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Territorial competitiveness

Creating a territorial development strategy
in light of the LEADER experience
[Part 1]

[ Index ]


Chapter 2
Territorial capital and territorial project


2.2 A few methodological ideas for analysing an area’s capital


There exists a multitude of analytical methods that are used by LEADER groups. The document “Launching and managing a local development project: the experience of LEADER I” (European LEADER Observatory/AEIDL, 1995) presented a number of such methods. Also, the “Methodology guide for the analysis of local innovation needs” (European LEADER Observatory/AEIDL, 1996), sets out how to pinpoint an area’s innovation requirements based on the following eight key points. Building on this prior work, the following aims to further the debate.

a) Identifying the components

A rural area’s capital is always eminently complex. A great number of elements are involved, and it is difficult to pick one’s way through such complexity without first establishing a number of reference points which, though not restrictive, make it possible to form an overall view.

The various elements of an area’s capital can therefore be classified into a number of components, which every individual is able to define in relation to his own specific situation or to what he is looking for.

Eight components are proposed below. These eight components are directly related to the eight “key points” in the above-mentioned methodological guide. They are:

  • physical resources and their management - in particular natural resources (topography, soil, subsoil, flora and fauna, water resources, atmosphere), public facilities and infrastructure, and the historical and architectural heritage;

  • the culture and identity of the area - the shared values of the players in the area, their interests, attitudes, forms of recognition, etc;

  • human resources - the men and women living in the area, those who take up residence there and those who depart from the area, the population’s demographic characteristics and its social structure;

  • implicit/explicit know-how and skills, as well as technological mastery and research and development capabilities;

  • local institutions and administrations, the political rules of the game, the collective players involved, and, more generally, what is nowadays referred to as the area’s “governance”; this component also includes financial resources (institutions, businesses, people, etc) and their management (savings, loans, etc), since an area’s governance cannot be dissociated from the formal commitment that local players are willing to make together (public/private financing, etc);

  • activities and business firms, their degree of geographical concentration and their structure (size of firms, sectors, etc);

  • markets and external relations, especially their integration into the different markets, exchange and promotion networks, etc;

  • the image and perception of the area both internally and externally.

These eight components can be represented graphically as eight portions of the area’s capital.

Graphical representation of the
eight components of an area’s capital

Each of these components can be analysed in greater detail, allowing its sub-components to be defined.

This more detailed analysis will be made in the forthcoming parts of this series which, as stated in the introduction, will deal successively with: environmental competitiveness, social competitiveness, economic competitiveness, and the area’s relations with the outside world (the area’s positioning in the global context). Each of these dimensions of territorial competitiveness is of particular concern to a number of components, which will be analysed in greater detail in line with the following table [1].


Environmental competitiveness Social competitiveness Economic competitiveness Positioning in the global context
Physical resources X
Human resources X X


Governance and financial resources
Activities/business firms

Markets/External relations X
Perception/Image X


b) Making a global assessment of each component in order to form an idea of the area’s “profile”

In order to form an overall view of the area’s situation it is sometimes useful to make an overall assessment of each of the eight components. This helps to better identify what major imbalances need to be addressed and to gauge the volume of resources available for a future project.

Such an exercise does not preclude the need for an in-depth analysis of the area’s capital but, on the contrary, makes it possible to guide the analysis more effectively.

A grading scale of 0 to 5 can be used, ranging from “zero” (0), to “very poor” (1), “poor” (2), “average” (3), “good” (4) and “very good” (5) in order to assess the status of each of the components. These different scores can then be represented on a graph with eight branches, which makes it possible to extract a “profile of the area”. Below is an example of a profile drawn up by the Bairrada e Mondego LEADER group (Centre, Portugal) during a self-assessment exercise.

Clearly such a profile is only of limited objective value, but it can lead groups of local players to define their vision of the area. It must be seen first and foremost as an “animation” tool that makes it possible to compare and complement each person’s viewpoint in order to arrive at an enhanced collective assessment of the area’s situation.

Example of a territorial profile:
Territory of Bairrada e Mondego
(Centre, Portugal)

Source: AD-ELO, Associação de desenvolvimento local da Bairrada e Mondego,
Auto-avaliação dos Grupos LEADER, Portugal, Octobre 1999.

What is more, by comparing profiles established at different times, it is possible to pinpoint past developments and to highlight the area’s “losses” or “gains”. It is possible, for example, to establish a territorial profile for the situation that existed 10 years earlier and to compare it with the present situation. Such an exercise can be supplemented by assessing the impact of LEADER on the area’s development over the past ten years. For instance, in the previous case the LEADER group designed a number of different profiles presented on the next page.

In this example, the local agents felt that the situation had improved over the past ten years for six out of the eight components and had remained stable with regard to the area’s culture and identity, but that the human resource situation had continued to deteriorate as a result of persistent rural depopulation.

Of course each overall assessment masks more complex qualitative assessments. For example, the group considered that the trend had been generally positive in terms of know-how and skills, even though there had at the same time been losses (loss of traditional know- how, etc) as well as gains (higher standard of training, especially as a result of the numerous training measures implemented). Another example concerns physical resources and their management. In this case, the LEADER group considered that considerable advances had been made over the past ten years, partially in terms of basic infrastructure but above all in terms of managing existing resources and the ability to develop them (developing rivers, forests, vineyards, etc).

With regard to LEADER’s contribution, the graph highlights fewer gains for the area in terms of image and external relations. By contrast, LEADER had a very appreciable impact on the diversification of activities, the area’s governance (thanks in particular to the partnership set up in the form of a local development association that included the municipalities and various private partners) and the management of local physical resources (restoration of traditional buildings as part of spatial planning and tourism projects). With regard to human resources and to know- how and skills, it should be noted that the graph goes beyond the current situation, meaning that LEADER actions have counteracted other trends which, without such measures, would have been more pronounced.

N.B.: The difference between the current situation and that of ten years earlier is represented by the distance between the line and the dotted line. LEADER’s contribution is represented by the distance between the broken line and the dotted line (contribution in relation to the previous situation).

An identical study can be made of the area’s future, in order to pinpoint any elements that should be modified over time, taking into account their inherent inertia. This exercise makes it possible to compare different views of the area’s future. What might the area be like in ten years’ time? What elements of the capital should be strengthened in order to achieve this, and on what elements should this be based? Here again the use of a territorial profile, forecasting the possible trend in the eight components of the area’s capital, could be used as a tool to facilitate discussions, compare ideas among several players and draw up a joint project.

Such a future projection may lead to the revision of the current analysis of the capital, according greater importance to certain elements that have turned out to be strategically essential to the desired developments.

Example of comparative territorial profiles:
territory de Bairrada e Mondego
(Centre, Portugal)

Source: AD-ELO, Associação de desenvolvimento local da Bairrada e
Mondego, Auto-avaliação dos Grupos LEADER, Portugal, Octobre 1999.


Qualitative analysis of territorial capital components by the Bairrada e Mondego LEADER group (Centre, Portugal) to outline the area’s profile
Components of capital 10 years ago Now
1- Physical resources Abundance of natural resources (watercourses, forests) and cultural resources, but processes of serious decline have begun. Physical recovery of the environment and heritage by diversifying activities in the area;
Qualitative development of natural resources that also opens up quantitative prospects.
2- Culture/ Identity Existence of two distinct and conflicting identity areas: strong tendency to circumscribe the scope for expression of the two identities. Strengthening identities by common consensus.
3- Human resources Decline in population due to emigration to urban areas.
Ageing population.
Reduction in depopulation, gradual return of families with children and/or young people of school age.
4- Institutions and governance Little involvement of local communication or power to make demands.
Remoteness of local authorities and centralised decision-making.
Existence of a few organisations representing local interests, acting as mediators between the authorities and the population.
Greater participation and power to make demands, but at the same time less cohesion in seeking joint solutions.
Greater ability to respond to problems of social exclusion.
Closer relations between the authorities and citizens.
Greater cooperation between municipalities.
5- Know-how and skills Traditional know-how disappearing and few links between traditions and technological integration. Strategies for the cultural preservation of know-how and its economic viability for modern activities.
6- Activities / Business firms Predominance of single-sector activities and a sectoral approach to activities and business firms. Greater diversification, ability to retain added value (eg, milk- processing on site) and integration of activities (by means of unifying themes, such as the wine route).
7- Access to markets and relations with the outside world Difficulties of access (poor, badly maintained road network).
Little openness towards the outside world.
Improvement of external access
Integration of networks
Commercial relations between enterprises
8- Image and perception Strong image of two local products: milk and wine. Image of wine and milk enhanced in order to promote the area.

Source: AD-ELO, Associação de desenvolvimento local da Bairrada e Mondego, Auto-avaliação dos Grupos LEADER, Portugal, Octobre 1999.

In the beginning, assessments and forecasts are often still intuitive and strongly influenced by preconceived “development models”. However, as the analysis progresses, they are refined and highlight the value of other elements that were not apparent at the outset.


The Terras Dentro LEADER area (Alentejo, Portugal) is dominated by large-scale land ownership, which has led to a lack of businesses and little spirit of enterprise. By contrast, the area benefits from lively traditions (of social and community life, etc) which can serve as the basis for asserting an identity. In a case like this, traditions can constitute a strong component, and promoting them makes it possible to create the conditions for developing business in the medium to long term, especially in the tourism sector, by exploiting cultural identity. By contrast, traditions can be neglected, or even considered as a drawback to a more exogenous form of development which is based, for example, on mines or the irrigation of vast expanses of land, as happened in the 1940s and 1950s.

As stated earlier, an area’s capital is not therefore a static entity. Depending on what project is pursued, certain elements will adopt lesser or greater importance and the territorial strategy will, within each component, endeavour to develop, modify and sometimes transform those elements that have been identified as essential to the project’s success.


[1] This table is intended purely as
a guide to the importance of the components
to the various forms of competition faced by
the area. Since real life is much more
complex, it is impossible to make a schematic
representation, which would be of academic
interest only.

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