1.Komsomolsk, Ukraine: The Establishment of a Municipal Economic Development Office to Facilitate Economic Growth and to Create New Private Sector Jobs
The Problem
When developing the city’s Strategic Plan of Socioeconomic Development for 2002-2006, a SWOT analysis was applied, which identified the city’s key weaknesses as:
- The single-industry nature of the local economy and the city's excessive dependence on operations of the Poltava Mining and Processing Plant.
- The low growth rates of local businesses, the insufficient infrastructure of business services, and an undeveloped building services industry.
In view of the analysis, the key development priority was to move gradually away from absolute dependence on the city's single employer and to create the conditions for the diversification of the local economy based on its natural resources, other external opportunities, and the aspirations of the community. To achieve success in this area, the following activities were planned:
- To create an environment conducive for development of private business. To create profitable business centers. To attract external investment and develop the work force in accordance with the city’s economic needs.
- To develop a market infrastructure, banking and consulting systems, and other organizations that would facilitate an increase in business activity in the city.
- To formulate a sound economic development policy that would support viable enterprises. To conduct an effective diversification program in the manufacturing sector to gradually outgrow the city's single-industry orientation.
With these new tasks facing the City Executive Committee, it was essential to reform the municipal Economic Development Directorate.
The Solution
To implement the strategy and promote economic development, the structure of the Economic Development Directorate (EDD) of the Komsomolsk City Council Executive Committee was improved by the City Council in October 2002.
The EDD structure was updated for the following reasons:
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To develop the capacity to implement the city's development plan.
- To support the city economy development priorities for the planned period.
- To develop the ability to implement the strategic planning tasks. This is expected to change as the economic conditions in the city change.
The Directorate’s mission was proclaimed to be “to develop policies for the city's productive and economic development, to attract investments, and to develop small business to increase personal incomes and to create new jobs.”
The reform created six departments within the Directorate’s organizational structure. The distribution of main tasks among the directorate’s departments, with the number of staff members within each department, is listed below.
- Economic Analysis and Planning Department (three staff members)
- Analysis of the financial and economic performance of medium-sized businesses, their dynamics, and developmental trends.
- Analysis of budget revenues generated by small businesses, the structure of employment, and the preparation of presentation materials dealing with the city’s economy.
- Analysis of budgetary institutions to identify possible opportunities for savings.
- Analysis of the performance of communal enterprises.
- Calculation of local tax rates and fees.
- Business Registration and Small Business Development Department (three staff members)
- Business registration activities.
- Preparation of small business development programs.
- Coordination of stakeholders in the development of local economic policies.
- The implementation of regulatory policies.
- The development of suggestions for improvement of the local environment for development of small business.
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Investments and International Activities Department (three staff members)
- Facilitation of the investment process in the city’s economy.
- The support of international activities of businesses.
- Development of the tourism industry.
- Consumer Market Department (two staff members)
- Analysis of the condition of the consumer marketplace, the development of proposals relating to the marketplace, and the forecasting of changes within the marketplace.
- The provision of technical and consultancy support to consumer service businesses.
- The monitoring of prices for goods and services.
- The promotion of activities targeted at improving the level of consumer services.
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Department for Protection of Consumer Rights (two staff members)
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The safeguarding of the rights of consumers to quality goods and services.
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Department for Improving Permit Procedure and Implementation of Regulatory Policies (two staff members)
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Simplifying permit procedures and regulatory environment for businesses.
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The precondition for successful implementation of the strategic priorities consists of developing partnerships between the local government and the local Enterprise Support Fund and Information and Consulting Center for Entrepreneurs, the Komsomolsk Entrepreneurs’ Union, and Komsomolsk Employers’ Association NGOs, as well as facilitating the establishment of other business support organizations.
The Results
The Directorate’s implementation of the Strategic Plan has supported positive growth trends in the Komsomolsk business community:
- 4,600 persons are currently employed by small and medium-sized businesses (to compare, the Poltava Mining and Processing Plant employs 9,980 persons).
- The share of revenues for the municipal budget generated by entrepreneurs has increased from 2.1% to 4.3% in the last three years.
Contact Information:
2. Chuhuiv, Ukraine: The Establishment of a Municipal Economic Development Office to Facilitate Strategic Planning
The Problem
The city of Chuhuiv in the Kharkiv Oblast began developing a strategic plan for economic development in 2001. Employees of the existing city economic departments did not have time to perform additional tasks connected with strategic planning. The leaders of the city council realized that the city needed to create a new economic development department to help lead the design and implementation of the strategic plan.
The Solution
With support from the USAID-funded Kharkiv Partnership Program, the city designed a new economic development department with broad responsibilities. Among the responsibilities of the newly created department were:
- Organizing the strategic planning process.
- Preparing analytical materials and forecasts on development of the city.
- Monitoring the strategic plan’s implementation.
- Cooperating with and supporting the local business community.
- Creating a registration center for businesses.
- Initiating a public relations campaign to publicize the city’s economic development activities and successes.
- Creating and updating of the city’s Web site.
- Developing materials on the city’s attractiveness to investors.
- Coordinating and collaborating with international donors and foreign investors.
Three employees were hired to work in the department: a head of the department and two specialists. Two of these employees had no experience in working in a bureaucratic organization, and they added new views and ideas to the activity of the department. One of the department’s specialists works exclusively on permissions for businesses.
The Results
The new economic development department has successfully led the city’s strategy for economic development. During the development of the strategic plan, the department conducted several surveys of citizen priorities, business attitudes and needs, and the economic development of the city for the past five years. This information was critical in creating a realistic strategic plan for economic development supported by the community.
A public relations campaign focusing on the strategic planning activities was started in the first days of the development of the strategy. It became an effective citizen participation tool.
Now the city is implementing the strategic plan with the new department coordinating and monitoring the implementation of the plan. It has also led training sessions for local entrepreneurs on how to start a business and how to provide high-quality services to clients. It has cooperated with numerous international technical assistance projects. The city received several grants for implementation of projects. The USAID BIZPRO project provided the city with technical assistance to create a registration center for businesses.
The department developed materials on the city’s investment attractiveness and conducted negotiations with several potential foreign investors. These investors are considering opening their businesses in Chuhuiv.
The city created a Web site, www.chuhuev.kharkov.com. , and the city’s economic department is updating information on the site regularly.
The Economic Development Department’s work is focused not only on monitoring and implementing the strategy but also on helping to implement LED international projects and programs and establishing links between local and foreign businesses. The department has also been directed to work on promotion of joint ventures and FDI attraction.
The experience of Chuhuiv showed that traditional municipal structures were not capable of dealing with economic development. What was required was the creation of an MOED that could create a viable plan, implement it, and successfully monitor it.
Contact information
Modern Technologies Promote Economic Development
The production of the “Chuhuiv: Yesterday, Today, Tomorrow” compact disc aims to help speed up local economic development. For the first time, a regional town is using modern information technologies to promote its economic development. This is a joint pilot project of the Chuhuiv Agency for Municipal Development and the Chuhuiv City Council, supported by the U.S. Peace Corps. Chuhuiv is located in Kharkiv Oblast and has a population of 37,000.
This informational CD is an important component of the Chuhuiv municipal marketing program. Chuhuiv is very proud to be the birthplace of the noted nineteenth-century artist Ilya Repin. The town’s Ilya Repin Museum is a major tourist attraction and hosts an annual international Repin painting festival that attracts more than 6,000 visitors each year.
One section of the CD features the museum and the festival. It is expected that this CD will help the Repin Museum and festival attract visitors from a broader geographical area. Attracting more tourists is seen as a great way to expand local business opportunities and to raise needed funds for the city and the museum.
The section of the CD describing city economic potential is targeted directly at potential investors. It includes descriptions of major local industries, a database of local enterprises, useful contact information, local entrepreneurs’ opportunities, and links to useful internet resources. Virtually all of the documents on the CD have been translated into English.
Another important feature of the CD is a detailed map of the city and the surrounding region. The map shows Chuhiuv, the Kharkiv Oblast, and greater Ukraine. It features transportation routes and other general geographic information. It is expected that the CD will be updated regularly, adding businesses to the commercial database and additional regional information.
