The political-administrative perspective
Economic promotion depends to a significant extent on a carrier structure. It will always involve volunteer activities, but it cannot depend solely on them. It is crucial that there are professional organizations which are responsible for the implementation of defined activities.
From this perspective, it depends on the polity of given country whether economic promotion activities should rather be pursued by local or regional authorities. There are three issues:
Is the country centralized or is there a certain degree of local and/or regional autonomy?
How many administrative layers are there?
How are responsibilities distributed between administrative layers?
Centralization and decentralization
Successful local or regional development initiatives evolve over extensive periods of time, and they involve intense interaction within a relatively stable core of stakeholders which learn jointly and establish a certain degree of trust. In highly centralized countries, it is common to find that state representatives at the local and regional level are installed by central government and rotate frequently (often due to the reasoning that too much collusion with locally based stakeholders may invite corruption and/or erode the commitment of state representatives with the policy objectives of central government). This makes local or regional economic development initiatives difficult, in particular if other stakeholders, such as business associations, are not well organized and competent.
Number of layers
The success of local and regional economic development initiatives is correlated to the match between administrative borders and economic spaces. If an economic space, say a regional cluster, involves a number of localities and local governments but is only a tiny fraction of the territory of the next higher level administrative unit, things become difficult. Government involvement in, say, cluster promotion becomes tricky because it requires collaboration between administrative units for whose collaboration there is no administrative provision and no established rules and routines.
It is common to find that nation-states have three administrative layers: municipal, provincial and national. With this structure, it is rather by chance that administrative borders and economic spaces match. But then again, there is no guarantee at all that more diversified administrative structures (such as the five layers in Germany) match with economic spaces.
Distribution of responsibilities
Finally, there is the question how responsibilities are distributed among different layers of government. Do decentralized layers of government have a clear mandate to pursue economic development? And if that is so, does this mandate match with the distribution of responsibilities for fields which are the basis for key economic development instruments, such as spatial planning, administration/preparation of real estate, education and training, permits and registration, and so forth? For a given layer of government, be it local or regional, it is difficult to fulfil an ascribed role in economic development if the responsibilities for the majority of these activities lie with other layers of government.
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