THE ROLE OF

THE LOCAL GOVERNMENT UNIT

IN ECONOMIC DEVELOPMENT
CONTENT:
 WHAT IS A LOCAL GOVERNMENT?
 THE LOCAL GOVERNMENT CODE 1991
 WHAT DOES DECENTRALIZATION HOPE TO ACHIEVE?
 THE ROLE OF LOCAL GOVERNMENTS IN SUPPORT OF LOCAL ENTERPRISE
 WHY LOCAL GOVERNMENT MATTER TO LOCAL ECONOMIC DEVELOPMENT
(LED)
 CHARACTERISTICS OF LOCAL ECONOMIC DEVELOPMENT
 KEY STRATEGIES AND TOOLS

 CONCLUSION
WHAT IS A LOCAL GOVERNMENT?

• As defined by the Local Government Code (1991) , the Local

Government refers to the political subdivision of a nation
which is constituted by law and has substantial control of local
affairs with officials elected as otherwise locally selected.
• The Local Government is an avenue where the civil society
groups at the community level can participate meaningfully in
the decision making processes.

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WHAT IS A LOCAL GOVERNMENT?

• As an enabler, the local government likewise

provides the environment for the development of
full potentials of its citizens guided by the
“overarching goals of respecting, protecting and
fulfilling basic human rights for all and of
empowering everyone to shape their own destiny
under a regime in which the realization of basic
rights is guaranteed” (Natividad, 2005)

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THE LOCAL GOVERNMENT CODE OF 1991

• The enactment of Republic Act 7160 known as

PRINCIPLES
the Local Government Code of 1991 - Decentralization
categorically specifies that the state shall - Accountability
provide for a system of decentralization - Transparency
whereby LGUs shall be given more powers, - Efficiency
authority, responsibility and resource. - Dynamic organizational structure

• RA 7160- is meant to transform Local

Government Units into a self-reliant
communities and active partners in nation
building by giving them more powers,
authority, responsibilities and resources. 5
WHAT DOES
DECENTRALIZATION
HOPE TO ACHIEVE?
a. It hopes to achieve the economic development at the regional
and local levels.
b. The local Chief Executives are given more freedom in carrying
out their own programs that are suitable to the conditions in their
respective area.
c. Effective decentralization requires upper-tier governments to
establish legal frameworks that provide local and regional
governments with clear mandates in the field of local economic
development and ensure that local authorities and their staff
have the institutional support, training and financial resources
necessary to carry out their roles. 6
 3 FORMS OF
DECENTRALIZATION
Transfer of power and authority
from the national government to
LGUs; political and territorial

Transfer of public functions and

Transfer of power, authority or responsibilities which government
responsibility or the discretion to plan , may perform to private entities and
design and manage from central to local NGOs 7

level; administrative and sectoral

THE ROLE OF LOCAL GOVERNMENT IN SUPPORT OF
LOCAL ECONOMIC ENTERPRISES
 LEEs are ventures wholly or partially owned by LGUs that generate revenue/income
through the sale of services and goods to meet a perceived constituency demand.
 Section 17 of the LGC defines the basic services and facilities of the LGU. It, however,
treats public utilities and economic enterprises separately.
 Economic enterprises are primarily concerned with public markets and slaughterhouses
[Section 17(b)(2)(ix)], while the rest of the services and facilities are treated as utilities and
services such as public terminal, ports and gymnasiums.

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THE ROLE OF LOCAL GOVERNMENT IN SUPPORT OF
LOCAL ECONOMIC ENTERPRISES
 To quote pertinent portions of Section 17 of the LGC:
“Section 17. Basic Services and Facilities.

a. ‘’Local government units shall endeavor to be self-reliant and

shall continue exercising the powers and discharging the duties
and functions currently vested upon them. They shall also
discharge the functions and responsibilities of national agencies
and offices devolved to them pursuant to this Code. Local
government units shall likewise exercise such other powers and
discharge such other functions and responsibilities as are
necessary, appropriate, or incidental to efficient and effective
provision of the basic services and facilities enumerated herein..
.’’
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ENTREPRENEURIAL DEVELOPMENT
a. Local and regional governments
in many countries have set up
centers to foster
entrepreneurship in their
communities, especially by
supporting people who wish to
create a new MSME
(micro, small and medium-sized
enterprise) (Treller, 2013)
b. Staffed by professional
counsellors, they assist with such
matters as feasibility studies,
market surveys, business plans,
licensing, and access to capital.
THEORY BASED
A range of theoretical framework has emerged in
economic growth and sustainability. The concept of local
enterprising of LGUs as means for local economic
development is anchored on the theory of Peredo and
Chrisman (2004) and the Centre for Family Business
Management and Entrepreneurship, their theory called
Community-Based-Enterprises (CBE) which explains that
the concept of Community-Based Enterprise represents
an alternative and promising model for development in
impoverished communities. It further explains that CBE
emerges as a prospective strategy for the sustainable
alleviation of poverty partly because it is holistic and
integrates so many different aspects — economic, social,
cultural, environmental and political — of the community. 10
WHY LOCAL GOVERNMENT MATTER TO
LOCAL ECONOMIC DEVELOPMENT (LED)?
a. Local governments’ roles include providing a
secure and stable environment in which
enterprises can flourish.
b. They are responsible for physical infrastructure
– roads, water supply,waste management,
information and communication
technologies –all necessary prerequisites to
economic activity.
c. LGUs also address the needs of their citizens
for public health,education,housing,local
transportation,cultural and recreational
facilities,childcare,and other public
services that are essential to nurturing a
healthy, skilled, and reliable workforce. 11
WHY LOCAL GOVERNMENT MATTER TO
LOCAL ECONOMIC DEVELOPMENT (LED)
As the public institutions closest to the people,with an immediate
grasp of the assets,deficits, and issues of their communities, local
governments are the most appropriate agents to convene all of the
local economy's stakeholders:the chamber of commerce,the
representatives of micro,small,and medium enterprises (MSMEs),trade and
labour unions,primary producers,education and training institutions,agents
of the departments and ministries of other levels of government,
non‐governmental organizations and international development partners
active in the community,as well as the representatives of those who
are unemployed,marginalized because of their youth,gender,disability,
or ethnic origin,or who are struggling to survive in informal economy.

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CHARACTERISTICS OF
LOCAL ECONOMIC DEVELOPMENT (LED)

Sen (1999), the meaning of development is the

increasing capability of people to live the life
they choose. The task of economic development
practitioners is to help to make this possible.
It must be
inclusive

Environmentally
sustainable
Providing
supports and
opportunities
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CHARACTERISTICS OF
LOCAL ECONOMIC DEVELOPMENT (LED)
• Local and regional governments are the best placed
to provide leadership and coordination in the
planning and implementation of LED initiatives,
either directly or through delegation to community-
based agencies.

• LGUs are responsible for the creation and

maintenance of an enabling environment in which
all economic actors – investors, workers,
educators, financial institutions, service
providers – can contribute to sound decisions and
work together to generate economic development.

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KEY STRATEGIES AND TOOLS

Building alliance of partners

Establishing governance and management structures

Encouraging entrepreneurship and attracting investment

Nurturing innovation

Promoting the green economy

Mitigating poverty, inequality, and social exclusion

Fostering local culture 15

 CONCLUSION

• The local government Code of 1991 is a major

breakthrough in pursuit of local economic development
because it allows every local government unit to thrive on
their own and become self-reliant communities by letting
them explore economically through establishing local
economic enterprises.
• Through the principles decentralization, national
government was able to transfer power, authorities and
responsibilities to mobilize them to understand their
economic circumstance, devise strategies and initiate
solutions to their challenges. LGUs now can provide
necessary complement to national economic
development policies, plans and programs. 16
CONCLUSION

• Although some LGUs are not adequately resourced,

with the aid from the national government, they still
manage to strategize ways by engaging more into
entrepreneurial development.

• Finally, along with the international development

partners, the national government must also devote
resources to building the institutional capacities of
LGUs in the field of local economic development:
provide skills training, mentoring and other forms of
support that LGUs themselves identify, empowering
them to play the role in economic development
they are so well positioned to perform. 17
REFERENCES
• Department of Budget and Management,D.(2016).Manual on the Setting up of Local Economic
Enterprises.Philippines:

• Department of the Interior and Local Government.(1991).The Local

Government Code of the Philippines.Retrieved from www.dilg.gov.ph/lgc1991

• Natividad,(2005).Rights-Based Philippine Governance Review.Development

Academy of the Philippines

• Sen,A. (1999).Development as freedom.NewYork

• Treller,George E. (2013) Building Community Prosperity Through Local

Economic Development:An Introduction to LED Principles and Practices. Ukraine Municipal Local
Economic Development.
www.fcm.ca/Documents/tools/International/Building_Community_Prosperity_Through_Local_Economi
c_Development_An_Introduction_to_LED_Principles_and_Practice_EN.pdf

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