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Development from within: An evaluative research on economic development

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GeoJournal (2006) 67:207–222
DOI 10.1007/s10708-007-9047-2
Development from within: an evaluative research on
economic development strategies
Rosario Turvey
Published online: 11 April 2007

Springer Science+Business Media B.V. 2007
Abstract Research on the practice of adopting local
economic development (LED) strategies is important
to understand our local world as it is and what it
might be made to be as a place for community. This
article on economic development strategies (EDS)
highlights the results from a survey of 82 small
communities representing the Yukon Territory and
ten provinces in Canada. The purpose was to evaluate
the positive and additive effects of past local action
and community initiatives so as to understand the
variation in the adoption of local economic develop-
ment strategies of Canada’s small towns and local
municipalities. Using a questionnaire as instrument
for data collection, the study employed hierarchical
regression analysis and principal component analysis
(PCA) as method for factor extraction and composite
assessment on the effects of adopting EDS for
community. The PCA solution was applied to eval-
uate the structure of correlation between the commu-
nity characteristics as control variables in the baseline
model for regression analysis and the past local
action and community initiatives as independent
variables. The results of the hierarchical regression
analysis showed that local initiatives have significant
and additive effects on the adoption of EDS by small
R. Turvey (&)
Department of Geography and Geology, Nipissing
University, 100 College Drive, P.O. Box 5002, North Bay,
Ontario, Canada P1B 8L7
e-mail: rosariot@nipissingu.ca
communities. The study findings offer some insights
into some perspectives of ‘development from within’
to mean the local economic development practice in
Canadian communities.
Keywords Development from within
Economic
development strategies
Evaluative research and
local economic development
Introduction
Research on the development of small communities
has been a long-standing subject of Canadian studies
and economic geography, especially on issues and
challenges that concern sluggish growth, economic
distress and decline in small communities, including
single-industry and resource-based towns (Robinson
1962; Lucas 1971; DREE 1979; Bradbury and St.
Martin 1983; CEIC 1987; ARRG 1993). Studies on
local development are most important to those
communities affected by structural changes in the
economy, those persistently shaped by ‘boom and
bust’ cycles, and those inherently vulnerable to
regional and global forces and pressures (e.g.,
resource towns and single-industry communities
(SICs)). However, despite a burgeoning literature
on the study of small communities with spatial
interest on local development efforts, little attention
has been paid to the evaluation of economic devel-
opment strategies (EDS) put in place by Canadian
123
208
communities. In the so-called ‘small town Canada’,
small towns and SICs constitute a major part of
Canada’s economic and resource geography. Based
on Clemenson’s (1992, p. 31) work, a ‘single-
industry community’ is defined as ‘‘a population
center with 30% or more of its labour force assigned
to a single standard classification category.’’ Perti-
nent literature invariably described small towns and
SICs as resource frontiers of Canada’s hinterland, as
vulnerable localities shaped by ‘boom and bust’
cycles, and as places in the periphery faced by
uncertainty about the future (Gill 1994; Fletcher et al.
1993; Hayter et al. 1994; Reed 1994). As an
important part of Canada’s economic landscape,
policy concerns have been raised about the future
of small communities with respect to their economic
viability and sustainability (Clemenson 1992; Bryant
1997).
In the context of Canada’s small communities,
local economic development (LED) practice has
grown significantly to deal with pressing issues
affecting the local economy and the community.
Over the past few decades, there is a widespread
support for LED to ameliorate problems, changes and
challenges posed by economic restructuring, global
competition and rapid transformations in the world
economy. The fundamental and disruptive changes
brought about by the restructuring of labour markets
and production systems, and the spatial distribution
of business and industry have placed tremendous
difficulties on the part of the small communities
(Storey and Smith 1997). In the 1980s, a diversified
economic base, knowledge-based industries, high
technology and productivity, flexible labour market
and new labour practices formed the basis of a new
economy (ERC 1993; Storey and Smith 1997). In
attempts to adjust to changes in the new economy,
promote local development and sustain the local
economy, the policy and practice of local economic
development are central to the development of many
localities in Canada and elsewhere. In conceptual
terms, LED is synonymous with bottom-up develop-
ment and local initiatives for community planning
and program development (ECC 1990; Bryant and
Preston 1990; Barnes and Hayter 1994; Nel et al.
2001; Stohr and Taylor 1981). In policy development
terms, Canada’s local authorities engaged in LED
practice claim to have an economic development
strategy (EDS) at the heart of their local development
123
GeoJournal (2006) 67:207–222
policy. As a substantial policy framework, EDS or
LED strategies are meant to address contemporary
economic issues in communities committed to stabi-
lize and sustain their local economy. Although
structural differences in the economy exist in various
regions, provinces and territories in Canada, no
empirical analysis of a large number of communities
exists to sufficiently indicate the effects of adopting
EDS.
From the standpoint of small communities, an
assessment research for establishing the positive,
additive effects of EDS is relevant, yet under-
investigated. Policy makers, local government poli-
ticians, planners and economic managers all need
adequate information to appreciate their efforts of
putting EDS in place, i.e., as a strategy for shaping
local economic development in small communities.
Insights from Canadian municipalities, in particular
the small communities, to explain the variations in
the adoption of EDS vis-à-vis local public involve-
ment deserve serious attention in evaluation research.
Since studies on the subject remain undeveloped in
local development and resource geography, Bryant
(1997) has encouraged the conduct of an evaluative
research to include the development of ‘novel’
methodologies to measure the community’s efforts
to adopt local initiatives (e.g., EDS). From an
assessment of past case studies, this research is
needed to examine the variation of how LED
practitioners, local governments and development
organizations adopt LED strategies. Further, this
evaluation research is deemed essential to examine
both the structural (community characteristics, e.g.,
economic structure) and the dynamic factors such as
‘past local action’ as factors for taking on LED
strategies in small communities.
This article is about an evaluative research on the
adoption of economic development strategies (EDS)
for small town development within the framework of
LED. Small town development is articulated here to
promote ‘development from within’ as a sum of
endogenous efforts involving past action and local
initiatives by various actors involved in the local
planning, development and management of a locality.
Based on a survey research in 2003, the paper
highlights the results of assessing the factors and
variables that influenced the EDS adoption by small
communities across Canada. For this purpose, small
communities include towns and municipalities
GeoJournal (2006) 67:207–222
outside the community zone of Canada’s larger urban
areas, with a population of no more than 30,000. The
conduct of this evaluative research is deemed imper-
ative, not just to fill a research gap but for establish-
ing the relationship and effects of community
dynamics between past action and local initiatives
in communities with economic development strate-
gies in place. The study is focused on small
communities with LED strategies in attempts to
bring together the theory and practice of LED by
using community accounts of objectives, rationale,
role and experiences in shaping their ‘local worlds.’
A nationwide evaluation of development strategies
within the framework of local development could
shed light on resolving the question of promoting
growth and development in small town Canada.
Based on the survey from which this paper was
drawn, the LED approach has gained acceptance to
local government and development circles given
the propensity of local economies to adopt EDS
and implement concrete programs of action. To
many communities, the process for community led
initiatives by Canada’s small towns and SICs is
central to local development in areas committed to
transform their economic landscape. To lay the
groundwork for the survey, an assessment frame-
work was proposed as basis for variance explana-
tion on ‘EDS’ adoption in small Canadian
communities. As employed in several Canadian
communities and elsewhere, a standard strategic
planning process for LED involves framing strat-
egies to expand the community’s revenue base, tap
endogenous resources, improve social services and
promote entrepreneurship, innovation, and grass-
roots participation. But first is a review of the
intellectual history of the field before a discussion
of the survey results.
Regional and local economic development
To set the study context, this section highlights the
economic development policy experience in Canada
at two geographic scales: the regional and local (e.g.,
small towns/cities). In both cases, the discussion
focuses on the development policy prescriptions with
emphasis on the latter. After a brief review of the
literature on Canadian regional and local economic
development policy, the research model for the
209
survey is discussed, followed by a summary of
research findings, analysis and conclusion.
The traditional approach to economic
development policy
Since the early part of the 20th century, the conven-
tional economic development approach in Canada
has been called ‘regional development’ given its
focus on enhancing specific regions and areas that
were geographically and economically marginal
(Hayter 1997; Savoie 2000; McMahon 2000). In the
literature, ‘regional development’ pertains to the
central government’s policies and programs to meet
the development needs of lagging regional economies
and places with economic hardships and decline. By
central government means the federal, provincial and
the entire machinery for regional development such
as departments and regional agencies. In regional
development policy terms, the central government
invariably extended development support to regions
in the form of subsidies, equalization transfers and
project grants. Although past regional policy reflected
national economic policy frameworks, the prime
purpose was to promote economic health and well-
being in certain regions to reduce economic dispar-
ities, especially in lagging or less developed
regions—whether for social justice or redistribution
of growth patterns and economic activity in space.
Compared to communities south of the border, this
Canadian approach somewhat mirrors the economic
development policy experience in the US where
policy prescriptions targeted ways to transform the
economic landscape given their overarching concerns
on uneven development and economic slowdowns if
not distress (Glasmeier 2000).
Local economic development: the Canadian way
Local economic development (LED) in Canada is
evolving and continually modified in light of local
circumstances and the prevailing forces within par-
ticular places, regions and the world economy. This
section provides a discussion of LED based on a
synthesis of current approaches that define it and the
emerging issues that are central to its concerns. The
notion of LED is variously tied with anything
‘local’—from capacity building to community par-
ticipation and development intervention. At the
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210
outset, LED is a complement to the conventional top-
down, regional development approach to policy
(ECC 1990). In Canada and elsewhere, three themes
dominate LED research and policy. First, local
economic development is called ‘bottom-up initia-
tives’ as locally inspired efforts to promote entrepre-
neurship at the community level or neighborhoods
within urban areas—in terms of local agency in
policy, research and development (Bryant and Pres-
ton 1990; ECC 1990; Hayter 1997). Coffey and
Polese’s (1985) four-stage model of a bottom-up
approach to economic development focused upon
local entrepreneurship by which endogenous factors
provide the necessary condition for growth—the
entrepreneur and human capital are important factors
for local development. In stressing the role of
individuals and institutions, the bottom-up approach
seeks to broaden community involvement in LED
that values local participation and popular input in
terms of action, policies and institutions. Specifically,
Bryant’s (1987) framework listed three key LED
dimensions and asserted elements of community
involvement, namely goal and objective setting,
strategy selection and implementation, selection and
use of local resources.
Second is the importance of strategic planning in
local economies (Bryant and Preston, 1990). As a
strategic planning process, Bryant and Preston (1990,
p. 4) defined LED within the planning framework as
‘‘a process with a purpose, viz. influencing the
patterns of growth, decline and restructuring of
economic activity to meet the community’s needs
and objectives more effectively.’’ In adopting a two-
stage planning oriented model, LED is ‘‘an endog-
enous process of transforming the local economy
through the use of planning and implementation tools
and techniques’’ (Turvey 1996, p. 2). The focus on
planning and advisory functions of local agencies for
local community economic development is to address
questions of equity, need for loan and technical
assistance, resource employment and appropriate
development model (Lewis 1994). By comparison,
Canada’s state of local economic affairs is quite
similar to many rural communities south of the
Canadian border because they experienced the same
difficulties in maintaining community economic
vitality and/or in promoting growth or development
(Korching and Allen, 2004). Evidence from rural
communities in the US indicates that small commu-
123
GeoJournal (2006) 67:207–222
nities with self-development strategies have potential
to increase local economic vitality (Green et al. 1990;
Korching and Allen 2004). Self-development strate-
gies in the American communities included projects
concerned with efforts by local organizations, invest-
ment of local resources and promotion of local
entrepreneurship.
Third is an emphasis upon local development as
well as entrepreneurial perspectives. One is Harvey’s
(1989) recognition of a shifting trend in policy
orientation from managerialism to entrepreneurialism
in cities and communities. The managerialist trend
that focuses on service provision and tax reduction
shifted to an entrepreneurialist orientation that
actively promotes local economic development (Har-
vey 1989; Hayter 1997). Like Coffey and Polese
(1985); Carvallo and Smith (1992) advocated the
bottom-up approach that fosters local entrepreneur-
ship to stimulate growth and economic progress.
Economic development has been adopted for centu-
ries because people chase jobs and income opportu-
nities while communities seek local prosperity. With
the variability and dynamism of LED, different ‘local’
models may evolve in relation to local situations and
challenges. In the traditional LED model, the devel-
opment of local economies is anchored upon the
stimulation and retention of business and employment
through its export-base and other engines of the
economy. LED may also be developmental through
efforts to diversify the economy, or structural through
its linkages with the sectoral, regional and national
strategies (Lovering 1988). The articulation and
nature of LED often reflected the adoption of devel-
opment strategies and initiatives in local communi-
ties. Those communities with EDS tend to combine
the traditional, developmental and structural
approaches—from marketing the community to
recruiting new industries and residents, and promoting
small businesses for job creation, broader tax base,
growth promotion and development to sustain the
community’s quality of life and vitality.
One example is a case study in British Columbia
(BC, Canada) that explored how small, rural
resource-based communities coped with the many
challenges posed by an industry closure such as
sudden job losses and concerns for the community’s
future. The results from this BC case study were
presented at the 2006 World Urban Forum on
Sustainable Cities to draw attention to the ways
GeoJournal (2006) 67:207–222
community stakeholders managed their transition
from industry closure to community recovery or
resiliency (Walisser et al. 2006). The authors stressed
the important lessons learned by the small commu-
nities to cope with major community challenges and
threats from either natural disasters or human-
induced events. Of the four valuable lessons, the
study emphasized the need for collaboration between
all stakeholders in the restructuring of resource-based
communities and the implementation of a wide array
of actions and strategies for achieving resiliency—
e.g., to stabilize municipal finances and plan for
economic diversification. In LED practice, this work
clearly specified the need to pay attention to the
concerns of small, resource-based communities for
building local capacity toward resiliency, whether in
Canada or across the globe.
The research model
The ‘‘structure-initiatives’’ model was constructed as
an evaluation framework based on three elements.
First is the consideration of the structure for assessing
community characteristics as control variables. The
term ‘structure’ refers to ‘‘community characteris-
tics’’ (development indicators) to define the state of
local economy—from population size to proximity to
the nearest urban center. Second is the examination of
past local actions (by block) and local initiatives as
independent variables. By ‘initiatives’ means grass-
roots influences or actions ‘from within’ or from the
‘roots up’—from diversification, local entrepreneur-
ship development, education and training, community
leadership and cooperation to local funding and
strengthening of information networks. While com-
munity characteristics (e.g., labour force characteris-
tics) tend to influence, constrain or limit the
performance of local economies, the concept of local
initiatives is assumed to contribute independently to
current and future efforts for sustaining economic
life. Third is an analysis of ED strategies as
dependent variables as described below.
LED strategies as dependent variables
Translating the framework into operational terms
began by selecting the dependent and independent
variables and the control variables for the ‘structure-
211
initiatives model’. As dependent variables, ‘LED
strategies’ refer to the strategies for the promotion of
business and industry, tourism and recreation-related
activities, creation and expansion of community
services (Table 2). The purpose was to assess whether
‘past local actions’ (in terms of community organi-
zation, planning and community engagement) have
generated positive and additive effects toward
adopting EDS in promoting economic growth and
development.
Community dynamics as independent variables
Drawing from the exploratory research by Zekeri
(1994) on efforts toward greater LED in US small
towns and rural areas, this empirical study on LED
examined the past actions and local initiatives as
independent variables. On the one hand, past local
actions as independent variables are deemed to
explain the variation in the adoption of LED strat-
egies of small communities in Canada. Past local
actions include (a) community planning on LED
(1996–2001), (b) organization (ED structures and
institutions) and, (c) community engagement as
measured by the range of initiators and proponents
of ED activities. While the study supports the
argument that socio-economic indicators of develop-
ment are key measures for conventional local
economic community analysis, past local actions
were assumed to have positive, additive effect(s) in
influencing the adoption of economic development
strategies at the community level. The variables for
measuring past local actions involved activities for
(a) community planning on LED over the past five
years (1996–2001), (b) organization at the commu-
nity level, and (c) community engagement. Commu-
nity planning means the iterative process involving
problem analysis, assessment of needs and resources,
goal setting, collection and decision making and
adoption of official development plans; marketing
plans and economic development strategies. Commu-
nity organization in LED context refers to the setting
up of working groups, task forces, institutions and
Economic Development Offices within the local
government or community. Community engagement
means those proponents, participants and stakehold-
ers in local development processes that relate to EDS
formulation. Included in the range of proponents and
initiators per strategy (EDS) are the local economic
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212
development organizations (LEDO), private/public
organizations, local government/council, multi-stake-
holders, central province/regional and local commu-
nity (private) organizations In identifying proponents
under community engagement, each of these were
tabulated by area of responsibility—from towns and
townships to district and rural municipality, villages
and counties. On the other hand, local initiatives refer
to ‘community activeness’ on LED activities involv-
ing the local government, the private sector, non-
governmental agencies, and/or community stakehold-
ers. The variable called ‘local initiatives’ is a generic
term articulating local actions and decisions or
dynamic adjustments to changes and challenges to
sustain economic stability and overall quality of life.
These were generated and quantified from the survey
responses by the study communities. In many com-
munities, local initiatives involved the implementa-
tion of programmes funded and sponsored by the
Federal Government (e.g., Community Futures) while
others concerned specific LED programs and projects
within five years before EDS were in place.
Analytical strategy
Three hypotheses were tested by the study. The first
hypothesis is that community characteristics (e.g.,
social, economic and spatial) are likely to operate as
dominant predictors for adopting LED strategies in
small towns and single-industry communities. The
second hypothesis is that past local actions are likely
to influence the adoption of LED strategies in small
communities. Finally, the third stated that local
initiatives are likely to make a positive contribution
and additive effects to explain the variation in the
adoption of EDS by the study communities. Among
the quantitative methods of analysis were univariate
analysis, reliability measurement of survey data,
factor analysis and bivariate correlation (the results
of which are not reported here). As control variables,
community characteristics measured the effects of
social, economic and spatial factors for influencing
and explaining the variation in local initiatives by
type of communities for plan period 1996–2001. The
measure of socio-economic status of community
residents included demographic variables namely
population size, percent of population change
123
GeoJournal (2006) 67:207–222
(1991–1996), highest educational attainment and
average annual income as of 1996 Census. The
measure of population size is the number of residents
enumerated in the 1996 Census by Statistics Canada
for each community in the sample. The mean is
11,663 and the standard deviation is equal to 8,989.
Population change is measured as change in popula-
tion size from 1991 to 1996 as reported in the 1996
Census and community profiles (Statistics Canada
1996, 2001). This demographic variable has a mean
of 5.5 and a standard deviation of 9.4 (Table 1).
Proximity is measured as the distance in kilometers
from each community’s central place to the nearest
urban center. This geographic variable has a mean of
82 and a standard deviation of 68.
LED survey
Using a direct mail questionnaire as data collection
instrument, the survey was administered during the
period April–May 2002 to 415 individuals as key
informants from 200 communities while the research
on EDS was concluded in 2003. The respondents
from the randomly selected communities were chosen
based on these criteria: (a) the informant’s position in
the community, (b) the level of interest and willing-
ness (consent) to participate, and (c) the relevant role
of the informant in the formulation and/or imple-
mentation of EDS. The survey informants included
the Economic Development Officers and Executives,
Planners and Planning Staff, Marketing Staff, Busi-
ness Development Officers, Chamber of Commerce,
elected officials (Reeve, Mayor) and administrative
officers (Chief Administrative Officer, Clerk). These
key informants who were regarded to play LED roles
in their community were drawn from the directories
of professional and municipal associations as well as
academic institutions by province. Of the 87 ques-
tionnaires received, the response rate by key infor-
mant (individual respondent) was 21% and by
community, the response rate was 41% (82 of the
200 communities surveyed). Since the survey focused
on the LED strategies in place, several informants felt
that one return was sufficient to reflect the commu-
nity’s views, instead of having two or three returns
from the same place. The 82 small communities
represented the Yukon Territory and seven of ten
GeoJournal (2006) 67:207–222 213

Table 1 Means and

Measures/indicators Mean Standard deviation
standard deviations of
control variables survey Social indicators
communities 2003*
(Income and education of community residents, 1996)
• Average annual income ($) 25,200 5,366
• Highest educational attainment (‘000) 4,492 3,912
Economic indicators
(Sectoral employment and labour force)
• Unemployment rate (1996) 10.7 6.2
• Participation rate (1996) 65.8 8.1
• Percent of workers in primary sector 12 14.6
• Percent of workers in secondary sector 21 10.2
• Percent of workers in tertiary (service) sector 67 13.7
Demographic and spatial
(Population and spatial indicators)
* Secondary data for
computing above • Population size 11,663 8,989
descriptive statistics derived • Population change (in %, 1996) 5.5 9.4
from Statistics Canada 1996 • Proximity to nearest urban center (km) 82 68
Census

Canadian provinces namely, Alberta, British Colum-

bia, Manitoba, Newfoundland and Labrador, Ontario,
Quebec and Saskatchewan.
The questionnaire contained two sections: the first
covered the community profile as Section (1) and the
second listed questions about the reasons, initiators
and scope of local initiatives and the range of LED
activities from 1996–2001 as Section (2). In record-
ing and tabulating the survey responses for Section 2,
code ‘2’ means a ‘Yes’ to signify a higher interest
while the code ‘1’ means a ‘No’ to indicate a lower
interest. Responses for items with ‘Don’t know’ have
been coded as ‘1’ since it was assumed the respon-
dent was not clear about that particular LED strategy
or it was ‘absent’ or limited as a local activity for that
specific community. This means that the response
categories of ‘No’ and ‘Don’t know’ were combined
giving a dichotomy in constructing the composite
index on LED.
Discussion
Univariate analysis was used to process the survey
data by proportion or percentage for the variables on
local initiatives. Indices were constructed for the four
major types of LED strategies namely: promotion to
attract business and industry, technical and financial
assistance to firms and local industry, creation of
tourism and recreation-related activities and creation
and expansion of community expansion services
(Table 2). Apart from the summated ratings, methods
for assessing reliability and agreement were carried
out for survey analysis. For testing the reliability of
survey results, the index of composite reliability
adopted the range of 1–2 to derive the proportion of
scale variance—i.e., Alpha as the single criterion for
measuring internal consistency of a set of items based
on a scale. The computation of Cronbach’s alpha
produced the dichotomous answers to the four items
by type of strategies with a scaling technique using
‘2’ for Yes and ‘1’ for No and Don’t Know. While an
alpha of .80 or higher was generally viewed as an
acceptable level of internal reliability, the set of four
items was deemed to constitute a reliable scale.
Under the first strategy, 78% established an
organized committee, task force and other groups
to attract business and industry and review the
zoning to increase the availability of land for
business and industrial development. Funding pro-
grams were pursued by 75% of communities to
improve the physical infrastructure for business
development. Of the items listed to attract business
and industry, the hiring of consultants to promote
growth and investments was not the first option.
This means the local governments and/or commu-
nities relied on existing ED offices, Business

123
214 GeoJournal (2006) 67:207–222

Table 2 Percent of study communities with economic development strategies and alpha reliability (n = 82)
Local economic development strategies %

1. Promotion to attract business and industry

a. An organized committee, task force and others established to attract business and industry 78
b. Developed and marketed brown fields and built industrial parks to attract business and industry 51
c. Prepared a marketing plan to promote growth and investments in the community 61
d. Hired external consultants to promote growth and investments in the community 35
e. Applied for grants and financial assistance to assist in promoting local business and industry 65
f. Encouraged the establishment of contacts and network including industry leaders 65
g. Reviewed and rationalized the zoning to increase the availability of land for business and industry 78
h. Promoted and established adult education, enterpreneurship training and local economic development 51
i. Pursued funding programs to improve the physical infrastructure for business development 75
Cronbach’s alpha = .741
2. Technical and financial assistance to firms and local industry
a. Increased access to business loans 52
b. Increased assistance and funding of local training for small business development 48
c. Funding of joint initiatives between local chambers of commerce, government and private sector groups 60
d. Publicly financed vocational training and skills development programs 31
e. Incubator space for new business 38
Cronbach’s alpha = .677
3. Creation of tourism and recreation-related activities
a. Historic and heritage sites preservation 79
b. Arts and music festival 78
c. Bed and breakfast accommodation 72
d. Scenic and tourist site development 85
e. Ethnic festival and special events 65
f. Sponsorship of sports events 74
g. Camping facilities and site development 68
h. Housing development 84
i. Improvement of transport services and facilities 46
Cronbach’s alpha = .700
4. Creation and expansion of community services
a. Expansion of day care facilities and services 46
b. Assistance to local development organizations in the planning and conduct of adult literacy training program 39
c. Services for the poor, the unemployed, the disadvantaged and the elderly 48
d. Health care services and outreach programs 60
Cronbach’s alpha = .647
LED Survey 2003

Development and Planning staff plus local institu-
tions for assuming this LED function. Cronbach’s
alpha is .741 implying strong internal consistency
and reliability of inter-item correlation. For the
strategy to promote technical and financial assis-
tance to firms and local industry, the focus of 60%
communities involved joint initiatives between local
Chambers of Commerce, government and private
sector groups. Next was for increasing access to
business loans particularly for small- and medium-
sized business development enterprises (52%). The
initiative to promote publicly financed vocational
training and skills training program was only
considered by 31% respondents while incubator

123
GeoJournal (2006) 67:207–222
space for new business and assistance to training for
small business development were considered by 38
and 48% respectively. Consistency and alpha reli-
ability is .677 for this strategy.
For the strategy to create and promote tourism and
recreation-related activities, physical and site devel-
opment were considered by majority of the commu-
nities in terms of scenic and tourist site development
(85%) and housing development (84%). Promoting
tourism to generate tourist traffic and revenues were
pursued first through historic and heritage sites
preservation (79%) and by launching arts and music
festival (78%). Recreation-related activities ranged
from sponsoring sports events (74%) to developing
camping facilities and sites for recreation (68%) and
celebrating ethnic festivals and special events (65%).
Tourism facilities through bed and breakfast accom-
modation were adopted by 72% of communities to
pursue the strategy to promote tourism and recrea-
tion-related activities. Only 46% included the item to
improve transport services and facilities under this
strategy. Inter-item correlation in terms of alpha
reliability for the strategy is .700. For the strategy to
promote and expand community services, 60% of
communities raised concerns about health care ser-
vices and outreach programs. This reflects the
prevailing need to attract and retain medical doctors
and address youth development issues. Expanding
day care facilities and services (48%) and services for
the disadvantaged groups (46%) were considered part
of this strategy. Not too far behind is the assistance to
local development organizations in the planning and
conduct of adult literacy programs (39%). Alpha
reliability for this strategy is .647.
Principal component analysis and control
variables
The principal component analysis (PCA) was applied
as a technique for factor extraction of the control
variables (community characteristics) as measured by
local development indicators, comprising social,
economic, demographic and spatial variables
(Table 1). As baseline model, the control variables
were grouped as a single block for measuring the
contribution of past local action variables. The PCA
solution using varimax rotation was applied on the
dimensions of all seven variables listed as ‘control
215
variables’. The application of the PCA solution was
expected to help understand the structure of correla-
tions of control variables in the baseline model. As
method for exploratory data analysis, PCA as method
for factor extraction was deemed suitable as a
solution for factoring—e.g., the variables that cluster
together may interpret each factor according to the
meaning of variables. Several runs were done to
identify which variables have small correlation with
others and to check for the size of communalities and
loadings (coefficients). If the communality for a
given variable is very low, then it may mean it has
little to do with two other factors after extraction
(Table 3).
The results of the principal component solution
using varimax rotation showed seven control vari-
ables have factor loadings greater than .5 percent on
three factors (Factors 1, 2, 3) that have eigenvalues
greater than 1 (Table 4). The criterion of eigenvalues
that were greater than 1 was used since factor
analysis is based on standardized items. The criterion
greater than .5 was used, given the small sample size
in the study. In interpreting the results, decreasing
eigenvalues indicated the end of meaningful factors
derived from the baseline model. Table 4 shows the
statistics for each factor before and after the principal
components (variables) were extracted.
In Table 4 above, the percentage of the total
variance attributable to the first factor accounts for
31.27, the second 19.07 and the third 16.03. Together,
the first three factors account for 66.37 of variability
of the original 7 variables. In the rotation sums of
squared loadings, components with variances less
than 1 are not included in Table 5, except for
components 1–3 with total eigenvalues greater than 1.
To produce an acceptable grouping of variables,
data were transformed using varimax rotation to
generate the PCA structure (constructs) shown below.
Three factors were obtained from seven compo-
nents (variables) after PCA extraction and varimax
rotation. The factor loadings indicate that the popu-
lation size and highest educational attainment mea-
sures distinctly load on Factor 1 and explains 31.2%
of the total variance (Table 6). Based on the principal
component analysis, this factor was identified as
‘human capital’ given the community’s index for
highest educational attainment and population size.
This factor stresses the quality of local labor force—
in terms of available skills and knowledge required
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Table 3 PCA extraction

Variables Initial Extraction
and communalities
% Sector employment 1.000 .625
Average annual income 1.000 .692
High educational attainment 1.000 .859
Population size 1.000 .853
% Population change 1.000 .413
Extraction method: Unemployment rate 1.000 .640
Principal Component Proximity (in km) 1.000 .564
Analysis

Table 4 Total variance explained: principal components

Component Initial eigenvalues Extraction sums of squared loadings

Total % of variance Cumulative Total % of variance Cumulative

1 2.189 31.268 31.268 2.189 31.268 31.268

2 1.335 19.072 50.341 1.335 19.072 50.341
3 1.122 16.035 66.376 1.122 16.035 66.376
4 .879 12.562 78.938
5 .778 11.109 90.047
6 .545 7.784 97.831
7 .152 2.169 100
Extraction method: Principal Component Analysis, May 2003

for local economic development. The relatively
strong statistical association between these two
factors showed that residents of the communities
attained higher educational status and this factor is
called growing communities based on human capital
value (GHC). Factor 2 is influenced primarily by
economic challenges relative to average annual
income levels and unemployment rates. This factor
exhibits strong association with these variables
contributing to local stability in monetary terms and
referred here as the ‘income capacity factor’ to mean
the stabilizing communities (SC). It relates to
communities with a potential capacity to generate
levels of employment and income as a measure of
fiscal stability to benefit its residents, thus potentially
leading to local economic security. Factor 3 is
dominated by the percent of workers employed in
the manufacturing industries (secondary sector) and
the proximity variable expressed in terms of distance
from the central place to the nearest urban commu-
nity. This implies some spatial advantage derived by
communities due to accessibility and closeness to
urban centers with increasing structural reliance upon
the secondary sector in terms of value added to the

Table 5 Total variance

Component Rotation sums of squared loadings
explained: rotation sums of
squared loadings Total % of variance Cumulative

1 1.975 28.213 28.213

2 1.408 20.109 48.322
3 1.264 18.055 66.376
4
5
Extraction method: 6
Principal Component 7
Analysis, May 2003

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GeoJournal (2006) 67:207–222 217

Table 6 Component matrix and communalities three components extracted (Extraction method: PCA)
Community characteristics Factor 1 Factor 2 Factor 3 Communality

a. Population size .882 .188 .200 .853

b. Population change .463 .152 .418 .413
c. Highest educational attainment .882 .219 .181 .859
d. Average annual income .392 .607 .412 .692
e. Unemployment Rate .347 .701 .171 .640
f. Percent employment in secondary sector .299 .199 .705 .625
g. Proximity to nearest urban center .232 .575 .423 .564
Eigenvalues 2.18 1.3 1.1
Total variance explained 31.2 19.0 16.0
PCA structure (constructs):
Factor 1: Human capital
Factor 2: Income capacity
Factor 3: Industrialization/restructuring

economy, and dispersed growth of the service Hierarchical regression model

industries (tertiary sector) in the small communities.
Factor 3 is called ‘industrialization and restructur-
ing’ wherein the local economy is characterized by
structural change in industry, given the growth of the
manufacturing industries, shifts in production tech-
nology, and dynamic adjustment to local resources
and institutions. The structural shift in the economic
base of communities pertains to the small industri-
alizing communities (SICs). Correlations of percent
population change with six other variables are among
the weakest in this panel. The orthogonally rotated
factor loadings indicated the above factors where
principal components loaded strongly together on a
particular factor to produce a more meaningful
construct of variables. The orthogonally rotated
factor loadings (PCA using varimax rotation) are
defined in the PCA structure below.
In Table 7 above, there is a strong positive
correlation between variables under Factor 1 as high
values of population size are associated with high
values of the residents’ highest educational attain-
ment. For Factor 2, there is a strong negative
relationship since the high values of average annual
income are associated with low values of unemploy-
ment rates and vice versa. For Factor 3, the relation-
ship is negative as the high values of secondary sector
(manufacturing) employment are associated with low
values of proximity to the nearest urban center and
vice versa.
In constructing the statistical model for assessment,
the equation in the study has more than two sets of
independent variables, hence a model for multiple
regression analysis (MRA). This was applied to test
hypotheses 2–3 and to determine the proportion of
variance (R2) in the dependent variable (Y) as the
criterion predicted from a set of independent vari-
ables (X’s) in the hierarchical regression equation.
The regression equation consisted of the adoption of
EDS as dependent variables (criterion), the control
variables and past local action and local initiatives as
independent variables (predictors). Hypothesis 2
explored if past local action made any positive effect
or contributed to the adoption of LED strategies after
considering and controlling for the community’s
structural and socio-economic characteristics.
Hypothesis 3 was tested to determine any positive
effect of local initiatives to explain the variation in
the adoption of EDS in small communities.
First is the hierarchical regression analysis on the
promotion to attract business and industry as the
dependent variable (Table 8). The control variables
(community characteristics) as a whole accounted for
8% of the variance in the dependent variable—the
promotion to attract business and industry (R2). With
past community action added to the regression
equation, the total R2 increment in variance explana-
tion (R2) is 2.8% as indicated under the column R2

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218
Table 7 Constructs from rotated component matrix (PCA solution using varimax rotation) Explanatory notes
Factor 1
Human capital: loadings are based on variables for highest educational attainment (.900) and for population size (.902).
Factor 2
Income capacity: loadings on variables include those on average yearly income increase (.819) and for unemployment rate ( .781).
Factor 3
Industrialization and restructuring: loadings on variables for proximity to nearest urban center ( .706), and for the percent of workers
employed in the secondary sector (.756).
change. This increment however is marginal and
below expectations. The results indicate that when
past local action variables are entered separately to
the baseline equation, the variables do not produce a
substantial additive effect to promoting business and
industry. However, when local initiatives are added to
the baseline model, the increment in variance expla-
nation of 55.9% is substantial. When past local action
and local initiatives are added to the baseline model
simultaneously, the variables make an additive con-
tribution to variance explanation. Overall, 64.5% of
the variance in the promotion to attract business and
industry is explained. Of this total, 56.5% is attrib-
utable to the combined effects of independent vari-
ables—past local action and local initiatives. The
results indicate the extent of community activeness
(local initiatives) due to limitations from other levels
of government to support all LED programs and
projects proposed by the community.
For technical and financial assistance to firms and
industry as the next dependent variable, the same
ordered series of hierarchical regression analysis is
presented in Table 8. The results in Table 8 indicate
that the baseline model with the control variable as
criterion, show an R2 of .075. (F = .670). When past
local action variables are added to the baseline
model, the R2 increases to .081 and the change in R2
is .006. However, this variance explanation for
technical and financial assistance to firms and indus-
try as accounted for by past local action is not
statistically significant. In contrast with past local
action, the addition of local initiatives as variables to
the baseline regression equation increases the R2 to
.609 with an R2 change of .535 (F = 10.63). When
both past local action and local initiatives are added
to the baseline model simultaneously, an additive
joint effect of 55.9% is made in variance explained.
On the whole, 63.4 % of the variance in technical and
financial assistance to firms and industry is explained.
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GeoJournal (2006) 67:207–222
Table 8 also presents the results of the hierarchical
regression model containing the creation of tourism
and recreation-related activities as the dependent
variable (criterion). The control variables for the
hierarchical model accounts for an R2 of .089
(F = 1.103). When past local action is added to the
baseline regression model, R2 is .126 and the increment
of .6 is negligible and not statistically significant. When
local initiatives are added to the baseline model, the
increment in variance explanation (R2) is .566
(F = 5.701) and is statistically significant. The additive
effect of local initiative as variable was consistent with
expectations. When added simultaneously to the hier-
archical regression equation, a significant increase of
.502 in variance explained is attributable to both past
action and local initiative and this is far beyond the
contribution of the control variables.
Overall, 59.1% of the variance in the creation of
tourism and recreation-related activities is explained.
The last criterion is the creation and expansion of
community services variable by which the control
variables account for 11.3% of the variance explana-
tion. With past action added to the regression
equation, variance explained reports an R2 of .145
with slight increase of .035 in R2 change and not
statistically significant. In contrast, adding local
initiative variable gives an R2 of .447 with a
substantial increase of 33.4% (F = 5.51). When both
past local action and local initiatives are entered as
single block to the control variables (in the baseline
regression model), an additional 38.2% in variance
explained is reported and this amount is statistically
significant (F = 5.034). Taken together, 49.5% of the
variance in creation and expansion of community
services is explained. Like previous dependent vari-
ables, the results from predictors for community
services criterion indicated that local initiatives, when
added as a block of independent variables or com-
bined with past local action, contribute sizeable
GeoJournal (2006) 67:207–222 219

Table 8 Change in amount of variance explained in hierarchical regression model

Dependent variables

R2 R2 change F Sig.

Business and industry

The control variables .08 – .98 .452
Increment due to past action .108 .028 .976 .523
Increment due to local initiatives .639 .559 7.742 0
Increment due to past action and local initiatives .645 .565 6.398 0
Increment due to past action with local initiatives controlled .645 .006 6.398 0
Increment due to local initiatives with past action controlled .645 .537 6.398 0
Technical and financial
The control variables .075 – .912 .502
Increment due to past action .081 .006 .67 .749
Increment due to local initiatives .609 .535 10.633 0
Increment due to past action and local initiatives .634 .559 8.896 0
Increment due to past action with local initiatives controlled .634 .024 8.896 0
Increment due to local initiatives with past action controlled .634 .553 8.896 0
Tourism and recreation
The control variables .089 – 1.103 .37
Increment due to past action .126 .037 1.091 .38
Increment due to local initiatives .566 .477 5.701 0
Increment due to past action and local initiatives .591 .502 5.093 0
Increment due to past action with local initiatives controlled .591 .025 5.093 0
Increment due to local initiatives with past action controlled .591 .465 5.093 0
Community services
The control variables .113 – 1.438 .202
Increment due to past action .145 .031 1.284 .255
Increment due to local initiatives .447 .334 5.515 0
Increment due to past action and local initiatives .495 .382 5.034 0
Increment due to past action with local initiatives controlled .495 .382 5.034 0
Increment due to local initiatives with past action controlled .495 .346 5.034 0
LED Canada Survey 2003

amounts to variance explanation. Findings from the
regression model to create and expand community
services indicated an increment in variance explana-
tion and produced additive, positive contributions to
community efforts for nurturing and sustaining the
vitality of local economies.
Conclusion
The proposition of this empirical study is that past
action and local initiatives have positive, additive
contribution to explain the variation in the adoption
of economic development strategies of small com-
munities. The involvement of the 82 study commu-
nities in the survey offers a valuable insight into the
field perspective on LED across Canada. In address-
ing the objectives of the study, the ‘structure-
initiatives’ model was adopted as the analytical
framework for assessing the effects of the structural
versus the dynamic (interactional) aspects of LED.
The study examined community characteristics as
control variables for variance explanation and assess-
ment of past action and local initiatives on the adoption
of LED strategies. Drawing from the survey analysis,
the results indicate a differential support to the main

123
220
proposition. The findings from the hierarchical regres-
sion analysis showed that the ‘local initiatives’ have
significant and additive effects on the adoption of
economic development strategies of small communi-
ties. This is indicated by the variation explained after
the community characteristics were considered and
controlled. Past action in the form of community
organization, planning and community engagement
made positive but modest effect to explain variations in
all sets of LED strategies adopted by communities.
After controlling the effects of the community charac-
teristics (structural factors), independent, additive con-
tributions to variance explanation are obtained for
promoting business and industry, technical and finan-
cial assistance to firms and industry, creating and
expanding tourism and recreation-related activities and
creating and expanding community services.
In contrast, variables for past action made mar-
ginal contribution to variance explanation in all
dependent variables with the slightest R2 change
found in technical and financial assistance to firms
and industry (.6) (Table 8). Further analysis indicates
that without the control variables considered in the
analysis, the independent variables significantly made
additive effects on all four dependent variables,
especially for promoting business and industry
wherein 56.5% is attributable to the combined effects
of independent variables. The findings from the
regression analysis raised the importance of ‘local
initiatives’ within the theory and practice of LED.
These results lend credence to the perspective in the
field promoting grassroots action and local involve-
ment to the LED process. Until now, empirical
studies on LED evaluation are limited to case studies.
With these survey results, the study is expected to fill
the research gap on evaluation from a broad number
of Canadian communities stressing the importance of
local initiatives. The study noted that the local
government, non-government actors and members
of the community have a positive role to play in LED
when measured by ‘local initiatives’ for the eventual
adoption of EDS in their respective communities. By
focusing on Canadian public policy, emphasis has
been placed on the relevance of conceptual and
practical applications to local community economic
development practice. Policy makers and profession-
als engaged in LED work should continue to
encourage ‘interactional factors’ or community
dynamics (local initiatives) as they remain vital
123
GeoJournal (2006) 67:207–222
actors in local development. This empirical study
on the effects of past action and local initiatives could
broaden our understanding of local development
processes at the community level.
For future policy consideration, the small commu-
nities could potentially reverse the current develop-
mental state of their local economies as they take a
proactive, strategic approach to local economic
development. LED professionals should explore
practical and innovative ways to strengthen commu-
nity capabilities including capacities for planning,
economic management and endogenous enterprise
development. Small communities could look for
‘development anchors’ (e.g., university and academic
institutions, knowledge-based industries, commerce
and retail) in addition to investment prospecting,
smokestack chasing and chip chasing to create small
towns and SICs as spaces of innovative development
or places of new business and industry. Many
communities have tapped the economic potential by
promoting tourism, recreation and culture (including
entertainment and film industry) and by developing
the community’s economic foundations, especially
the physical infrastructure and human capital. In
addition, further research should explore additional
indicators and assessment indices for a larger repre-
sentation of communities (e.g., >500). At the time of
the survey research, general data on trends of inter-
governmental sources of local revenue were not
analyzed yet deemed important to grasp fully the
different outcomes on community engagement and
variables influencing EDS adoption. The involvement
of private sectors and local development agencies, the
policy and economic coordinating role of local
governments, and all concerned with ‘development
from within’ in the form of LED initiatives are
fundamental in pursuing growth and development for
shaping local worlds for tomorrow, today.
Acknowledgement The author wish to thank Dr. Bob
Sharpe, Associate Professor of Geography and the Office of
the Vice-President for Academic and Research of Wilfrid
Laurier University in Waterloo, Ontario for the funding support
to the survey research from 2002–2003.
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