The main objective of our research is to provide a new theoretical foundation for local economic development. We examine how can the aim of local economic development be defined, what set of information is needed to frame the local development decisions and what kind of decision making processes are appropriate within the framework provided by the capability approach of the Nobel-laureate Amartya Sen.
The ultimate objective of local economic development is to increase the welfare of the residents. Any developmental intervention is considered to be desirable if it results in a better welfare situation. As a consequence, the whole theoretical structure of local economic development is fundamentally dependent on how the notion of welfare is interpreted.
The literature of the local economic development – implicitly – builds on the dominant (utilitarian) welfare traditions of economics. We claim that the objective of local development can be interpreted within a different framework as well; the most up-to date theoretical achievements in connection with human development and welfare can be incorporated into the underlying theories of local economic development. We attempt to answer three, closely interconnected research questions, which are the following:
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