A key part of being circular is to source your materials from local sources. In fact, going local is a great way of cutting down on transportation costs, and there are always people in your local government institution who want to promote local initiatives.
We will now introduce the concept of Local Economic Development (LED) and the understanding of how business models may impact LED.
Urban and rural communities, and governments around the world increasingly turn to LED-strategies in response to the challenges of globalization and the drive for decentralization.
LED is a central part of developing local government institutions. It is a process which involves several projects that bring together different partners in the local area. The goal is to work together to harness resources for sustainable economic growth. LED is increasingly being seen as a key function of local government and a means of ensuring that local and regional authorities can address the priority needs of local citizens in a sustainable way. There is no single model for LED. Different approaches reflect local needs and circumstances.
LED means more than just economic growth. It is promoting participation and local dialogue, connecting people and their resources for better employment and a higher quality of life for all.
Applying business models that positively affect the local economy is key to sustainable growth.
In order to better explain the impact business models may have on local economies, the circular business model Canvas may be used (see Module 1).
In the CBMC, the most important part of the model is the Value Proposition, as it explains precisely the value that a company offers to its customers. In the case of a circular business the Value Proposition is usually a combined figure, based on economic value, “value” for the community (Social) as well as “value” for the environment (Planet). So in a circular business, “Value” refers to operating practices that enhance the competitiveness of a company while simultaneously advancing the economic and social conditions in the communities in which it operates, (Porter and Kramer 2011).
The value creation process also leads to opportunities for creating awareness. The Use of local resources reduces harmful impact on the environment and collaborating with local companies (as key partners) further boost the local economy. Employing local labor also positively contributes to the local economy. While applying the circular economy principles in the entire process. We also need to pay attention to the source of possible investment in the business, and make sure that it is not opposed to the interests of the local community or nature.
So LED can be a cooperation between local businesses, local government and local organizations and consumer collectives that have a shared interest. In meeting the needs of the other entities in the LED, a business can prosper while supplying important elements to the needs of other local stakeholders.