Introduction to the theme (local factors and actors)

The local factors that influence the entrepreneurial activities (with section on Role of outside actors, Empowerment and Institutions).

II.1 Role of outside actors

Any organization or group of people whose entry influences the economic, but also the social situation at the local level, can be seen as an outside actor. Outside actors can influence not only the local economy but also the way people think and behave. The role of outside actors is found to be important for improving the quality of life for local people and generating returns for local entrepreneurs. Also, their entry into developing regions and countries influence local economic development processes. NGOs assist the community to discover their potentials and also mobilize community to be self-reliant. The final outcome of community development is the independence of the community from external actors, and that is why NGOs should not be seen as a permanent solution, but as a vehicle to reach this goal.

Future research should examine which actors, besides MNCs and NGOs can take the role of an outside actor in the Local Economic Development process. Although the number of NGOs is increasing over the last decades, their exact role in the context of Local Economic Development still needs to be determined.

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II.2.  Empowerment

Participation in community economic development stimulates individual empowerment, which in turn dismantles the sense of personal isolation. This act of participation is considered to create a feeling of belonging and interconnectedness, that enables commitment and cooperation. At the local level, empowerment is considered one of the possibilities for promoting local economic development. Empowerment can be achieved by employing coordination approaches. Furthermore, related research offers several ways in which empowerment can be facilitated. This includes fulfillment of basic needs, the strength of social capital, giving training, providing starting capital, and creating networks.

Future research should examine which empowerment framework is most effective in the context of the Multi-Level, Multi-Actor Model of Local Economic Development.

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II.3. Institutions

In this theme, the role of institutions in stimulating local economic development is considered. This includes financial institutions, universities, and governmental and non-governmental institutions. Institutions are the rules of the game in a society or the humanly devised constraints that shape human interaction. They consist of both informal constraints (sanctions) and formal rules (laws). Institutions exist to create order and reduce uncertainty in exchange, by defining and limiting the set of choices of individuals. For example, the relationship between governmental and non-governmental institutions may increase community empowerment. Furthermore, governmental institutions may influence the relationship between local leaders and entrepreneurs.

Future research: A direction for future research is the examination of which institutions are important in the context of the Multi-Level, Multi-Actor Model of Local Economic Development.