Abstract
Private investment is one of the prominent approaches to local economic development. The focus of this study is the exploration of the political elements of private investment in local economic development activities in the backgrounds of local governance. A combination of quantitative and qualitative research methods challenged the idea that private investment, considered economically, contributes to local economic development, an assumption that isolates private investment from the surrounding environments. Therefore, the study found out that private investment in Gurage Zone has been showing an inconsistent trend in terms of its contribution to land development, employment creation, and capital generation. This inconsistency is reflective of the nature of private investment which is a depoliticized, delocalized, and de-bureaucratized program highly isolated from the local realities. This again is related to the detrimental effect of local governance structure which is fragmented, asymmetrical, poorly structured, and de-contextualized, thereby creating weak-bureaucratic services, inefficient partnership, and poorly structured governance platforms. Thus, the study concludes that private investment in Gurage zone is being restrained because of its isolation from the local realities, political imperatives, bureaucratic networks, and resource contexts, supposed to be controlled by the local governments.
Highlights
Private sector investment is no doubt important to improve local economic development
Though some studies tend to show the general decline of private sector’s investment in Gurage Zone (Gurage Zone is found in Southern nations Nationalities and People’s Region in Ethiopia), there is a dearth of research that explains the relationship between private sector investment and the resulting impacts on local economic development, measured by employment increment, land cultivation, and capital generation
Apart from what [31, 32] mentioned that partnership modalities are important to facilitate public-private collaborations, this study revealed that a sense of social responsibility, organizational and governance stimuli of the local government strongly maintains the engagement of private sectors in local economic development platforms
Summary
Private sector investment is no doubt important to improve local economic development. To improve the private sector’s investment performance in alignment with local governance platforms and planning processes, it is so worthwhile to critically analyze the impact of the private sector’s investment on local economic development. This requires deeply assessing the impact of the political environment on the activities of private investors. The complex relationship between private investment and the local government’s political responsibilities in the context of local economic development has to be studied from the governance and regulatory framework perspective. The basic rationale of this study is to deeply investigate the role of private
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