Intangible Locational Factors, relevant for Individuals

Intangible locational factors do not exclusively relate to firms but also to individuals. It is one of the basic goals of the activities of local governments to contribute to the improvement of the conditions of life of its citizens: The existence of local hospitals, kindergardens, schools and recreational facilities, attractive housing opportunities and good environmental quality all shape the well-being of local citizens.

For the purposes of local economic development, intangible locational factors for individuals are important in a more specific context:

• First, they are influencing the willingness of well-skilled professionals to work and live in a certain place to an enormous degree. Many developing countries suffer from a scarcity of skilled professionals. Most of these live in the capitals of their respective countries, because quality of life is often considered better there than in more remote areas. Therefore, companies intending to invest in areas outside the capital face substantial difficulties in attracting professionals to these locations. Often, they have to offer enormous fringe benefits on top of excellent salaries, leading to high operational costs that are sometimes undermining competitiveness.
  

• Second, these factors influence the chances for women to become employed. Especially poor households can usually not afford to pay someone who takes care of the children in the absence of the parents. Thus, public kindergardens or pre-school facilities enable women to take up employment and thus broaden the local labour force.

Local authorities are in a position to improve the attractiveness of their local area. The following outline gives an idea of how one could go about it:

First step: Defining a governing pattern for development
A governing pattern tries to shape the image of a local area and defines the basic direction of its economic development. "Vilankulo - revitalizing tourism", "Ouro Preto - promoting historical tourism and creating new enterprises around our businesses incubator" or "Manica - attracting investors from neighbouring Zimbabwe" are all examples of such governing patterns. They are built on the specific features of a local area, trying to strengthen strengths and to overcome weaknesses. Ideally, local authorities define them in cooperation with the local business community.

Second step: Defining priorities
The next step is to define priorities. Some activities are important for achieving the governing pattern, whereas others are less essential and may be left aside for the moment. Some of these activities relate to intangible locational factors relevant for individuals, others do not.

An example from Brazil: Ouro Preto has the image of a charming city, unique in its compilation of 17th and 18th century houses and churches. Some years ago, some of these old houses had become neglected and decayed. The city was in danger of losing its attractiveness not only for tourists but also for its corpus of renowned university lecturers. Among other possibilities that existed, the local government opted for a rehabilitation programme in order to reverse the trend, recover the city image and keep the professionals attracted to it.

Third step: Making a financial plan
Measures designed to improving vocational attractiveness need to be financed. Usually, local governments do not dispose of many funds, and the scarce resources that do exist are more easily dedicated to basic services rather than spent on investments improving intangible factors. However, not in all cases do these measures create heavy burdens for the local treasurer. In the case of the kindergarten mentioned above, parents may contribute with a modest fee to support its operation. The municipality of Our Presto sourced funds from federal government as well as from a local mining company for the rehabilitation of a good part of the old structures. And if you think of the creation of good housing opportunities of skilled professionals, part of the development costs of the real estate may be borne by a private developer.

As a general rule, creativity and the search for alliances with the private sector and other institutions may make up a good deal of the financial shortcomings encountered.

Examples: Intangible Factors for Individuals

Career opportunities

Quality of housing and neighbourhoods

Environmental quality

Quality of schools

Social infrastructure

Recreational opportunities

Attractiveness of city and region

High and popular culture

Instruments to strengthen intangible factors relevant for professionals

Improve housing and quality of neighborhoods

Improve environmental quality

Assure high quality of educational institutions

Create an attractive social infrastructure

Improve leisure facilities (sports, high culture, popular culture)

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