From means to well-being: local economic development the capability approach

Most authors agree that the goal of local economic development is increasing welfare, standard of living or the quality of life of local inhabitants. But when we look for a rationale of well-being (or welfare, standard of living, quality of life) we cannot find any tangible definition in the literature on local economic development. Mostly, the practice of, and the theorising about, local economic development pay attention only to the means of well-being. For instance: How can competitiveness or regional innovation capacity be increased, how can the local economy be restructured, how can less-developed regions be developed? Means are in the focus of mainstream theories of local economic development because according to those theories, there is a positive linear relationship between means and well-being: improvement of means results automatically in higher well-being. We call mainstream theories of local economic development means-oriented because their focus is on means and not ends (well-being). In opposition to the means-oriented approaches, we try to establish a model of local economic development which is based on the notion of wellbeing, based on the capability approach formulated by Amartya Sen. We had two research questions. (1) What are the goals, the processes and methods of local economic development according to the capability approach? (2) What are the consequences of the capability-based local economic development for the practice of local economic development in Hungary? In our paper, we argue that the goal of local economic development is the enhancement of capabilities of local inhabitants. The process of local economic development consists of three steps. (1) Identifying relevant capabilities with deliberative participation. (2) Analysing the relationship between means and relevant capabilities. (3) Iteration of the previous two steps. We suggest that it is possible to base local economic development on the capability approach, which focuses both on means - and the circumstances of the use of means. This capability-based approach creates an openly value-driven and community-centred model. An essential part of this approach is to specify the valuable capabilities and most important values that come along with deliberative participation. We show that local development should not focus only on one aspect (for instance economic growth) and that the information taken into consideration in current practice is insufficient for a successful local development process. So, our perspective provides guidelines to broaden the informational base for decisions on local development.