Local and Regional Economic Development (LRED) is a specific, regionally focused approach alongside the more general approach of Local Economic Development (LED).

LED has been described as follows:
“The purpose of local economic development (LED) is to build up the economic capacity of a local area to improve its economic future and the quality of life for all. It is a process by which public, business and non-governmental sector partners work collectively to create better conditions for economic growth and employment generation.” (World Bank)

“LED means more than just economic growth. It is promoting participation and local dialogue, connecting people and their resources for better employment and a higher quality of life for both men and women.” (International Labour Organization)

LRED – Adding Value to the Region
As opposed to LED, Local and Regional Economic Development (LRED) not only involves many stakeholders and sectors, it also creates regional synergies through Inter-District Cooperation.

With experience in almost 70 projects world-wide, GTZ defines LRED as follows:
“LRED is an ongoing process to mobilize competent key stakeholders and organizations from the public sector, the private sector as well as from civil society to become partners in a joint effort to increase the competitiveness of a defined sub-national territory (GTZ)

The overall objective of LRED in a development context is to promote sustainable local or regional economies that will trigger pro-poor growth and lead to better living conditions for the majority of the population. The fundamental difference between LRED and traditional stand-alone private sector development interventions, such as technology transfer, trade promotion and SME development, is the systemic character of LRED. LRED relies on a comprehensive set of instruments and interventions, which are all inter-linked in the implementation.

LRED has been implemented in industrialized countries for decades. In the 1990s, first attempts were made to transfer these experiences to developing countries. In the beginning, activities focused on marketing locations to external investors. At a later stage, the scope was broadened to include the development of local resources. Starting in the late 1990s, a more holistic approach was introduced which concentrated on partnerships between the public and the private sector, participation of civil society, and networking between all stakeholders.

This holistic LRED approach has proven to be quite flexible and thus suited to diverse political and socio-economic settings. LRED can be applied in urban and rural locations; it works in fast-growing, high-potential areas and may be adapted to more remote or poverty-stricken regions. LRED has been successfully implemented in densely as well as sparsely populated areas, and even in conflict, post-conflict and post-disaster contexts. The careful selection and combination of LRED instruments and fields of intervention is crucial for achieving long-term impacts.

For more information on definitions and concepts of LRED, please see GTZ LRED Brochure Asia and LRED Brochure South Africa (downloads).

LRED in Indonesia
A decade after the Soeharto era, Indonesia has emerged as a country with more democratic and decentralized structures. Regional autonomy has come hand in hand with a transfer of significant tasks and funds to sub-national parliaments and planning boards, which have become responsible for the economic development of their respective districts and provinces. However, analysts continue to criticize the lack of capacity and commitment of stakeholders at both the national and regional level within this process.

The changes brought about by regional autonomy hold opportunities as well as challenges. Decision makers often still lack the knowledge and skills necessary to fulfill their new roles. Against this backdrop, the concept of LRED seemed to be well-suited to strengthen regional potentials and meet related challenges. The RED Program, an Indonesian-German cooperation between the National Planning and Development Agency (BAPPENAS) and the German Technical Cooperation (GTZ) on behalf of the German Government, is a response to these ongoing developments.