Endogenous development and institutions: Challenges for local development initiatives

Abstract

This paper discusses the relevance of local development policy as an instrument for regional development. Endogenous development strives to obtain self-sustained development in urban and rural areas and argues that institutions that facilitate the introduction of innovations leading to diversification of productive activities and market access are key to the process. The efficiency of local initiatives depends on the agreement between local actors on strategies and goals, as well as local communities’ participation in the management and control of development initiatives. The effectiveness of local initiatives confronts important challenges, such as compatibility of goals, interaction of the forces of development, and strengthening of institutions. Therefore, endogenous development is always a slow process that demands the evolution of institutions and requires specific local initiatives and actions for each territory.