Sustainable Human Development : A new territorial and people-centred perspec9ve

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1 LOCAL and INDUSTRIAL DEVELOPMENT a.a th November 2015 Sustainable Human Development : A new territorial and people-centred perspec9ve Mario Biggeri *^ and Andrea Ferrannini^ * Department of Economics, University of Florence ^ ARCO Lab (Ac?on Research for CO-development)

2 Premise Development is characterized by mul9dimensional, mul9level and dynamic processes, involving mul?- stakeholder and mul?ple local and extra-local rela?ons à vs linear input-ac?on-output-outcome rela?ons Economic and social dimensions of development are simultaneously affected by growth/recession processes, together with social turmoil and financial, food and energy crises, etc. Necessary to provide stakeholders and policymakers with deeper understandings of development processes, and broader approaches are needed to integrate economic, social and environmental objec9ves within poli9cal economy discourses.

3 The local development perspective in the 21 st century the idea is to unlock the wealth of regions as the prime source of development and renewal in tending to favour bottom up, region specific, longer term and plural-actor based policy actions (Amin, 1999) Keywords: Meso-economic dimension Territorial systemic competitiveness and endogenous potentials Dynamicity Inter-sectorial and multi-disciplinary perspective Exploring the strict interrela9on among economyins9tu9ons-society (Antonelli et al., 1988)

4 Local development systems Marshallian industrial districts Alterna?ve way to achieve produc?ve efficiency External agglomera?on economies Industrial atmosphere Compe??on and reciprocal coopera?on Territorial clusters of SMEs External economies within the area Proximity, trust and coordina?on Func?onal interconnec?on along the value chain Collec?ve efficiency Overlap between economic dimension and local community social life Mobiliza?on of hidden and underu?lized endogenous poten?als and resources

5 Low road vs High road to development The low road, characterised by limited interac9on, specializa?on and coopera?on between SMEs, a scarcely dynamic local government and a modest level of investments and ins?tu?onal changes, exploi?ng a low-wage and unskilled workforce; The high road, based on a wide and inter-sectoral par?cipa?on of different local actors, able to compete and cooperate at the same?me, s?mula?ng investment in innova9ve technologies and in R&D, employing skilled workers, in order to pursue a solid systemic efficiency, greater innova9on capacity and compe99veness.

6 What is missing? This dichotomy does not depict fully the dynamic process of clustering, as many La?n American and Asian clusters experienced elements of both roads, e.g. a rapid growth combining innova?on and low wage workers. à Mehrotra and Biggeri (2002 and 2007) include the ignored dimensions of social outcomes such as social protec9on and quality of labour condi9ons offered in clusters.

7 The dirt road A third development path for clusters where workers, especially home-workers, do not receive any social protec9on, work in extremely poor socio-economic condi?ons and are exposed to deep risks for their health. à The informal economy and ac9vi9es are pervasive and it appears very difficult to involve this sector and its microentrepreneurships in public support strategies. à The dirt road strategy thus represents a case where cluster upgrading follows a path opposed to human development and decent work, constraining the same growth of the territorial system, as local produc?vity, workers purchasing power and thus local demand for local products are limited.

8 Figure 11.2 Clusters, Human Development and Poverty Reduction: High Road, Low Roads and Dirt Roads and Strategic Routes SOCIAL OUTCOMES BSS access, social integration and participation, social and environmental protection No High Collective Efficiency High Extremely rare Based on exploitation at all levels (High Road 3) High Road 1 Higher synergy and social cohesion (Low Road 3) (High Road 2) Dirt Road 3 Low Road 1 Low Road 2 No Cooperation and competition Dirt Road 1 Dirt Road 2 Unsustainable in the market economy in the long run The two synergies strategic route 1 Alternative SR dominant strategic route 2 Alternative CE dominant strategic route 3 e.g. Deviations Notes: SR= Social Result; CE=Collective Efficiency; BSS=Basic social services; Collective Efficiency implies cooperation between cluster firms and absence of cut-throat competition.

9 Policy implica9ons for Cluster development strategies The fact of being clustered does not automa9cally bring posi9ve external economies in the produc9ve system neither posi9ve social and environmental outcomes for local development à A policy agenda has to be outlined. What are the main policy implica?ons? Are the policies the same for all clusters and local development systems? Can a dirt road be turned into high road of development?

10 Renewed interest: HD paradigm People-centred, focusing on their opportuni?es and choices in daily life Par?cipa?on and Empowerment GDP as unique mono-dimensional indicator vs mul?-dimensionality (e.g. Human Development Index) Integra?on among micro-meso-macro levels Valorisa?on of synergies and complementari?es between the economic and social dimensions of development

11 CAPABILITY APPROACH AND HUMAN DEVELOPMENT Development can be seen as a process of expanding the real freedoms that people enjoy. Sen (1999) Opening Sentence, Development as Freedom Puts human beings at the centre, not income, People are the real wealth of a na?on. The basic objec?ve of development is to create an enabling environment for people to live long, healthy and crea?ve lives (HDRO 1990) Human development is a process of enlarging people s opportuni?es. The most cri?cal ones are to lead a long and healthy life, to be educated and to enjoy a decent standard of living. Addi?onal choices include poli?cal freedom, guaranteed human rights and self-respect

12 MAIN ELEMENTS OF CHANGE IN THE ANALYSIS 1. From economic system to the single person à The person is the object of the social and economic policies 2. From the metric of income/means to the metric of opportuni?es/goals à Evaluate the policies according to the capacity to have an impact on capabili9es expansion 3. From economic growth to sustainability (economic, social and environmental) including processes. 4. Process à empowerment individual (as agent) and social empowerment 5. The basic objec9ve of development is to create an enabling environment for people to live long, healthy and crea9ve lives (HDR, 1990)

13 But Most social arrangements are determined at the local level Capability Approach (CA) and Sustainable Human Development (SHD) Paradigm ooen ignore the meso level characteris9cs and achievable and achieved func?onings at the local level (among others: Deneulin, 2008; Stewart, 2013) For prac??oners the SHD paradigm needs to be opera9onalisable at local level (e.g. different HDR at na?onal and regional level)

14 partment, Inc. of Economics and Today, the global debate on development is at a crucial turning point. Discussions on post- nagement of the University of 2015 processes with the UN, as well as on the reform of the EU Cohesion Policy, interact rence, Italy, and Scientific Director with a heterogeneous combination of diffused global instability and social unrest, long- ARCO Lab (Action Research for COstanding recessions and extraordinary growth processes, together with increasing velopment). He has conducted concentration of economic activity, wealth and power. Within this scenario, the authors earch for a number of international stress the importance of dealing with economic competitiveness, social inclusion, anizations on capability approach, environmental protection and poverty reduction at the local level, recognizing the interplay ernational cooperation, impact aluation, local development, well- between the evolution of local development systems and the expansion of individual and ing of children and persons with collective capabilities. Blending Amartya Sen's people-centred and opportunity-oriented abilities. He is Fellow of the Human Capability Approach with the literature on place-based local development processes, this velopment Capability Association book helps in understanding multidimensional paths of local change within a Sustainable DCA) and scholar of the Florence Human Development perspective and analysing what means are available to enable human ool on Local Development. flourishing. drea Ferrannini is Coordinator of Strategic Unit on Local velopment of ARCO Lab (Action search for CO-development), PIN.r.l., University of Florence, Italy. He s been working in several countries ch as the Dominican Republic, anda, Ethiopia, Albania and Serbia, quiring expertise on local velopment processes, human velopment and participatory thods. Sustainable Human Development A New Territorial and People-Centred Perspective Special offer with this flyer valid until 30/11/2014 Mario Biggeri and Andrea Ferrannini This price is available to individuals only. This offer is not available to our trade and library customers. Offer only valid outside Australasia & Canada. Orders must be placed direct with Palgrave Macmillan. To order your copy at this special price, visit and quote discount code PM14THIRTY, or your order to the address below. rope, & ROW (excl. Australia & Canada): USA: Australia: Customer Services, Palgrave Macmillan, VHPS, Customer Services, e Macmillan, James Madison Highway Palgrave Macmillan, ing Building, (US route 15), Gordonsville, Level 1, Claremont St, Road, Houndmills, VA 22942, USA South Yarra stoke, RG21 6XS, UK Tel: VIC 3141, Australia 4 (0) Fax: Tel (free call) 4 (0) sales@palgrave-usa.com orders@unitedbookdistributors.com.au orders@palgrave.com Prologue by Giacomo Beccattini, Emeritus Professor, University of Florence, Italy Special Offer - 30% off with this flyer The book s perspective is especially relevant, as the world cogitates about the post-2015 Sustainable Development Goals agenda, because in the next few decades the synergies between local development and human development will become more salient than ever before. Santosh Mehrotra, Institute of Applied Manpower Research, Government of India This book is a timely and innovative contribution to bridging the gap between the capability and local development literatures. The authors develop a powerful conceptual framework that is likely to become an essential starting point for policymakers and those committed to promoting sustainable human development within and across regions. David A. Clark, University of Cambridge, UK

15 Book s objec9ve The core idea of this book is based on the integra?on between: Amartya Sen s Capability Approach (Sen, 1999) / Sustainable Human Development (SHD) paradigm (UNDP HDRs) and the literature on local / regional development processes within an evolu?onary perspec?ve

16 Star9ng point: Which partner theories? Importance of the territory as an ac9ve protagonist of development in contemporary economies Close rela?onships between economy-ins9tu9ons-society Dealing with economic compe??veness, social inclusion and environmental protec?on at the territorial level seems to be undeniable Evolu?onary paths of adapta?on to changing condi?ons through learning processes, knowledge genera?on and enhancement of organiza?onal capabili?es and behaviour à Territories as evolving complex popula;on system (Hodgson and Knudsen, 2010) But: Amartya Sen s capability approach + literature on local / regional development processes + evolu9onary perspec?ve à They have rarely been framed together in theore?cal models

17 Ra9onales for SHD at the local level (1) 1. Human development is implicitly a place-based process The kind of development pursued by agents is shaped by principles and values, reflec?ng the rela?ons and balances of power 2. Par?cipa?on and agency freedom are mostly locally experienced The primary community, whether geographical or organiza?onal, is the immediate space open to most people (IFDA, 1980, p. 11) 3. The expansion of individual and collec?ve capabili?es is inexorably linked to local governance mechanisms within a mul?level perspec?ve Shaped by poli?cal commitment, civil society, decentraliza?on, etc. 4. Individuals and their capabili?es and agency expansion processes are territorially embedded Structures of living together are shaped by the territorial features

18 Ra9onales for SHD at the local level (2) Services and goods provided and distributed at the local level Collec?ve empowerment and par?cipa?on Social and environmental conversion factors Role of local ins?tu?onal structure (formal/informal), social capital à The context shapes place-based SHD processes à The func9onings expressed by a territorial system are key conversion factors to give all persons the possibility to flourish, i.e. expand his/her capabili?es

19 The perspec9ve of SHD at the local level (1) Paradigm: Sustainable Human Development (SHD) Level of analysis: Local Development System (LDS), including individuals, groups and collec?ve capabili?es NoAon of development: A process of enabling the local system to func9on in order to facilitate the expansion of the real freedoms that agents have reason to value in an integrated and sustainable (economic, social and environmental) manner (Biggeri and Ferrannini, 2014: 11).

20 Clarifica9ons 1. It is not simply a mater of unit of analysis 2. Co-loca?on of economic and social actors is not sufficient à Cogni9ve, organiza9onal, social, ins9tu9onal and geographical proximity 3. No suppor?ng a uniquely con9ngent view with no space for compara?ve analysis or inves?ga?on of universal paterns. 4. No single or preordained scale can be iden?fied in advance as most appropriate spa?al unit of analysis 5. Each territory of analysis and interven?on is neither isolated from the na?onal and interna?onal context nor self-sufficient

21 Features: Opportunity-based Diagnos?c Systemic

22 Synergies among capabili9es and between BSS The effecaveness of freedom as an instrument lies in the fact that different kinds of freedom interrelate with one another, and the freedom of one type may greatly help in advancing freedom of other types (Sen, 1999: 37) Synergy between economic opportuni?es and social opportuni?es, which results in feedback-loops (Ranis, Stewart and Ramirez, 2000). Synergy between interven?ons within BSS, which result in achieved func?onings (Mehrotra and Delamonica, 2007; Mehrotra and Biggeri, 2007). Holis?c and systemic approach to different socioeconomic phenomena and contexts

23 Local ins9tu9onal structure a set of humanly devised behavioural rules that govern and shape the interac;ons of human beings, in part by helping them to form expecta;ons of what other people will do (Nugent and Lin, 1995: 2307) Formal ins9tu9ons: poli?cal, legal, economic and contractual rules, governance ins?tu?ons, economic collec?ve organisa?ons, civil society organisa?ons Informal ins9tu9ons: behavioural norms (social conven?ons, moral values, and tradi?ons) which characterise each territorial community Broad-based ins9tu9onal thickness includes enterprise support systems, poli?cal ins?tu?ons and social ci?zenship.

24 Social capital in territorial systems (1) Set of social rela?ons based on reciprocity, coopera?on and trust; Collec?ve and public dimension, linking the micro-level of individual experiences with the meso level of associa?ons, firms and communi?es. à To foster the supply of local public goods and services for compe??veness; à To promote inter-ins9tu9onal coopera9on and develop systemic incen?ves to favour inclusion of other ins?tu?onal actors in the development process versus à To generate perverse mechanisms and networks

25 Social capital in territorial systems (2) à Openness to outside values prevents the sense of community from degenera?ng into communitarian confinement. à Bridging vs Bonding E.g. the sense of community is a form of social capital which determines: the ins?tu?onal environment, the capacity to generate consensus and trust, to resolve conflict and to mobilize resources, the level of provision of public goods, the local willingness to pay for development.

26 Interna9onal rela9ons and local development systems The development of a certain local system is also based through link between sectors and territories on ini?a?ves and ac9ons taken in another place, or by external ins?tu?ons/ agents (Becauni et al., 2001); Key features of the globalisa9on process entail significant effects in the short and medium term on collec?ve efficiency and social outcomes of local development systems, leading to relevant devia?ons in their trajectories in terms of HD; Interna9onal coopera9on programs and ini?a?ves.

27

28 Features: Opportunity-based Diagnos?c Systemic

29 Opportunity-based SHD at the local level as à A process of crea?on of condi9ons and ins9tu9ons within local systems enabling the realisa?on of territorial poten9ali9es and the expansion of individual and collec?ve opportuni9es in an integrated and sustainable manner. NB Sustainability and long-term horizon in environmental, social, economic and ins?tu?onal terms (e.g. Social cohesion and social jus?ce, etc.) à Public delibera?on, open debate and discussion, par?cipa?on and ac?ve involvement in decision-making

30 Diagnos9c approach: The problem of universal remedies These paradoxes arise when applied economists and policy advisors mistake models and arguments that are valid only in specific circumstances for universal remedies. If nuanced, fine-grained, contextual research gets transformed into simple rules of thumb: 1. The research loses relevance and effec?veness. 2. The research develops in its vulgar form the poten?al of doing actual damage by being applied in inappropriate circumstances Rodrik (2010)

31 Diagnos9c approach à Give up on a Holy Grail that produces development at all places and?me (universal fix) à Act as diagnos9cians, helping decision makers choose the right model (and remedy) for their specific reali?es, among many contending models (and remedies). à Diagnos?cs requires pragma9sm and eclec9cism, in the use of both theory and evidence. It has no room for dogma?sm, imported blueprints, or empirical purism. Rodrik (2010)

32 Systemic approach Territory is conceveid as a locus of systemic interac?ons and rela?ons based on geographical, cogni?ve, social, organisa?onal and ins?tu?onal proximity à To strengthen the systemic interac?ons which shape the innova?ve capacity of local systems, embracing the complexity and heterogeneity of territorial socie?es NB No local system is self-sufficient à To strengthen mul?-scalar and mul?-level rela?ons within and between territories to foster collec?ve learning and crea?vity.

33 The interpreta9ve framework of SHD at the Star?ng point: local level Individual level per se remains the best way to evaluate the impact of policies (Sen, 1999) but a complementary perspec9ve is necessary à To focus on the characteris?cs and func9onings of the territorial/local systems themselves where individual human beings live and interact

34 The STEHD Framework Sustainable Territorial Evolu;on for Human Development ObjecAve: To explore the territorial dynamics of SHD processes. Features: The STEHD framework is conceived as mul?level, mul?dimensional, complex and evolu?onary Structure: The STEHD framework aims to disentangle the combina9on of different elements (stakeholders and agents, resources, barriers, ins?tu?ons, capaci?es, par?cipa?on spaces and poli?cal willingness) that shape the evolu9onary processes of, and territorial paterns for, SHD.

35 The STEHD Framework Extra Local Level Collec9ve dynamics Local dynamics Individual dynamics Source: Biggeri and Ferrannini (2014, p. 50)

36 The STEHD Framework and the role of the firms Source: Figure 6.2 Biggeri and Ferrannini (2014)

37 The core of the STEHD framework 1. The local context cons?tutes an enabling environment to enhance individual capabili9es and facilitate virtuous circles of social cohesion and ins?tu?onal change. 2. The LDS, given its resources, barriers, ins?tu?ons and capaci?es and the interac?on among different stakeholders, can func?on through a vector of territorial achievable func9onings. 3. Star?ng from this opportunity set the choice process (connected to the poli?cal willingness and par?cipa?on processes) will determine the achieved func9onings at the LDS level (i.e. the performance of the LDS and the provision of services and goods) The STEDH framework focuses on non-individual outcomes (such as collec?ve and external capabili?es) and func9onings achieved at the territorial/local level as intermediate outcomes for individuals and other agents capabili?es.

38 Applica9ons of the STEHD framework MulAlevel governance mechanisms (Biggeri and Ferrannini, 2014) InternaAonal development cooperaaon (Biggeri and Ferrannini, 2014) Local Economic Development Agencies / Regional Development Agencies (Biggeri and Ferrannini, 2014) Buen Vivir (paper presented at EAEPE 2013) Social enterprises (paper presented at ERSA 2014) Industrial clusters (e.g. local atmosphere vs top-down imposi?on) Role of MNCs (e.g. territorially embedded or exploita?ve purposes) Technological and organiza?onal innovaaon processes Structural insatuaonal reforms (e.g. local ownership or external imposi?on, gradual or quick-paced?ming) Community-Based RehabilitaAon (CBR) programs for people with disabili?es Social empowerment processes (e.g. acquisi?on of civil rights for indigenous popula?ons in La?n America)

39 Empirical results regarding Tuscany region provinces

40 Mc 10 provinces Lu Pt Po Pi Fi 3.7 millions of inhabitants Si Ar Li Gr

41 Local development paths: Tuscany region provinces - Rationales for unit of analysis and data base - Characteristics of the analysis: Dynamic ( ): medium-term analysis with 4- years intervals Multidimensional: economic and social dimensions with 5 sub-dimensions each

42 Medium-term analysis (or most recent data: ) à 4-years intervals are needed to observe significant movements on Human Development trajectories

43 Interpretative framework

44 Bi-dimensional index The idea is to represent the units and try to observe their path or shio over?me à Need for two indexes or a bi-dimensional index that can describe both situa?ons Many approaches are possible to describe both social and economic components: most of them have to face a step where the variables available are aggregated into a (possibly single) value.

45 Multidimensional analysis Economic Dimension (n indicators) Social Dimension (n indicators) Economic opportunities (4) Environment opportunities (2) Employment opportunities (3) Access to health services opportunities (3) Credit opportunities (4) Education opportunities (3) Entrepreneurship opportunities (3) Participation and social capital opportunities (6) Investments opportunities (2) Equal opportunities (8)

46 Selected variables for Tuscany provinces (1) Economic dimension Wealth GDP per capita Entrepreneurship Industrial value-added per worker Debt per capita Turn-over of local firms Bank savings per capita Density of firms Financial autonomy Investments Hi-Tech firms Employment Employment rate Provincial capital account expenditures CIG hours per worker Credit Bank branches per capita Subsidized credit per capita ATM per squared km Accounts uncollectible

47 Selected variables for Tuscany provinces (2) Environment Provincial expenditure for environmental protection Legambiente Ecosystem Index Social dimension Health Coverage of mammography prevention Health workers per capita Education Graduates per capita Work injuries Participation and social capital Provincial expenditures for professional education Coverage of professional education courses Teachers per pupil Blood donations per capita Waste recycling Newspapers diffusion Electoral participation Equal opportunities <35 in provincial administration Women in provincial administration Female unemployment Youth unemployment Waiting list for kindergarten Learning support teachers Women in local firms N of volunteering organizations <30 in local firms Juvenile reports Foreign entrepreneurship

48 Main difficulties in data collection - Missing data in panel series e.g. Institutional structures and processes (e.g. start up new enterprises, corruption, ); GDP per capita corrected by inequality; Renewable energy; Job-training for persons with disability. - Change in some statistical indicators - Poor territorial disaggregation of data (province level)

49 Results (1) 0,60 0,55 0,50 0,45 Economic dimension AR FI 0,40 GR 0, , LI ,25 Social dimension LU 0,20 0,20 0,25 0,30 0,35 0,40 0,45 0,50 0,55 0,60

50 Results (2) 0,60 0,55 0,50 0,45 Economic dimension 1998 MC PI 0, PT 0, , PO 0,25 Social dimension ,20 0,20 0,25 0,30 0,35 0,40 0,45 0,50 0,55 0,60 SI

51 ED disaggregation (1) 0,65 0,60 0,55 0,50 0,45 0,40 0,35 0,30 0,25 Entrepreneurship and investments AR FI GR LI 0, ,15 Wealth, employment and credit LU 0,10 0,10 0,15 0,20 0,25 0,30 0,35 0,40 0,45 0,50 0,55 0,60 0,65

52 ED disaggregation (2) 0,65 0,60 0,55 0,50 0,45 0,40 0,35 0,30 0,25 Entrepreneurship and investments MC PI PT PO 0,20 0,15 Wealth, employment and credit SI 0,10 0,10 0,15 0,20 0,25 0,30 0,35 0,40 0,45 0,50 0,55 0,60 0,65

53 SD disaggregation (1) 0,65 0,60 0,55 0,50 0,45 0,40 0,35 0,30 0,25 0,20 Education, participation and equal opportunities AR FI GR LI 0,15 Environment and health LU 0,10 0,10 0,15 0,20 0,25 0,30 0,35 0,40 0,45 0,50 0,55 0,60 0,65

54 SD disaggregation (2) 0,65 0,60 0,55 0,50 0,45 0,40 0,35 0,30 0,25 0,20 0,15 Education, participation and equal opportunities Environment and health MC PI PT PO SI 0,10 0,10 0,15 0,20 0,25 0,30 0,35 0,40 0,45 0,50 0,55 0,60 0,65

55 Main results (a) - Most units follow routes quite close to a synergic pattern in Tuscany during the first period - Similar trajectory except for Livorno and Massa-Carrara (decline ED) - Impact of recent financial crisis: immediate dramatic decline in SD in all provinces - ED seems to diminish sensitively its level, although still partially reflected in our data

56 Main results (b) - The sensitivity analysis confirmed our results are not driven by a unique group of variables. - The disaggregate analysis in the ED indicates a more diffused attention towards variables affecting wealth, employment and credit opportunities. - The disaggregate analysis in the SD indicates a general tendency towards a more synergistic path before the crisis.

57 Main conclusions - Relevance of changing perspective and objective with an integrated framework focused on ED-SD synergies - Benefit of path analysis with an evolutionary mediumterm view: Replicable to other case studies Easy to be continuously updated Policy implications

58 Today (2015): to the SDGs To be adopted in 2015 as future development agenda goals targets Wide participatory consultation process

59 Group discussion on SDGs localising2015 Question: How to localize the SDGs? à Implementation à Measurement / M&E Select 2 goals and discuss the two issues!

60 Conclusions The need for a comprehensive, holis?c and integrated approach to local development focused on synergies between economic and social dimensions of wellbeing; The need for the human development approach to focus mainly on the meso/ territorial level, where individuals live, interact and influence the development process; Only by making policies that are both place- and people-based will a strong case for regional development interven?on be made (Barca et al., 2012). The human sustainable development paradigm based on the expansion of individual and collec?ve capabili?es and individuals par?cipa?on in the society gives the coordinates for understanding the economic and social evolu9on of local development systems

61 Development is defined as the establishment of conditions and institutions that foster the realization of the potential of the capacities and faculties of the human mind in people, communities and, in turn, places (Pike et al., 2006: 1263) à Sustainability and long-term horizon in environmental, social, economic and institutional terms (e.g. Social cohesion and social justice, etc.) à Public deliberation, open debate and discussion, participation and active involvement in decision-making

62 Contact for further ques9ons and feedbacks Posi?ve and nega?ve comments on this lecture are more than welcome!

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