Participatory approach of competitive advantage (PACA) for local economic development in Sri Lanka: the case of the coir industry in Southern Sri Lanka

Abstract

Local Economic Development (LED) is a participatory development process that encourages partnership arrangements among the main private and public stakeholders in a locality. The goal o f LED is to create decent jobs and stimulate economic activities. LED is mainly focusing on promoting rural entrepreneurship. In Sri Lanka LED has been introduced in a few districts, but at the moment, it is in the initial stage. The experience o f countries which have implemented PACA and LED initiatives have revealed that it is a better approach to solving the constraints faced by small and medium scale entrepreneurs (SMEs) as well as fo r SME promotion, and for developing economic activities to reduce poverty especially in rural areas. Therefore, this study mainly focuses on identifying the constraints for development o f SMEs in rural areas; and reviewing the key actors o f the market value chain. Finally this study suggests how the participatory development approach can be activated to bridge the gap between the development constraints and functions o f the key players in entrepreneurship development and thereby ensure the sustainable development o f SMEs and to reach competitive advantage at national and global level. To simplify the findings and recommendations o f the study the Southern Province was selected as the research site; and the coir sector as the industry type. The study examines the constraints o f all three categories o f the coir industry including primary level producers, middlemen level, and exporter level. Attention has been paid to the nature o f the existing service spectrum o f the public-private sector organizations and also to international interventions on promoting the sector. Lack o f and low quality o f raw material; Lack o f knowledge o f better technology and value added products, increasing cost o f production, poor market links specially with large scale coir producers and export companies operating at local level, low profitability due to intermediaries and high cost o f production; lack o f financial assistance for investing in better technology; negative attitude o f the younger generation to take up the industry, and poor coordination among the key actors o f the coir sector value chain are the major constraints revealed.