homes and/or residential homes)


Such areas tend to be fairly near towns (easy access), although they are not peri-urban areas. They have no marked economic vocation and remain fundamentally rural in character.

LEADER groups have developed two types of strategy for such areas: strategies for capitalising on the existence of second homes as an economic development asset, and strategies to diversify the economy by redeveloping certain distinctive local features.


a) Economic development strategies based around second homes


      Example

      In the Marsica LEADER area, situated in Italy’s Abruzzi region, one hour’s drive from Rome, the LAG has developed a strategy to extend the amount of time second home owners stay in the area. In order to do so, a project entitled “Micro-receptivity” was launched. Its objective was twofold: to develop Marsica as a place for the urban population to recharge their batteries, and to develop a catalogue of houses for rent. They pursue both objectives by the same means: a quarterly magazine distributed to 12,000 households on the basis of a mailing list supplied by the local water board. The aim is to forge a close relationship with second home owners, the idea being to treat them as proper permanent inhabitants of Marsica. Each second home owner is offered the opportunity to participate in the Micro-receptivity project by renting out their own home. The magazine also serves as a medium for promoting the area, its services and products.

      A fidelity card (“Marsicard”) is distributed along with the magazine which provides a whole series of discounts and exclusive access to certain services. The idea is to provide weekend services which consumers either do not have the time to use during the week or do not have in town. These range from sport, cultural and vocational training (foreign language courses), to gastronomy (regional menus) and include cultural programmes (concerts, theatre) and health services (spa, dental care, alternative medicine). The proximity of urban centres makes it possible to guarantee a very high standard. An estate agent’s has also been set up to facilitate the search for and purchase of such homes.


b) Strategies for promoting local distinctive features and for diversification


      Example

      Once again in Marsica, the aim of the “Roots” project, as its name would suggest, is to “root” young people in an area where their income and well-being come mainly from the jobs they hold in nearby towns. The key players in the project have been schools and school children. The project has led to the creation of a consultation forum between schools and businesses. Pupils have explored former local products (agri-foodstuffs, hairpins and ceremonial costumes) and devised new uses for such products in collaboration with local processing firms and tourist operators.

 

3.4.7 Examples of strategies for Type 7 areas
(areas whose economy is dominated by small businesses)


Situations vary widely in this type of area. For example, areas where the businesses all make the same finished product without seeking any production complementarity suffer from fierce competition, problems in accessing certain services and, worst of all, unstructured promotion and marketing.

In such areas, LEADER’s purpose is to create links or even networks between business firms (especially for promotion and marketing), for example to create a new collective offering or to create joint support structures.


a) Creating a collective offering

    With increasing frequency, markets impose economies of scale that are no longer feasible for small individual businesses. They also demand a strong brand image that can be invoked when marketing products.

    In order to cope with these constraints, in addition to creating marketing groups, LEADER groups have supported measures to create new types of “thematic coherence”, based around a local image, symbol or other asset. This has led to the creation of “unifying themes”, “evocative themes”, “thematic routes” and other “routes of discovery” to group economic, cultural, leisure and other activities under a common or cross-sectorial image. Backing for the project from local producers and operators then results in a new collective product.

    “Thematic routes” and their like are used to bring producers in the same sector together to put together a tourist offering that enables visitors from outside the area to appreciate the environment in which the product is made. LEADER groups have therefore launched operations to harness support from producers, first of all to help surmount a number of difficulties inherent in such an approach: reaching a consensus between producers on how to operate the route (business opening times, guided tours, availability for organising tasting sessions, organisation of hosting and leisure services), organisation and promotion costs, etc.


      Example

      It took at least four years for the “Cheese route” in the Bregenzerwald LEADER area (Austria) to finally emerge. In the case of the “Ekoroute” in Drenthe (Netherlands), it took many months of negotiation to agree on the exact path the route should take because it could not integrate all of the area’s organic producers. In other areas, this same type of approach was adopted to create an “imaginative environment” conducive to the creation of new complementary activities. This has included reclaiming historic monuments or traditions and turning them into “catalysts” for achieving an economic dynamic by creating an evocative theme.


      Example

      This was the case, for example, with the exclusive handmade souvenir trade in the Pays Cathare LEADER area (Languedoc-Roussillon, France), producing articles “reminiscent” of a religious past, a mystery or a tradition of resistance. In this instance, the “evocative theme” was designed to arouse interest in an area suffering from depopulation by making it attractive once again.


b) Creation of commercial distribution and promotion structures

    In other cases, LEADER has supported the creation of commercial distribution and promotion structures to meet the needs of small- scale local producers.


      Example

      “Bia Na Ri” (Food of Kings) started life as a cooperative to market food specialities from the Shannon region (Ireland). Today, with LEADER support, it has become an independent company supplying luxury farmhouse cheeses. The company groups together the offerings of various cheese producers from two neighbouring regions and, because of its extensive range and sufficient volumes, it is able to supply a clientele of hotelkeepers, restaurateurs and shops throughout much of Ireland. Since it deals directly with this market, the company is able to provide consumer feedback to producers in the way of opinions, suggestions, reactions, etc.


c) Strategies to foster complementarity between small and large enterprises

    Where small and medium-sized enterprises coexist in a single sector, it can be useful to support operational complementarities and collaboration between them. This may mean pooling quality control criteria or fostering a climate conducive to risk-taking by young entrepreneurs. LEADER has participated in various projects of this type.


      Example

      One association in the Navarra region (Spain) brings together 23 producers of traditional and industrial foodstuffs from a variety of different sectors, including: cheeses (Roncal and Idiazabal), “cuajada” (junket) and “natillas” (milk custard), meat (“chorizo” - a highly-seasoned pork sausage - and other delicatessen meats), regional liqueurs (“Pacharan”), cider, preserved vegetables, stewed fruits, chocolate and traditional cakes and pastries. The association seeks to improve its presence in short marketing channels and international fairs by offering a range of local products. Through its joint efforts it has succeeded in introducing rigorous quality control methods.

    In various cases, cost-sharing strategies (quality control, promotion and marketing services) have led to interesting developments in the transfer and emulation relationship between small and large enterprises.

 

3.4.8 Examples of strategies for Type 8 areas
(peri-urban areas)


Peri-urban areas are “outward-looking”, in that although considerable human skills and resources may be concentrated there, they are directed towards the nearby town, without the local area being able to properly benefit. What is more, such areas, which are often subject to uncontrolled land and housing pressure, have lost their distinctiveness in terms of the physical heritage and no longer have their own identity. This is quite apart from the serious environmental problems that may arise. Offsetting this is the fact that the proximity of the town provides the area with market opportunities (it is easy to sell local products and to cater for day-trippers from neighbouring areas, etc).


a) Strategies for integrating economic, social and environmental aspects

    Refocusing the inhabitants’ interest on their local area and redeveloping a lost identity based on the opportunities provided by nearby markets represent the main challenges for such areas. Not only does this require economic competitiveness, but also, and perhaps more crucially, social and/or environmental competitiveness. Examples of strategies for such areas can be found in the part of this series dealing with social competitiveness.

    The few strategies implemented in this type of area tend to demonstrate that in areas like this, even more than elsewhere, it is vital to integrate the social, economic and environmental approaches to local development.


      Example

      In the Ile Crémieux region, not far from Lyon, France’s second- largest city, a local development process has been set up on the basis of a broad partnership to harnesses the support of local players for developing an archaeological site. This has culminated in the creation of a museum and heritage centre, the “Maison du Patrimoine”, providing environmental education courses to people of all ages from the nearby city. Apart from providing local cultural tourism, the heritage centre serves as a base for heritage renovation and management in nearby areas.

 

3.4.9 Examples of strategies for Type 9 areas
(areas with serious structural difficulties)


It is in this type of area that LEADER has amassed the greatest experience. The many difficulties facing such areas (natural handicaps, population problems, unattractiveness, reliance on subsidies, etc.) have led the LAGs to devise all sorts of economic development strategies.

Once again we stress that the situation in such areas does not allow a return to economic competitiveness in the short term. In cases like this, strategies must form part of a long-term approach. Essentially they are pioneering, experimental measures, leading to partial and as yet inadequate results.

For this reason the cases presented below should be considered as possible approaches and examples of “partial” strategies, based on which many different combinations can be devised. In marginal areas with a low population density, problems of market access, for example, mainly relate to exploiting local markets.


a) Strategies for adapting to weak and dispersed local demand

    Demographic decline and scattered housing and businesses have deprived some areas of their ability to retain certain services. However, flexible solutions are possible.

    This type of strategy sometimes calls for prolonged negotiations with public institutions (especially where public enterprises are involved), or for organisational adjustments (an enterprise combines several services or provides “mobile” services to several villages), or even for the collective ownership of businesses.

    LEADER has backed the creation of collective service companies (often owned by the villagers themselves) in cases where, for example, firms were about to go out of business.

    In order to keep young local entrepreneurs in the area, LEADER has backed the creation of businesses whose management is later entrusted to these young entrepreneurs in a variety of forms.

    In the case of public enterprises, LEADER has backed operations to lower the product viability threshold by introducing new technologies, grouping services together at multi-service centres and altering the way in which services are provided (e.g. mobile units), all the while involving the direct owners of the services.


      Example

      In the Haut-Allier region (Auvergne, France) LEADER has supported the creation of a company providing the services of farmers (“43 Services”). The company was set up on the basis of contracts concluded with public enterprises and today it provides a variety of services, ranging from maintaining telephone kiosks to restoring small-scale artefacts or to manufacturing urban furniture.


b) Strategies to lessen the constraint of competition from towns

    In certain areas, the approach is to forge closer links with urban consumers, in particular by creating short distribution channels for marketing local products.

    Consumers assess products from rural areas on the basis of quality/distance criteria and so these products come into competition with urban products. For areas whose lead product suffers strong competition, with a constant threat of price erosion, the problem is one of achieving product differentiation. It is at this point that quality procedures are implemented.


c) Strategies for labelling and quality charters

    The creation of quality labels for differentiation, whether quality guarantees, labels of geographic origin or simply an evocation of certain characteristics of the area, is another approach supported by LEADER, especially where products come under fierce competition. Such processes, which are fairly widespread throughout Europe, have harnessed the support of producers in LEADER areas. In many instances they have also been backed by ad hoc training courses, field visits, exchanges with producers from other LEADER areas, etc.


      Example

      In the municipality of Ydre (Sommenbygden LEADER area in south-east Sweden), in order to counter the drop in farm prices, four livestock producers got together to market organically produced meat under a single label. A contract with a chain of small shops (“Hemkop”) led them to step up task sharing in order to provide a year-round supply of organic meat. The livestock producers also created a joint Internet site in order to disseminate information about their products, to develop contacts with other customers and to answer consumer questions.


d) Strategies for launching new activities based on previously untapped resources

    In certain areas, LEADER has supported the launch of new products based on hitherto untapped or neglected human, natural, know-how and other resources. In such cases, the keys to success have been external support and training.


      Example

      In the Ross & Cromarty LEADER area (Scotland, United Kingdom), an informal association of 15 mushroom-growers was set up following a training course organised as part of the “Highlands Birchwood” project. The project was aimed at promoting the development of a Scottish variety of birch tree, whose cultivation had been neglected in recent decades. However, it is a tree whose trunk is well suited to growing speciality mushrooms. The association buys raw materials and equipment at much more advantageous prices. In this context, two mothers wishing to return to the labour market have launched the company “Highlands Wildwoods” to cultivate and market these birch wood mushrooms.


e) Collective revival of local structures or services to prevent further deterioration

    In most cases, marginal areas do not provide the right conditions for ensuring competitive production costs. In farming, this applies to all marginal areas that have no fertile agricultural land and/or where mechanisation is either impossible or difficult (mountain regions, etc). In other sectors, it applies to areas without sufficient infrastructure or services. One LEADER strategy has therefore been to support the introduction of services or to create the conditions for providing services that fill in the gaps.


      Example

      On the Gulholmen and Karingon islands (Sweden), to cope with reduced services and deteriorating infrastructure due to the decline in the fishery business, local associations decided to club together to ensure the maintenance of services for both the community and businesses in order to halt the deterioration in infrastructure. They reached the conclusion that it was vital to renovate houses and restore transport and other support services in order to prevent young people from moving out of the area. A global action plan was drawn up and a “community-owned” company was created to coordinate the organisation of all the services and activities to be developed.


f) Strategies to combat depopulation

    In certain marginalised areas, the aim is to attract new inhabitants.


      Example

      Since 1984, three villages have mobilised their efforts to implement a re-population strategy in the Jämtland region (Sweden) to counter the population deficit (fewer than three inhabitants/km2), which has led to the closure of services, particularly primary schools. The inhabitants themselves built three single-family dwellings, providing homes for three young families and thereby saving the primary school. Additional families moved into the area when the construction of an old people’s home released further houses. The restoration of several core services (grocery shop, nursery, community hall, leisure facilities, etc.) will consolidate a process that has even led to the creation of a teleworking company employing a number of villagers. A village cooperative created in 1987 coordinates this long-term approach, which relies on volunteers and the technical and financial support of the local council. Fifteen years of hard work have not simply stemmed the demographic decline, but reversed it. The combined population of the three villages in question rose from 126 in 1986 to 160 in 1990, creating 20 new service jobs into the bargain.

 


[6] See “Constructing a territorial
development strategy in the light of the LEADER
experience Part 3: environmental competitiveness”,
LEADER European Observatory, 2000.



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