Today, as in Soviet times, most city halls in Ukraine have an economic department. However, with the transition to democracy and a market-based economy, these departments are not equipped to support or encourage economic development effectively in their communities. As the experience of countries with developed market economies shows, the role of local government is not to try and manage the local economy, but rather, to support local economic development by creating and supporting a business-friendly environment and by attracting investment. Fulfilling this role, however, requires a new and different approach. The creation of a municipal economic development department (MOED) devoted to private-sector job creation is an important step in adopting this new approach and in institutionalizing the process of local economic development in the city.
Distinctive Features of a MOED
An important step in preparing for local economic development strategic planning, or at least before implementing an LED strategic plan, is to establish a professional team within the local government that can move the planning process forward and can be responsible for the implementation and monitoring of the plan. Ultimately, it is this team’s responsibility to facilitate the creation of jobs in the private sector and economic growth in the community.
Creating a credible and effective MOED is a proven way for local governments to focus and coordinate activities that promote job creation and economic growth in their communities. It is a long-term investment by the city to enhance its ability to attract the resources (businesspeople, residents, institutions, finance, capital, knowledge, and the like) necessary for economic development and to use these resources in a coordinated way. Of course, a municipality may function well without a MOED, but it will need one if it hopes to compete successfully against other municipalities within the country and throughout Europe for resources and investments.
What does a credible and effective MOED look like? MOEDs in Ukraine should be organized as a separate department or as an independent division of the existing economic department. An MOED’s shape and size can vary greatly from city to city, depending on population size, available resources and its strategic mission, but its core functions will always remain the same.
Every MOED must have a director who reports directly to the mayor. This structure is important, because in managing local economic development efforts (such as negotiations with foreign direct investors), quick decisions must often be made at the top level, and if the director cannot deliver them quickly enough (through direct and immediate contact with the mayor), the opportunity may move to another city, region, or country.
- Strategic Planning and Project Management
- Creation, administration, maintenance and updating of the economic development strategic plan.
- Compilation, evaluation, and maintenance of analytical materials, including a community profile, business attitude surveys, population surveys, and SWOT analysis.
- Management and implementation monitoring of the strategic plan.
- Administration of a strategic plan projects database.
- Generating, selecting, and developing new projects.
- Management of project implementation.
- Negotiating with financing authorities about financing of implementation projects.
- Assessment of projects and their impacts.
- Marketing and Communications
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Development, administration, and implementation of a global marketing strategy.
- Development and administration of a unified graphic visual style for municipal presentation materials.
- Development of marketing and promotion materials.
- Presentation of community development goals for partners.
- Organization of municipal participation and presentation in relevant events, trade fairs, and exhibitions.
- Targeted searching and contacting of potential investors, institutions, and organizations whose presence in the community would contribute to the achievement of strategic development objectives.
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- Funding/Economic Development Financing
- Identification and assessment of potential external sources of financing (banks, international donors and projects, government, etc.) for use in implementing projects.
- Development of relations with the representatives of external sources of financing.
- Development of application materials necessary to secure funding.
- Reviewing the terms and conditions of financial applications.
- Cooperation on budget development to ensure that resources needed for priority project are appropriately allocated.
- Financial evaluation and audit of implemented projects.
- Promotion of Business and Investment
- Coordination of activities related to the promotion of business and investment.
- Presentation of community development goals for partners.
- Serving as intermediary between businesspeople and the local government.
- Cooperation with business promotion organizations.
- Mapping, development of properties, land, and buildings for business — business property database administration.
- Business information service administration.
- Human Resources Development and Workforce Training
- In direct response to the current and anticipated needs of the business community, coordination of relations between the municipal education and labor departments, universities and schools, and professional agencies in order to attract and/or develop a more skilled workforce in the municipality.
- Regional Cooperation and External Relations
- Coordination of relations and activities with institutions and organizations related to economic development at the regional and national level.
- Managing relations with foreign organizations, donors, and investors.
- Helping implement the regional, national, and global marketing strategy.
- Tourism (Optional)
- Coordination of activities related to the tourism industry.
- Participation in meetings of tourism promotion organizations.
- Support of implementation of tourism projects carried out by third parties.
- Implementation management of projects related to tourism and initiated or funded by the municipality.
|
City Pop. |
MOED Size |
|
10,000 – 35,000 |
1-4 |
|
35,000 – 100,000 |
4-7 |
|
100,000 – 350,000 |
7-12 |
|
350,000 – 1,000,000 |
12-15 |
|
1,000,000 + |
15+ |
In very small cities, only one or two individuals may be responsible for dealing with all these important activities. In larger cities, the MOED may be more fully staffed, with one or more individuals dedicated to each activity area and with additional staff to support the office’s administrative activities. Whether your city is large or small, it is important to remember that the individuals working in your MOED, particularly the director, do not need to be specialists in any of these areas. Truly skilled economic development professionals are generalists, not specialists. They need only to be knowledgeable enough to speak with credibility to the businessman, the civil engineer, the media, the visiting foreign investor, the mayor and city council, and the poor or unemployed laborer. Therefore, it is often a very good practice to recruit fresh people to join the MOED staff, preferably from the private sector, and to create a mix of professional experience and educational backgrounds that best enables your economic development team to deal with the diversity of issues covered in the local economic development process.
Below is an example of an organization chart for a MOED with the minimum number of required staff for a city of 35,000 to 100,000 people.
It is important that each staff member in the MOED have a computer with Microsoft Office software and access to the internet. It may be important to invest in geographic information system (GIS) software that can be used by the information management officer to accurately map and track municipal land and buildings available for economic development.
How to Establish an MOED
Many cities already have something called an office of economic development or a person responsible for economic issues. In these cases, it is important that the city evaluate its current efforts to address economic development and determine whether the current structure is meeting the aim of creating jobs and economic wealth. If it is not, then the city should benefit from restructuring the department along the European and international best practices described in this toolkit.
Listed below are the recommended steps for the mayor and political representation in a city to create (or reorganize) and operate a successful office of economic development. Many of these steps will be implemented by the economic development director, once hired.
Steps for Success
- Develop a clear definition of the city’s mission in terms of economic development. If your city is planning to embark on the LED strategic planning process, this process will create a forum where a mission shared by the community will be developed.
- Review the economic development functions currently delivered by City Hall.
- Determine the human and financial resources available for the office of economic development. This will determine the resources available to implement the mission, and in many ways, it will also determine the MOED’s future capacity and possibilities.
- Develop a scope of work for the new/reorganized office of economic development and determine the resources necessary to fulfill that scope of work.
- Hire an executive director and allow him or her to hire other individuals to work specifically and exclusively within the department. Because many of the people who are most likely to be the best qualified to work in this department usually command high salaries, the city hall should consider providing additional resources to improve the city’s ability to hire and retain the most qualified candidates. In addition, it should be noted that English-language skills are very valuable in economic development, because English is the international language of business, and attracting and communicating with most international investors requires strong English-language skills. Ideally, your MOED will be staffed by people who are multilingual and can speak and write in at least proficient English.
- Make the MOED report back to the local council outlining its success and achievements every year. More regular interim reporting can be established every two to three months.
- Establish criteria by which the impact of activities will be measured. This is normally the increase in private sector jobs or new businesses as a direct result of local economic development initiatives. Align performance and success with remuneration for the MOED staff.
- Establish clear relations with other departments, especially planning, transport, public works, and utilities. Ideally, all these activities should be very strongly influenced by the MOED’s priorities.
- Develop and begin implementing an MOED staff training plan. Without specialized training in the latest LED techniques, your MOED team will be less competitive. Remember, the quality and skills of your team will in many ways correspond to the future economic growth of your community.
- Promote the activities of your MOED within the community. The activity of a MOED must not be invisible. It takes some courage for any city to devote adequate resources to its MOED, and both citizens and public officials have the right to know what is happening with these resources and what success is attributable to the MOED.
Organizing for Local Economic Development
The LED project places a high priority on every Ukrainian city’s creating an MOED within City Hall, where all programs related to economic development will be centrally located and coordinated. The City Hall-sponsored MOEDs being created in Ukraine are well suited to the current state of the Ukraine economy and the human and budgetary resources available to the cities.
However, there are several alternative organizational forms that may become appropriate within the next 5 to 10 years, as Ukraine’s private sector business groups become more active and involved in their city’s LED efforts. The purpose of this note is to suggest, for future reference, alternatives in organizing delivery of LED services that are commonly used by local governments in the United States and Western Europe.
Economic development has been recognized as an essential activity of U.S. cities for more than 50 years. Although almost all cities began these activities in the 1960s by creating city-financed and city-managed departments of economic development, alternative forms began to develop in the 1970s and 1980s, and today, many options are available to cities concerned about competing effectively in retaining and attracting job-creating investment. These alternatives emphasize the importance of a permanent partnership between the City Hall and the business community in providing credible, relevant, and comprehensive LED services.
One example of such an organization is the public, not-for-profit corporation, jointly financed by the city and the business community, which is a private/public partnership (PPP). The private sector board members are often chosen by the Chamber of Commerce, and the mayor and city council appoint others to represent the city’s interests. The PPP, being a nongovernmental organization, is not restricted in either its activities or hiring practices by governmental regulations and thus enjoys greater flexibility in delivering economic development services, particularly in financing, marketing, and land development.
Another option is to organize the development agency as a public corporation, technically within city government, and totally financed by public revenues not managed by the City Council. It will have a Board of Directors composed of representatives of local business organizations and City Council appointees. This revenue stream is often provided by legislation permanently dedicating specific tax receipts to the corporation.
A third alternative is to remove economic development services from City Hall completely and delegate management responsibility to the local chamber of commerce or other private sector business leadership group, often called a business council. The organization is primarily funded by the private sector. The city’s contribution is limited to its financial contributions to the organization.
