50th Congress of the European Regional Science Association: "Sustainable Regional Growth and Development in the Creative Knowledge Economy", 19-23 August 2010, Jönköping, Sweden
There is a wide range of economic development tools used by practitioners to facilitate growth on regional and municipal level. One of such tools is a strategic planning process. It helps local governments to set goals and priorities for community development and to coordinate activities in different areas of community life. It also helps to establish partnership among stakeholders and interest groups. This enables communities to mobilize public and private resources, to consolidate efforts of various groups and, by these means, to streamline economic development. Despite a large number of applications, there is a lack of rigorous evaluation results. This lack is related to two major difficulties: 1) The planning procedure differs greatly in the implementation details from case to case. That makes the comparison complicated (if at all possible). 2) The decision to start the planning process in most cases is thought to be predetermined by growth outcomes. Cities that are more likely to benefit from the planning are more likely to get involved into the process. Thus, it is almost impossible to tell if planning causes growth or economic growth leads to planning. The project "Local Economic Development in Ukraine" (LED) allows overcoming the above mentioned difficulties. This project is implemented by the USAID in 76 Ukrainian cities starting in 2004. The project helps local governments to initiate and to implement a process of strategic planning. It is done consistently using the same procedure in all participating cities that were initially chosen by the project administration. This paper evaluates the effect of LED using data of Ukrainian State Statistics Bureau on minor administrative units (cities and rural districts) for the period of 2003-2008. The analysis reveals that communities that have started a strategic planning with the LED are able to increase the number of businesses per capita, the amount of investments in fixed capital, and the number of jobs per capita in a short run. It also has affected the unemployment rate in a longer run.