From the Framework of the Eleventh Rapid Field Appraisal, which focused on the progress of

decentralization monitoring the activities done by the local governments in exercising the powers that
were devolved to them as provided by the LGC, as well as the benefits to the people that followed, the
implementation of the Local Government Code of 1991 resulted to a change in the performance areas
of local governments which include the Local Governance and Administration, Social Services and
Health, Local Economic Development, and Environmental Management.

The general performance areas were further broken down into specific topics which were based on the
responsibilities and devolved functions provided for in the Local Government Code of 1991.
As we can see, the Local Economic Development (LED) includes revenue generation activities,
support facilities, programs and projects to promote agriculture, fisheries, tourism, and national-local,
as well as public-private partnerships.

According to World Bank and International Labour Organization, LED is a process by which public,
private, and non-governmental sectors work collectively to promote economic growth and
employment generation. Its central feature is in the emphasis on endogenous development using the
potential of local human and physical resources to create new employment opportunities and to
stimulate new, locally based economic activity.

General Principles for LED

LED aims at creating favourable locational factors making

a good place to do business.
LED aims at promoting business. This can be existing businesses, start-ups or
external companies coming into your location.
LED aims at making better use of locally available resources.

With these aims, some strategies such as improving the infrastructure, training workers, attracting
more investors which fit nicely into the local economic structure, considering franchises as a
source of new local businesses, and utilizing all the resources available such as for agricultural
production and tourism must be done.

*Research question

Local Economic Development = f (natural resources, labor, capital investment, entrepreneurship,

transport, communication, industrial composition, technology, size, export market, international
economic situation, local government capacity, national and state government spending, and
development supports)

Theories on Local Economic Development

Economic Base Theory (EBT): This theory focused on a sectoral approach to economic development
where it postulates that local economy is strongest when it develops those economic sectors that are not
closely tied to the local economy. By developing industries that rely primarily on export markets, the local
economy can better withstand economic downturns because, it is hoped, these external markets will remain
strong even if the local economy experiences problems. Moreover, it is argued that export industries have
higher job multipliers than local service firms.
Basic and Non-basic sectors: The economy is a combination of basic and non-basic industries. Basic
sector is made up of local businesses (firms) that are entirely dependent upon external factors. Local
resource-oriented firms (like logging or mining) and agriculture, manufacturing, and tourism are usually
considered to be basic sector firms because their fortunes depend largely upon non-local factors and they
usually export their goods.. Non-basic firms are those that depend largely upon local business conditions.
Local grocery store sells its goods to local households, businesses, and individuals. Almost all local services
are identified as non-basic because they depend almost entirely on local factors.

Neoclassical Economic Theory

this theory argues that all localities must ensure that they use their resources in a manner
that attracts capital. An inferior governmental bureaucracy and an absence of "good business
climate" are barriers to economic development. Aside from that,

Attraction Models
This theory emphasizes on attracting entrepreneural populations, particularly
socioeconomic groups, to a community or area. New middle-class migrants bring both buying
power and the capability to attract employers, Moreover, they are more likely to start new firms.
This, in turn, has led to increased economic growth as a response to both internal demand and
new export enterprises created by the new migrants.