Local Economy Support Strategies in the Netherlands

Master Thesis
Local Economy Support in the Netherlands.
An Exploratory Study.
WrittenbyFrantišekKraus
OverseenbyProf.HarrieA.A.Verbon
2015
MScStrategicManagementProgram
TilburgSchoolofEconomicsandManagement
TilburgUniversity

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Local Economy Support in the Netherlands.
An Exploratory Study.
Master Thesis in Strategic Management

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Acknowledgments
I hereby extend my gratitude to my supervisor Prof. Harrie A. A. Verbon of Tilburg University for
his support and useful advice in the process of both conducting research and writing itself.
Furthermore, I wish to thank Dr. Marek Pavlík and M.C.Triton, ltd. for the provided assistance in
selecting the research objectives. Final recognition goes to anonymous representatives of each
respondent municipality that have contributed their time and provided the answers necessary for
this study to yield its results.

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Table of Contents
Acknowledgments........................................................................................................................... 2
Table of Contents............................................................................................................................ 3
Management Summary................................................................................................................... 5
1 Introduction............................................................................................................................. 6
1.1 Problem Indication........................................................................................................... 6
1.2 Problem Statement ........................................................................................................... 8
1.3 Research Questions .......................................................................................................... 8
1.4 Structure ........................................................................................................................... 9
2 Theoretical Background........................................................................................................ 10
2.1 Regional Policy .............................................................................................................. 10
2.2 The Role of Clusters....................................................................................................... 12
2.3 Local Multiplier 3........................................................................................................... 14
3 Research Methodology ......................................................................................................... 17
3.1 Research Design............................................................................................................. 17
3.1.1 Research Purpose.................................................................................................... 17
3.1.2 Type of Research .................................................................................................... 18
3.1.3 Sampling Strategy................................................................................................... 18
3.2 Data Collection and Analysis......................................................................................... 19
3.2.1 Data......................................................................................................................... 19
3.2.2 Data Collection and Access .................................................................................... 19
3.2.3 Data Analysis.......................................................................................................... 19
3.3 Validity and Reliability.................................................................................................. 19
3.3.1 Validity ................................................................................................................... 19
3.3.2 Reliability................................................................................................................ 20

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4 Findings................................................................................................................................. 22
4.1 Basic Overview of the Survey........................................................................................ 22
4.2 Demographic and Economic Indicators ......................................................................... 23
4.3 Local Economy Support Analysis.................................................................................. 30
4.4 Differences in Performance............................................................................................ 35
4.4.1 Unemployment........................................................................................................ 36
4.4.2 Population Growth and Decline.............................................................................. 39
4.4.3 State of the Municipal Budget ................................................................................ 43
4.5 Clusters and Local Multiplier 3...................................................................................... 45
5 Conclusion and Discussion................................................................................................... 49
5.1 Conclusions.................................................................................................................... 49
5.1.1 What are the common practices of local economy support currently in use? ........ 49
5.1.2 What are the main differences between regions with high and those with a low
performance in local economy support when it comes to regional policy?............ 50
5.1.3 How important are clusters in fostering regional growth and development? ......... 50
5.1.4 To what extent is the flow of money from and into the local economy tracked by the
municipalities? Does a local multiplier play a role in the evaluation? ................... 50
5.2 Limitations ..................................................................................................................... 51
5.3 Recommendations.......................................................................................................... 52
5.3.1 Recommendations for M.C.Triton.......................................................................... 52
5.3.2 Recommendations for Future Research.................................................................. 52
Bibliography ................................................................................................................................. 54
Appendices.................................................................................................................................... 59
Appendix 1 – Survey Questions ............................................................................................... 59
Appendix 2 – Additional Findings............................................................................................ 67

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Management Summary
This study relates to a corporate objective of a Czech consultancy firm – M.C.Triton – to explore
effective regional policies of local economy support used within the Western European region and
applicable in practice within the Central and Eastern European region. M.C.Triton is involved in
regional development and local economy support as an essential part of its business portfolio. As
such the firm is interested in exploring methods to foster regional economic growth and
development as used in the Netherlands.
Thus, analyzing the policies regional governments in the Netherlands use to support the local
economy is the central topic of this thesis. Within a qualitative and exploratory research based on
survey questions distributed to 39 representatives of local municipalities provide data that reveal
some of the patterns of regional policies used in Dutch local economy support. These findings are
contrasted with results from a previous research project of the client conducted in the Czech
Republic and Germany.
Furthermore, the state of the implementation of two regional economic polices regarded as ‘best
practices’ is evaluated. The first is cluster policy originally described by Michael E. Porter and the
second is the Local Multiplier 3, a local policy tool devised by the New Economics Foundation.
The results point out a strong focus on the establishments of long-term economic strategies within
Dutch municipalities as well as a strong involvement with the private sector and external partners
in the formulation of local economic policy. Gathered responses suggest that the use of cluster
policy is common within the Netherlands, while the Local Multiplier 3 is an unknown tool for
local municipalities.

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1 Introduction
1.1 Problem Indication
The economic policies of local governments form an area that has been overlooked by
contemporary research to a great extent. What are the policies and practices used in regional
administration and how effective are they? Apart from being the formulating basis for this study,
this question also forms a considerable part of business for M.C.Triton, a consultancy firm that
advises municipalities in the Czech Republic and other countries in the Central and Eastern
European region. In 2012 this firm has conducted a research project entitled ‘Intelligent Cities’ in
order to look into the state of regional policy and local economy support in the Czech Republic
and Germany. In their exploratory study based on gathering surveys from municipalities,
M.C.Triton’s researchers uncovered which policies are used within these countries on a regular
basis and some of which are overlooked. The purpose of this study is to partly build upon project
‘Intelligent Cities’ and provide the corporate client with additional data from the Netherlands,
however with a stronger focus on local economy support. Based on discussions with the client we
have decided to follow this particular aspect of the previous research, as economic policy is the
main focus of the company’s advisory services to regional administration.
Local governments are faced with a considerably worse starting point in establishing its economic
policy, as at the local level the equipment available to the local decision-maker is only a fraction
of that given to the one at the national level. Data and statistics are limited, economic tools are to
complex and local government does not have the capacity to use these, strategies are formed ad
hoc or not at all and there are but a few non-governmental organizations offering their advice or
assistance. According to Stoker (2011) and Rhodes (2007) local governance systems are
vulnerable due to the absence of ‘hard power’ (in the form of commands and incentives) to
effectively influence the regional economy and are left only with ‘soft power’ options to negotiate
and passively promote their objectives. An adequate combination of both hard and soft power
available to local governments must be found in order to achieve positive results within the local
economy (Rhodes, 2007). Research from the Scandinavian states shows that a strong base in the
politics of identity, combined with a significant role in welfare development matched by a skillful
development of community governance role has resulted in a system of local governance which is
likely to flourish (Rose and Stahlberg 2005). Such findings show that the combination and

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structure of regional policies applied requires further analysis in order to determine the appropriate
models of regional policy.
The importance of well executed regional policy is growing due to the greater importance of
decentralization and, in the case of European Union member states, also due to the existence of
Regional or Cohesion policy. In its recent report the European Comission (2010a) has urged for
new ways to evaluate and analyze the effectiveness and efficiency of regional development
programs to be established and this area further investigated. Studies such as Becker, Egger, von
Ehrlich & Fenge (2008) and Busillo, Muccigrosso, Pellegrini, Tarola, & Terribile (2010) provide
evidence that investments within regional policy bring about significant levels of economic
growth. The EU 2020 Strategy (European Comission, 2010b) further calls upon innovation
through investment in technologies and the establishment of clusters within regional policies of
EU members. Clusters ofenly appear as a popular tool in reginal development since Michael E.
Porter devised his ‘competitive diamond’ illustrating the importance of clusters within a local
economy (Porter, 2000). Policy-makers the world over, in the World Bank, the OECD, national
governments, and regional and local development agencies, have seized upon Porter’s cluster
model as a tool for promoting national, regional and local competitiveness, innovation and growth.
Few other models of regional economic success have exerted such an impact on the policymaking
arena (Asheim, Cooke, & R., 2006).
On the other hand, the report to the Commissioner for Regional Policy (Barca, 2009) proposes a
new process of EU Regional Policy Reform based on the rationale, economic justification,
conditionality, and process design as well as the delivery style of regional policy itself. An example
of such approach would be the application of a local multiplier, a tool developed by the New
Economics Foundation and used to measure fiscal impact of regional policies (New Economics
Foundation, 2002a). The dilemma at the level of European Union, illustrates the issue facing
regional governance everywhere. Which factors of local economy support are more important? Is
it the need for more investment in technology and cluster policy or a more thorough analysis of
the surrounding environment and the establishment of best practices such as the application of the
local multiplier?
A closer look into the situation of a highly developed, politically stable and decentralized country
allows to understand the processes behind local economic policy and assists in identifying possible

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improvements within states in a lower state of development, but with a similar political system
and demographic characteristics. Apart from being economically strong with unchanging
democratic executive system, the Netherlands is a substantially decentralized unitary state (VNG
International, 2008). As such the analysis of the local economy support within this country
provides useful insights for the formulation and deeper understanding of regional governance
mechanisms in Europe and possibly thorough the world. The expected outcome of this study is to
map some of the ways Dutch regional governments form and implement the policies intended to
improve the performance of the local economy and create an overview of policies that are generally
used and perceived as effective within this country. Apart from exploring the current policies of
local municipalities, the role of cluster policy and the local multiplier is being assessed within this
thesis as these two specific tools of regional policy have a greater potential for analysis. Clusters
have been considered by many to be a highly effective instrument for supporting the local economy
and it is vital to know if they are perceived similarly by Dutch municipalities. Subsequently, the
local multiplier is a relatively new tool that has yet to be analyzed to ascertain its usefulness.
1.2 Problem Statement
How do municipalities in the Netherlands provide support to their local economies?
1.3 Research Questions
1. What are the common best practices of local economy support currently in use?
2. What are the main differences between regions with high and those with a low performance
in local economy support when it comes to regional policy?
3. How important are clusters in fostering regional growth and development?
4. To what extent is the flow of money from and into the local economy tracked by the
municipalities? Does a local multiplier play a role in the evaluation?

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1.4 Structure
As the concluding part of the introduction, the structure of this thesis is briefly outlined. Following
this chapter the theoretical part includes the literature review and an evaluation of previous
research. The third chapter clarifies the research methodology used to put together and analyze
data and provide the sought overview of regional economic policy for this exploratory study.
Subsequently, the next chapter yields the research results and their thorough analysis. Lastly, the
fifth and final chapter contains the conclusion and evaluation of the inquiry as a whole. All
supplements, transcript and additional documents are then presented within the appendices, which
should be consulted for referencing and verification of the findings and research project design
and methodology.

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2 Theoretical Background
In this chapter the theoretical foundations for the research is laid out and the literature review of
the relevant concepts is conducted. Additional findings from previous research are mentioned and
discussed as well. The chapter is divided into three sections; (1) Regional Policy, (2) The Role of
Clusters and (3) Local Multiplier 3. The first section being the most general, deals with research
in the field of regional economic policy as a whole, while the two former sections focus on two
specific tools of local economy support, which are clusters and the Local Multiplier 3.
2.1 Regional Policy
In order to understand the underlining objective of this research, the concept of regional policy
needs to be differentiated as a greatly independent mechanism. Regional policy has been
previously regarded as a subset of the central policy and little attention has been paid to the local
context and the implications of decisions made at the lower level. Until the end of the 20th
Century,
regional policy has been firm-centered, standardized, incentive-based and state-driven.
Paradoxically, this has been the case for both centralist Keynesian and pro-market neoliberal
approaches towards regional policy as either did not place any importance to region-specific
factors of the local economy (Amin, 1999: 365). Given the increasing focus on decentralization
and regional policy, especially within the member states of the European Union pursuing economic
integration through a regional approach (European Commission, 2010), a closer look at the various
ways regions support their local economies is significant.
The conduct of regional policy has been largely ineffective due to its general approach as
illustrated, for example, by the use of broad incentives for firms to relocate into less favored
regions (LFRs) that have failed (Merkusen, 1996). The continuation of these so called ‘one size
fits all’ policies, derived from the center, has been doomed to failure and most top-down attempts
have failed to bridge LFRs with those economically stronger. Amin (1999: 366) further suggests
that a bottom-up alternative is achievable. Regional policy aimed at mobilizing the endogenous
potential of the LFRs, through efforts to upgrade a broadly defined local supply-base. Regional
policies implemented from the national or supranational level are therefore unlikely to succeed as
compared to regional policies that are devised and implemented at the local level.

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Consequently, Porter (1996: 89) points out that the relevant economic area is smaller than most
large and medium-size countries, suggesting that a policy of decentralization yields considerably
better results in fostering economic development. According to Porter decentralization of policy
choices also promotes accountability to citizens and creates competition among regional councils
in contrast to a monopolistic national government. Howells (2005) analyzes both the top-down
and the bottom-up approaches in more detail on the specific case of regional development through
innovation. For our purposes the bottom-up mechanism is the focus point as we have established
the drawbacks of the centralized pattern. Howells suggests two types of bottom-up mechanisms;
best practices and bespoke. It is important to know that these are in fact not contradicting models,
but rather stages of one common process. A successfully implemented bespoke or custom
approach may be turned into a best practice if it is sufficiently transferable amongst regions. Where
top-down policies of national governments have failed a best practices transferred between local
councils may be a suitable replacement. After all, it should be the local not the national body who
‘knows best’. The advantages and disadvantages of both types are described in Table 1. Our focus
within this research is the analysis of what Howells refers to as ‘best practice’1
policies as these
reflect most closely the contemporary understanding of regional policy as a local phenomenon.
We are therefore approaching regional policy by examining what mechanisms are being used
within it and whether these may be considered as ‘best practices’.
TABLE 1: ‘BEST PRACTICE’ VS. ‘BESPOKE’ POLICY MECHANISMS IN REGIONAL INNOVATION2
Advantages Disadvantages
‘Best practice’ policy mechanisms
Proven elsewhere Common design may be difficult to adapt
Acknowledged as the ‘best’ ‘Best’ in what, or for whom?
Developed over considerable length of time in
different circumstances
Locality may not have all required resources
Ready to use Takes time to adapt
Advice and support is available May be difficult to understand
Not developed centrally by those ‘who know best’
‘Bespoke’ policy mechanisms
Developed for the specific locality Unproven at the outset
Tailored for resources and time frame Timely testing and development
Local creation of expertise May aggravate local tensions – limited resources
Can be novel Generally higher risk
Possible ‘learning-by-doing’ Building-up unwillingness to learn from elsewhere
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Bespoke mechanisms are also relevant, however, it is impossible to analyze those from a general exploratory
perspective as their nature makes them applicable to a unique context.
2
Table retrieved from Howells (2005: 1229), edited.

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We have established that the adoption of policies to support the local economy from a bottom-up
perspective at the regional level is more likely to yield positive results than a top-down alternative.
Hence, the foundation for this research is therefore the understanding of regional policy as a tool
that comes from the local level and plays a key role within the surrounding economy. The objective
is to gather data about regional policies within the Dutch municipalities and analyze these to
understand the practices prevailing and effecting the local economy, thus the exploratory nature of
this research. Following the research conducted under project ‘Intelligent Cities’ (M.C.Triton,
2012) the objective is to gather an overview of regional policies implemented by Dutch
municipalities and look for similar patterns that can be categorized by Howells (2005) definition
of ‘best practices’. Within the first part of the research we therefore look at various policies that
have been previously analyzed by the client and examine the situation within the Netherlands, and
where possible draw comparisons between the findings here and in project ‘Intelligent Cities’.
Unlike this project however, we focus entirely on policies related to local economy support, which
has been the client’s initial requirement. Furthermore, we have also selected two policies, which
are considered as best practices by contemporary research and our aim is to examine their
importance for local municipalities within their economic policy. The theoretical background of
the two examples, that can be considered as ‘best practices’ of regional policy, is discussed in parts
1.2 and 1.3.
2.2 The Role of Clusters
Clusters are geographic concentrations of interconnected companies, specialized suppliers, service
providers, firms in related industries, and associated institutions (e.g., universities, standards
agencies, trade associations) in a particular field that compete but also cooperate (Porter, 2000:
16). According to Porter (2000), the creation of clusters of interlinked businesses is the key to
regional growth and while this is supported by evidence of spillover effects created by such clusters
(Davis & Sun, 2006). OECD report analyzing the structure of clusters within the Dutch economy
marks ten sectors as the largest cluster industries within the Netherlands (Roelandt, Hertog,
Sinderen, & Hove, 1999). The above mentioned business sectors consist of the following:
agriculture, chemical, communications, construction, energy, health, media, metal processing &
electronics, services and transport.

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This study further elaborates on the strong link between the presence of cluster economies and
increasing economic performance. In this study the analysis will observe these industrial segments
and additionaly the education and the information technology sectors. Education has been included
due to the documented spillover effect of universities within a local economy that can serve as a
basis for educational clusters (Bleaney & Binks, 1992; Goldstein & Renault, 2004) as well as the
strategic technological know-how transferred through these institution (Nishimura & Okamuro,
2010). Information technology sector has been included due to its rapid growth since the early
2000s and its higly innovative nature. Arthurs, Cassidy, Davis & Wolfe (2009) produce evidence
confirming the rising importance of IT and its relation to R&D in business clusters and posit that
this segment will play a major role within cluster policy in the future.
To maintain balance it needs to be stated that government failure may lead to malinvestment in
risky or underperforming clusters (Hospers, 2005). This trend is partly caused due to path
dependance in government decision-making processes (Nauwelaers, 2001) and the lock-in based
on repetition of poor policy choices (Hassink, 2005). As previously explained centralized policies
of the past decades that were applied without the attention to specific regional characteristics have
failed or yielded significantly different results in various places (Porter, 1996; Amin 1999;
Tödtling & Trippl, 2005).
None the less, the role of deliberate intervention within economic development is crucial as it helps
give direction to the evolutionary market process (Raffaelli, 2003). As stated by Loasby (1998)
acknowledging that the process of economic evolution depends quite significantly on conscious
human action constitutes one of the major distinctions between Alfred Marshall’s thought and neo-
Darwinian biology. Thus, elements of conscious action intervene in the process of competition,
but without actually replacing it (Dei Ottati, 2003: 518). Prior to implementing a coherent cluster
policy all decision-makers face the difficulty of corectly identifing a cluster and its components
within a local economy (Burfitt & MacNeill, 2008: 497). That is why insights into the mechanisms
regional municipalities tackle these issues is essential for further study of cluster policy and local
economy support in general.
Porter’s diamond approach (2000: 20) describes four dimensions fostering the expansion of cluster
economies. These dimensions are; (1) factor conditions, (2) context for firm strategy and rivalry,
(3) demand conditions, (4) related and supporting industries. From the perspective of local

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economy support we can identify the first two dimensions as the bridges between policies and
economic outcomes. In the case of factor conditions, an activist economic policy reflects mostly
here, as investment into infrastructure and the provision of subsidies and grants enhances the input
availability and lowers the cost of production. In contrast, a more passive approach of local
economy support is to be seen within the context for firm strategy and rivalry. In practice
promoting a flexible and welcoming business environment allows for a more competitive market
structure. Naturaly, both the active and passive approaches may be applied within regional
development separately and as complements and their use is further explored further within this
inquiry.
2.3 Local Multiplier 3
Decision-making bodies at all levels of competence look to achieve greater economic growth and
focus on trying to find additional funds to channel towards local economies. Cooke (2001) points
out that while spending on regional development and public intervention is higher in Europe than
in the United States, the leakage of funds lowers the effectivenss of European local economy
suport. Due to these recently discovered trends an increasing level of attention is being paid to the
effectiveness of money spent within local development programs. For example the European
Comission report (2010) urges for new ways to evaluate and analyze the effectiveness and
efficiency of regional development programs to be established and this area further investigated.
Similarly, in it’s report on Local Economic Development the OECD (2010, p. 26) suggests that
there is a requirement to local urban development to better understand the factors which underpin
the performance and share best practice. Nevertheless, a firm methodology for evaluation of
regional development projects and their impact on the local economy used widely, is still very
limited and needs further research.
An effective measure to resolve the above mentioned issues may be the application of the local
multiplier approach. In fact multipliers used to analyze regional economic linkages date back over
30 years, when they had been used for mapping the tourism industry (Archer, 1982). Consequently,
tourism has been the sector for which local multipliers had been used most frequently as for
example in the case of the U.S. Department of Commerce that used tourism multipliers to map the
expenditure flows within the local economy of Washington, D.C. (Frechtling & Horvath, 1999).

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The government of the United Kingdom, where local multipliers are used most frequently within
regional development policy, has included a local multiplier measure within its sustainability
evaluation criteria for certain development projects under consideration (Darby & Jenkins, 2006).
Another example is measuring the impact of using local procurement of food supplies for UK
hospitals (Thatcher & Sharp, 2008). Moretti (2010) uses a local multiplier to examine the impact
of regional growth in particular industries on the employment in their related sectors. More recent
cases of research involving a local multiplier include, for example, the study of a project for a
digital card scheme that incentivizes consumers to buy local products (Balis, 2012), the analysis
of the local economy of West Cumbria, UK (Cabras & Mulvey, 2012), the application usage of a
local multiplier within environmental economics by government bodies of the Ministry of the
Environment of the Czech Republic (Březina, Šafařík, & Hlaváčková, 2013), and finally, the
application of local multipliers within the study of the labor markets of the United States and
Sweden (Moretti & Thulin, 2013). Based on these examples we can state that a local multipler
model is becoming an attractive tool of contemporary research of the economic outcomes of
decisions, projects or policies and is applicable within variours fields of study. Hence, our analysis
of the local economy support must not ommit this important variable from our inquiry.
The New Economics Foundation (2002a) has established a conscise local multiplier measure
known as the Local Multiplier 3 (LM3) that creates an index that illustrates how much funds spent
in the local economy stay within it, rather than leave outside instantly. It attempts to do this by
measuring the impact of the initial increase in demand over three rounds. The first round measures the
initial income of the group of people, the organization or the company in question. The second round
measures the proportion of this initial income spent locally, while the third measures the proportion of
the locally spent income estimated in the second round spent locally. The three rounds of local spending
are added together and divided by the initial income to produce a multiplier (Marchant & Vik, 2011).
The LM3 is based on the previously mentioned Keynesian income-expenditure multiplier. As this
tool is fairly new to policy-makers the objective here is to uncover the extent to which
municipalities are even aware such a measure exists and whether they consider it a tool that serves
beneficially in the process of formulating their local economy support strategies and/or operative
decisions. Marchant & Vik (2011) further explain that this methodology has been applied by NEF
on numerous studies including in the evaluations of financial inclusion interventions. For example,
the methodology has been applied in the village of Killamarsh outside of Sheffield to evaluate the

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impact of a cash machine put in by Coop Bank following local pressure. A survey was conducted
of users of the cash point and revealed that between 50 and 70% of cash taken out was spent in the
local community.
Overall the LM3 is considered a highly practical tool for local agents and decision-makers are able
to effectively use with relative ease. The model is most productive when analysing the economic
impact of activities and projects in small economies and for individual firms and bodies with few
suppliers. On the otherhand, the LM3 is dependant on the availability of a substantial ammount of
primary data, gathered through questionnaires and databases, making it impractical for application
within larger economies. As such the extent to which it is being applied within Dutch
municipalities and their local economies is therefore a question that requires further analysis.

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3 Research Methodology
The third chapter specifies the approach of the research in detail. In three sections the research
purpose, type and sampling strategy are explained first. Secondly, the selection, collection, access
and analysis of the date are discussed. Finally, possible issues in relation to the validity and
reliability of the research are evaluated further.
3.1 Research Design
This is a study based on qualitative research for an external client – M.C.Triton a large Czech
consulting firm operating within the Central and Eastern European region. The central idea behind
this research is to gather primary data from respondents within regional municipalities in the
Netherlands.
3.1.1 Research Purpose
The nature of this research is purely exploratory and its objective is to map the situation of local
economy support in selected municipalities in the Netherlands to be possibly used as a source for
advice provided by M.C.Triton to their public sector clients within the Central and Eastern
European region. As an exploratory study, it is not possible to use this document as a firm policy
recommendation, however, the results should form a basis for further researchers in this field as
they will be able to evaluate the policies and approaches local governments actually use in practice,
rather the possibly creating false assumptions about the current state of affairs.
There are three main goals to be achieved by conducting the research. At first, to examine regional
policy of local economy support in general and to make an attempt to find similar traits and
characteristics between individual municipalities to serve as a basis for identifying best practices
within regional economic development. Secondly, to analyze the previously identified tools
considered as best practices within contemporary literature, meaning clusters and LM3, within the
context of Dutch local government and assess their importance. Thirdly, to interpret the findings
to provide a ground for suggesting policy recommendations and for further research evaluating
individual findings in more depth.

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3.1.2 Type of Research
The foundation of this research is a qualitative study carried out within the period of 1-2 months.
It is based on sending out questionnaires to representatives of preselected municipalities within
the Netherlands, who are closely familiar with the economic policy of the municipality they work
for. These respondents provide answers about the mechanisms and the structure of local economy
support within their region.
The content of the is derived from a similar survey conducted previously by M.C.Triton in
Germany and the Czech Republic under a project entitled ‘Intelligent Cities’ and conducted during
July/August 2012 with the support of the European Social Fund in the Czech Republic
(M.C.Triton, 2012). The analysis is further based on the responses and date gathered and where
possible comparisons will be drawn between the results from the previous research. However, as
this study maps local economy support in more depth than the previous research there are
additional questions included that will be interpreted based on other literature and comparison with
the situation in Germany and the Czech Republic is impossible as the data are unavailable.
3.1.3 Sampling Strategy
The sampling strategy of this research is purposive sampling (Saunders & Lewis, 2012). Due to
the requirements of M.C.Triton municipalities with population over 10,000 inhabitants will be
selected. Smaller cities have also been omitted as it is unlikely for these to have a local economy
support policy in place with a sufficient impact on the region. Questionnaires have been sent out
to as many potential respondents as possible in order to ensure a sufficient response rate and
ensuring that municipalities within each province of the Netherlands are approached in order to
avoid bias towards a particular region.
This is done in accordance with the set-up of the previous project and the objective is to achieve a
sample of at least 30 municipalities to serve as a basis for further analysis. Within the study of
‘Intelligent Cities’ in the case of Germany 46 municipalities have responded and in the case of the
Czech Republic the number of respondents was 37 (M.C.Triton, 2012).

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3.2 Data Collection and Analysis
3.2.1 Data
This study is mainly focused on gathering primary data from respondents as explained above.
Secondary data from other studies and researches, namely M.C.Triton, 2012, have been used for
comparison and benchmarking of the gathered data from the Netherlands with results from other
countries.
3.2.2 Data Collection and Access
Data collection is based on responses received from questionnaires distributed to representatives
of preselected Dutch municipalities as explained above. The distribution of the surveys has been
conducted electronically through the use of email and an online survey form. A transcript of the
questions included in the survey can be found in Appendix 1.
Primary data has been gathered directly from respondents, who have been contacted within the
period between April/May 2015. Secondary data comes from cited literature and previous study
of M.C.Triton (2012).
3.2.3 Data Analysis
Data from the questionnaires have been categorized and analyzed in data sheets and findings
further interpreted. The main viewpoint through which data are divided is the population size
grouping, which has also been used in previous research.
The responses are evaluated individually as well as in their mutual context in order to provide
answers to the previously stated research questions and problem statement. Results are further
confronted with findings of M.C.Triton (2012) where possible. Gathered data are displayed in
graphs and diagrams in order to provide a clear overview of the findings based on Saunders &
Lewis (2012) and M.C.Triton (2012).
3.3 Validity and Reliability
3.3.1 Validity
Validity is defined as the correct interpretation of results that provide a valid understanding of the
problem at hand (Saunders & Lewis, 2012). Within the following table the main factors which

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threaten the validity of research have been listed and their risk level for this study has been noted
as well as the measures instigated to avoid such threats.
TABLE 2: VALIDITY THREAT FACTORS3
Factor Refers to: Risk and mitigation
Subject
selection
The biases which may result in selection of particular
research subjects which may be unrepresentative of the
research population.
Moderate – respondents are recruited from a
large pool of approached municipalities within all
provinces of the Netherlands. Biased selection is
therefore unlikely.
History Specific events which occur in the history of the project
(for example, between first and second phases of the
research) which have an important effect on findings.
Low – study is conducted within a period of 1-2
months in one phase. Historical occurrence is
unlikely.
Testing Any effects that the data collection process itself may
have on the subjects (e.g. respondents keen to impress
the interviewer).
Moderate – respondents are ensured results are
entirely confidential.
Mortality The loss of subjects during the research: this is a
particularly important issue for the conduct of
longitudinal research.
Low – study is conducted within a period of 1-2
months in one phase.
Ambiguity
about causal
direction
Confusion over the direction in which the flow of cause
and effect runs: for example, are poor call center
operator performance ratings caused by a negative
attitude towards the way their performance was rated,
or were the poor ratings causing the negative attitude?
Low – this study is an exploratory research that
does not attempt to provide causal interpretations
for its findings.
3.3.2 Reliability
Given the exploratory nature of this research reliability is a risk, as the researcher may
inadvertently fall to biases and therefore each step should be carefully evaluated in order to avoid
misinterpretation of findings. As this study is partly derived from previous research (M.C.Triton,
2012) the risk of low reliability is already reduced as previous lessons learned are taken into
acoount, however high level of attention has been paid to the reliability risks as denoted in Table
3 below:
3
Table retrieved from Saunders & Lewis (2012, p. 127), edited.

21
TABLE 3: RELIABILITY THREAT FACTORS4
Factor Refers to: Risk and mitigation
Subject error Measurement which may take place at different times:
for example, a questionnaire administered to night-shift
workers may produce significantly different results to
dayshift workers.
Low – all surveys have been distributed via the
same channel and in the same manner.
Subject bias Research subjects giving you unreliable information
because they think that telling the truth may, for
example, show them in a bad light.
Moderate – some questions are related to the
performance of a particular municipality, which
may motivate unreliable answers, however
confidentiality should reduce this risk factor.
Observer
error
The way in which different researchers may, for
example, ask the same questions in different ways, thus
biasing the results.
Moderate – phrasing of questions has been
reviewed on several occasions to avoid this
threat.
Observer bias The way in which different researchers may interpret
the same data in different ways, thus biasing the
findings and conclusions.
Moderate – consultation of previous research as
well as advice from other researchers is applied
to avoid misinterpretation.
Final issue in this aspect is the topic of generalizability, as the findings are based on a purposively
selected group of respondents in a particular segment the implications are valid exclusively for
this segment and can hardly be used as general theory. However, they may still serve as a good
basis for advisory use within the same field.
4
Table retrieved from Saunders & Lewis (2012, p. 128), edited.

22
4 Findings
Chapter four contains the results gathered from the analysis of the questionnaire’s findings, which
have been presented in five sections. The initial section contains a summary of the survey and the
details of the respondents. The following three sections are organized with respect to the design of
the questionnaire. First, the general overview of the demographic and economic indicators of the
local economies is presented, secondly we observe the local economy support policies in general
and thirdly the role of clusters and the local multiplier is analyzed. In the final section a selected
responses are analyzed based on the answers to questions in part B of the survey and an overview
of the differences between better and worse performing municipalities is presented.
4.1 Basic Overview of the Survey
There is a total of 393 municipalities (Dutch: gemeente) in the Netherlands, out of which 284 were
selected to be approached for answering the questionnaire. These 284 municipalities all exceed the
required minimal population limit of 10,000 inhabitants and are formed as a balanced
representation of all 12 provinces of the Netherlands to ensure suitable selection process. The
number of municipalities that have successfully responded to the survey is 39. As seen in Table 4
in comparison with the previous research project linked to this study (‘Intelligent Cities’) the
response rate of 13,7% in this survey is slightly higher than in the case of the Czech Republic and
considerably higher than in the case of Germany. Out of the total number of Dutch municipalities
our sample equates almost 10%, which allows us to draw an initial picture of Local Economy
Support within this country.
TABLE 4: SURVEY OVERVIEW AND COMPARISON WITH PREVIOUS RESEARCH5
Netherlands
(this study)
Czech Republic
(project ‘Intelligent Cities’)
Germany
(project ‘Intelligent Cities’)
Municipalities
approached with the
survey
284 370 1000
Municipalities that
have responded
39 37 46
Response rate 13,7% 10% 4,6%
5
Data for project ‘Intelligent Cities’ retrieved from (M.C.Triton, 2012, p. 3).

23
In order to establish the reliability of the responses within the survey the responses of 10 randomly
selected municipalities to questions 2-7 (see Appendix 1 for full description) were confronted with
data accessible through the database of the Dutch statistics office (CBS Statistics Netherlands) and
Knoema Data Atlas. These questions serve as a basis for estimating whether respondents aware of
the actual socioeconomic situation within their municipality answered the survey.
Out of the 60 responses undergoing the validity check 53 were verifiable with available data.
11,3% or 6 responses were incorrect6
, and 88,7% or 47 were corresponding to the available data.
As such we consider the responses as reliable to an extent high enough to consider the responses
for the remaining questions as likely to be reliable.
4.2 Demographic and Economic Indicators
In this section the responses regarding basic demographic and economic context of each
municipality are analyzed (Part B of the questionnaire). Apart from providing an understanding of
the background of the respondents, in this part we also show how the socioeconomic situation
within the respondents’ municipalities corresponds to the overall situation in the Netherlands as a
whole.
6
The responses found incorrect have been changed to correspond with the actual data.

24
FIG. 1: RESPONDENTS BY POPULATION SIZE
Fig. 1 shows the distribution of the respondents by population size. Out of the 39 respondents, 4
municipalities consisted of 10,000 – 25,000 inhabitants, 9 of 25,000 – 50,000, 8 of 50,000 –
100,000, 12 of 100,000 – 200,000 and 6 out of more than 200,000 inhabitants.7
This means that
all desired population groups were represented by at least 4 or 10% of the respondents in total. In
contrast with project ‘Intelligent Cities’ (M.C.Triton, 2012), the population groups were selected
differently based on the requirement of the client starting with 10,000 inhabitants rather than 5,000
as in the previous research.
7
A possible response within the survey was also ‘Less than 10,000’, however this served purely to avoid the inclusion
of municipalities with lower population by a mistake. No respondents have chosen this answer.
10%
23%
21%
31%
15%
10,000-25,000
25,000-50,000
50,000-100,000
100,000-200,000
>200,000

25
FIG. 2: PERCENTAGE OF INHABITANTS 25 YEARS OF AGE OR YOUNGER
Fig. 2 depicts the percentage of inhabitants 25 years of age and younger. In the vast majority of
cases the answer was ‘More than 25%’ and only in 3 cases the response was within the 20-25%
group. This finding corresponds with the national age structure (CBS Statistics Netherlands,
2015a). While these results do not show considerable differences between municipalities, in the
category of inhabitants older than 65 years, as shown in Fig. 3, the results display more variance.
Most respondents have been categorized within the group between 15-20%, which is above the
reported national average of 11,6% (CBS Statistics Netherlands, 2015b). Many municipalities
exhibit a higher presence of inhabitants over 65, demonstrating the ongoing process of ageing
population. Results are fairly similar between all municipality population sizes.
0 0 0 0 0
1
1
0
1
0
3
8
8
11
6
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
10,000 - 25,000 25,000 - 50,000 50,000 - 100,000 100,000 - 200,000 >200,000
>25%
20-25%
15-20%
10-15%
<10%

26
FIG. 3: PERCENTAGE OF INHABITANTS 65 YEARS OF AGE OR OLDER
Figures 4 and 5 deal with social assistance payments and the number of unemployed respectively.
Both the social handouts and unemployment levels seem to be slightly higher in municipalities
with higher population; this is especially true in the case of municipalities with more than 200,000
inhabitants.
FIG. 4: PERCENTAGE OF INHABITANTS CURRENTLY RECEIVING SOCIAL ASSISTANCE
The unemployment figures oscillate between 5 – 10%, which is also in line with the national
average over the period between 2010 and 2015 (Taborda, 2015).
0 0 0 0 0
1 2 2 3
1
1
5
3 5
3
2
1
2
4 2
0
1 1
0 0
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
10,000 - 25,000 25,000 - 50,000 50,000 - 100,000 100,000 - 200,000 >200,000
>25%
20-25%
15-20%
10-15%
<10%
2
1
2
2
0
1
4
3 6
1
1
3 2
3
3
0
1 1 1
2
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
10,000 - 25,000 25,000 - 50,000 50,000 - 100,000 100,000 - 200,000 >200,000
>10%
5-10%
2,5-5%
<2,5%

27
FIG. 5: AVERAGE LEVEL OF UNEMPLOYMENT BETWEEN 2010 AND 2015
Next we have examined the presence of non-native population within the respondent
municipalities; the results are presented in Fig. 6. There is a trend of an increasing presence of
non-natives within municipalities consisting of a greater populous. Results match with the reported
19,9% of people with a foreign background living in the Netherlands (CBS Statistics Netherlands,
2015b).
FIG. 6: PERCENTAGE OF INHABITANTS COMPOSED OF NON-NATIVES
0
1
0 0 0
1
3
2
2
0
2
2
3
4
2
1
2
3
5
3
0
1
0
1
1
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
10,000 - 25,000 25,000 - 50,000 50,000 - 100,000 100,000 - 200,000 >200,000
>10%
7,5-10%
5-7,5%
2,5-5%
<2,5%
1
0 0 0 0
2
1 1 1
0
1
3 2
1
0
0
3
3
2
1
0
2
1
5
2
0 0
1
3
3
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
10,000 - 25,000 25,000 - 50,000 50,000 - 100,000 100,000 - 200,000 >200,000
>25%
20-25%
15-20%
10-15%
5-10%
<5%

28
The responses regarding population growth (resp. decline) is depicted Fig. 7. The population is
mostly reported as growing within cities over 100,000 inhabitants. Recorded population decline is
minimal, which is adequate to the projections of overall population growth in the Netherlands by
the CBS.
FIG. 7: POPULATION GROWTH/DECLINE BETWEEN 2010 AND 2015
Further the analysis looked into the budgeting practices of each respondent municipality. In other
words how many annual deficits the municipality ran within the period between 2010 and 2015.
The responses are displayed in Fig. 8 and show that most respondent municipalities achieve
surplus/balanced budgets within most of the period in question. Only 7 respondents have not
reached a balanced budget in 3 years or more.
0
1 1 2
2
1
3 2
7
3
2
4
3
2
1
1
1
2
1
00 0 0 0 0
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
10,000 - 25,000 25,000 - 50,000 50,000 - 100,000 100,000 - 200,000 >200,000
Considerable
decline
Slight decline
No change
Slight growth
Considerable
growth

29
FIG. 8: STATE OF THE MUNICIPAL BUDGET BETWEEN 2010 AND 2015
Within the last two survey questions in Part B, the respondents were asked to rate their own
municipalities performance with respect to the rest of the Netherlands and also with respect to
similar municipalities. The ranking has been set to a scale of 1 (worst) until 10 (best). The results
are presented in figures 9 and 10.
FIG. 9: SELF-EVALUATION OF ECONOMIC PERFORMANCE AS COMPARED TO THE REST OF THE
NETHERLANDS
(Mean value = 5,8)
0
1
2
3
4
5
1 2 3 4 5 6 7 8 9 10
10,000 - 25,000
25,000 - 50,000
50,000 - 100,000
100,000 - 200,000
>200,000
3
4
3 4
4
1
2
4
5
2
0
2
1
3
00
1
0 0 0
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
10,000 - 25,000 25,000 - 50,000 50,000 - 100,000 100,000 - 200,000 >200,000
Deficit 5
years
Deficit 3-4
years
Deficit 1-2
years
Surplus or
balanced
every year

30
FIG. 10: SELF-EVALUATION OF ECONOMIC PERFORMANCE AS COMPARED TO SIMILAR
MUNICIPALITIES
(Mean value = 5,9)
These rankings are further used in section 4.5 as a part of the tool to differentiate better performing
municipalities. With relation to this initial overview of the respondents it can be stated that the
distribution of the ranking is concentrated near the middle as demonstrated by the mean values for
both figures in all population categories.
4.3 Local Economy Support Analysis
This section is related to the Part C of the survey and deals with the questions mapping certain
aspects of local economy support in each municipality and as such is the key to answering research
question 1; “What are the common best practices of local economy support currently in use?”.
The objective is to give a more general picture of some of the policies and trends applied within
Dutch regional government. Where possible the questions are compared with the results found
within the study of M.C.Triton (2012). In the case of the first question regarding the selection of
the three most important characteristics of a well-performing economy, the 8 possible responses
have been selected from answers to the same, but open question asked within the project
‘Intelligent Cities’. Table 4 below displays the ranking of each characteristic as chosen by the
respondents of this study.
0
1
2
3
4
5
1 2 3 4 5 6 7 8 9 10
10,000 - 25,000
25,000 - 50,000
50,000 - 100,000
100,000 - 200,000
>200,000

31
TABLE 4: MOST IMPORTANT CHARACTERISTICS OF A WELL-PERFORMING LOCAL ECONOMY
Characteristic Times Selected8
Rank
Quality of residency and living 21 1.
Investment and business opportunities 20 2.
Good infrastructure and public services 15 3.
Satisfaction of the public 14 4.
Clean environment 13 5.
Sufficient tax incomes, solid budget 12 6./7.
Positive job migration 12 6./7.
Low unemployment 10 8.
Interesting observation is that least unemployment seems to be the least sought after characteristic
and less easily quantifiable measures such as quality of living or business opportunities come first.
On the other hand all municipalities claim to have a policy for the reintegration of the unemployed
back into the working environment. As such this ranking serves as an illustration of some of the
possible objectives each municipality attempts to achieve through its policies, we further show the
state of these policies as described by the respondents.
In the next question (Fig. 11) we have asked the respondents whether their municipality has a long-
term strategy for improving the performance of the local economy.
8
All 39 respondents were asked to select 3 out of 8 characteristics making the total number of choices 117.

32
FIG. 11: LONG-TERM STRATEGY IN PLACE
35 municipalities or 90% claim to have such a strategy in place, with the 4 municipalities not
having such a strategy being in the categories below 50,000 inhabitants. This can be compared
with the results of project ‘Intelligent Cities’ where 74% cities both in Germany and the Czech
Republic claim to have a set strategic vision of their city (M.C.Triton, 2012, p. 4). While this term
differs from the one we use for our purpose, it can be stated that the vast majority of municipalities
does focus on maintaining a strategic plan for its development, including the economic outlook.
In relation to this a question asking the frequency of evaluation of the strategic plan follows. The
results are depicted in Fig. 12 as follows:
2
7
8 12 6
2
2
0 0 00 0 0 0 0
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
10,000 - 25,000 25,000 - 50,000 50,000 - 100,000 100,000 - 200,000 >200,000
Inapplicable
No
Yes

33
FIG. 12: FREQUENCY OF THE STRATEGIC PLAN EVALUATION AND UPDATE
Most respondent municipalities focus on evaluating and updating their strategic plan once or twice
a year. In contrast with the results from project ‘Intelligent Cities’, over 30% of municipalities in
the Czech Republic evaluate their strategic plan once per election period, while in Germany this is
the case for only 12% (M.C.Triton, 2012, p.5). Therefore, the frequency in the Netherlands is
comparable with that of cities in Germany, while in the Czech Republic it is considerably lower.
The next question dealt with the inflow of commercial revenues into the municipal budget and
whether the budget relies on these inflows. The findings are shown in Fig. 13:
1 2 2
2
0
2
3 2
6
2
1
4
3
4
3
0 0
1
0
1
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
10,000 - 25,000 25,000 - 50,000 50,000 - 100,000 100,000 - 200,000 >200,000
Once every six
months or
more
Once every
year
Twice per
election
period
Once per
election
period

34
FIG. 13: COMMERCIAL REVENUES FOR THE MUNICIPAL BUDGET
77% of municipalities claim to have commercial revenues and 19% are actually reliant on these
revenues. In the case of Germany only 33% of respondents have commercial revenues, while the
Czech Republic is closer to the Dutch result with a total of 60% municipalities generating inflows
from commerce (M.C.Triton, 2012, p.14). All three countries exhibit the same trend of increasing
commercial activities in cities of greater population size.
The final segment covered in this section is the involvement of external partners that is citizens,
private firms and non-governmental bodies in the local economic policy. The results for this issue
are presented in Fig. 14.
1
4
4
8
6
1
3
1
2
0
2
2
3
2
0
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
10,000 - 25,000 25,000 - 50,000 50,000 - 100,000 100,000 - 200,000 >200,000
No
Yes (municipal
budget relies)
Yes (municipal
budget does
not rely)

35
FIG. 14: IMPORTANCE OF EXTERNAL PARTNERS IN EVALUATING LOCAL ECONOMY SUPPORT
Over ¾ of the respondents consider the input from external partners as important and based on
further findings as many as 90% of the respondents claim to evaluate feedback from the external
partners in question. With a greater population size the trend to evaluate feedback increases.
4.4 Differences in Performance
Based on a request from the client, in this section we look at some of the policy related questions
from part C of the survey to evaluate some of the differences in practices in economies of various
economic performance, thus answering research question 2; “What are the main differences
between regions with high and those with a low performance in local economy support when it
comes to regional policy?”. The client’s focus is looking at the practices discussed in questions
14, 16, 17 and 18 with respect to the level unemployment, population growth/decline and the state
of the municipal budget as gathered from the responses in part B. These three measures have been
selected as based on the results of M.C.Triton (2012), these measures are considered as key
indicators of performance in the Czech Republic and Germany. The objective is to draw the
attention to some possible trends that should be considered for further analysis by M.C.Triton.
1
3 3 4
4
1
5 4
6
2
1
1
0 1
0
1
0
1 1
0
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
10,000 - 25,000 25,000 - 50,000 50,000 - 100,000 100,000 - 200,000 >200,000
Do not know
Not important
Somewhat
important
Very important

36
4.4.1 Unemployment
For the purpose of assessing the first performance measure, that is unemployment, all
municipalities were divided into groups according to the alleged unemployment level of their
municipalities. Out of the 39 respondent municipalities, 1 is within the unemployment level below
2,5%, 8 are between 2,5-5%, 13 between 5-7,5%, 14 within 7,5-10% and 3 above 10%.
Firstly, we revisit the frequency of the evaluation and update of the strategic plan and its
implementation goal (question 14). Figure 15 displays the data in accordance with the level of
unemployment:
FIG. 15: FREQUENCY OF THE STRATEGIC PLAN EVALUATION AND UPDATE VS.
UNEMPLOYMENT
The distribution shows that there does not seem to be a clear pattern between the frequency of the
evaluation of the strategic plan and the level of unemployment within the municipality. In
comparison there seems to be a firm trend between the level of unemployment and the existence
of commercial revenues within the municipal budget (question 16) as shown in Fig. 16.
0
2
1
3
1
1
2
5
6
1
0
3
7
4
1
0
1
0
1
0
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
<2,5% 2,5-5% 5-7,5% 7,5-10% >10%
Once every six
months or more
Once every year
Twice per
election period
Once per
election period

37
FIG. 16: COMMERCIAL REVENUES FOR THE MUNICIPAL BUDGET VS. UNEMPLOYMENT
While the positive trend between higher unemployment and commercial revenues is visible, the
results are strongly correlated with the population size of each municipality as shown previously
in Fig. 13. Therefore, it is impossible to draw any conclusions from this initial observation and
further analysis is necessary to ascertain whether there is a link between unemployment and
commercial revenues of the municipality.
Further, the focus on the reintegration of the unemployed is analyzed (question 19). As all
respondents claim to have a policy of reintegration in place we look at the difference between a
general policy and one that aims to reduce long-term unemployment. The observations are shown
below in Fig. 17.
0
1
8
11
3
0
3
2
2
0
1
4
3
1
0
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
<2,5% 2,5-5% 5-7,5% 7,5-10% >10%
No
Yes (municipal
budget relies)
Yes (municipal
budget does
not rely)

38
FIG. 17: REINTEGRATION INTO THE WORKING ENVIRONMENT VS. UNEMPLOYMENT
In this case we see a clear link between the concerns with long-term unemployment and the
observed unemployment level. It needs to be analyzed whether a connection between the two is
present on a more global scale and whether this policy helps reduce unemployment in the long-
run.
The fourth question analyzed from the perspective of performance is the importance for
municipalities to gather and use feedback from external parties for the formulation of their local
economy support strategy. Figure 18 displays the findings in this case.
0
3
7
12
31
5
6
2
00 0 0 0 0
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
<2,5% 2,5-5% 5-7,5% 7,5-10% >10%
No
Yes
Yes, with a
focus on long-
term
unemployment

39
VS. UNEMPLOYMENT
Similarly to the findings regarding question 14, neither there, nor in this case do we observe any
clear trends between the importance of getting input from the public, private entities or expert
bodies and the level of unemployment.
4.4.2 Population Growth and Decline
The second performance measure is the population growth/decline within the municipalities as
observed on the responses to question 8. The municipalities are grouped by their answer to this
question and the results are compared with the same questions from part C as in the previous
subsection on unemployment. The distribution of respondents by population growth is as follows;
6 respondents have claimed considerable population growth, 16 slight growth, 12 no change, 5
slight decline and no respondents chose considerable decline.
Firstly, we again look at the frequency of the evaluation of the strategic plan for local economy
support as shown in Fig. 19:
0
3
6
5 1
1
4 4 7
2
0
0
2
1
00
1
1 1
0
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
<2,5% 2,5-5% 5-7,5% 7,5-10% >10%
Do not know
Not important
Somewhat
important
Very important

40
FIG. 19: FREQUENCY OF THE STRATEGIC PLAN EVALUATION AND UPDATE VS. POPULATION
GROWTH
While there is a slightly higher frequency of updating the strategic plan for the municipalities in
the category of ‘considerable growth’, overall the results seem balanced and the confirmation of
any trends would require further analysis.
Considerably clearer trend is visible in the case of the analysis of commercial revenues as a part
of the municipal budget shown in Fig. 20:
0
3
3
1
0
2
6
5
2
0
3
7 3 2
0
1
0
1
0
00%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Considerable growth Slight growth No change Slight decline Considerable decline
Once every six
months or more
Once every year
Twice per
election period
Once per
election period

41
FIG. 20: COMMERCIAL REVENUES FOR THE MUNICIPAL BUDGET VS. POPULATION
GROWTH/DECLINE
The observation suggests that population growth is positively linked with commercial revenues
for municipalities, however similarly to the findings presented in Fig. 16, there is also a link
between population growth/decline and the size of the municipality and further inquiry is required
to confirm whether there is a link between population growth and commercial revenues in this
case, for example due to the greater availability of services provided through the municipality.
Balanced results are to be seen in the case of policies aiming to reintegrate the unemployed and
there seems to be no link between population growth/decline and the level of focus on eliminating
long-term unemployment (Fig. 21).
5
10
6
2
0
1
2
1
3
0
0
4
5
0
00%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
No
Yes (municipal
budget relies)
Yes (municipal
budget does not
rely)

42
FIG. 21: REINTEGRATION INTO THE WORKING ENVIRONMENT VS. POPULATION
GROWTH/DECLINE
Similar results are outlined in the case of judging importance of external partners in the formation
of local economic policy as shown in Fig. 22.
VS. POPULATION GROWTH/DECLINE
4 10 8
3
0
2 6 4
2
0
0 0 0 0
00%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
No
Yes
Yes, with a focus
on long-term
unemployment
4
5 4
2
0
2
6
8
2
0
0
3
0
0
0
0
2
0
1
00%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Do not know
Not important
Somewhat
important
Very important

43
For all categories except ‘considerable growth’ the distribution of evaluating the importance of
external partners’ participation is similar. In the first category the majority seems to evaluate the
performance as very important. A possible further research should focus on the analysis of external
partnership effect on the inflow of citizens into the municipality.
4.4.3 State of the Municipal Budget
Final measure of economic performance are the outcomes of the municipal budget over the period
of 5 years. The survey results show that 18 municipalities claim to have had a surplus or balanced
budget every year within the past 5 years, 14 had deficit in 1 or 2 years, 6 in 3 or 4 years and 1 in
all 5 years.
The findings of this segment suggest that a frequent evaluation and update of the strategic plan is
associated with relatively lower deficit or its complete absence. As displayed in Fig. 23
municipalities with no deficits or deficits up to 2 years are mostly centered around the updating
period to be founded on an annual or semi-annual basis.
FIG. 23: FREQUENCY OF THE STRATEGIC PLAN EVALUATION AND UPDATE VS. BUDGET STATE
Commercial revenues as an additional source of income for the budget are linked with lower
deficits (see Fig. 24). Hence, looking into the practices of municipalities in generating additional
income is a possible subject for further analysis as a tool of regional policy.
1
2
4
0
6
7
2
0
9
5
0
1
2
0 0 0
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Balanced every year Deficit 1-2 years Deficit 3-4 years Deficit 5 years
Once every six
months or more
Once every year
Twice per
election period
Once per election
period

44
FIG. 24: COMMERCIAL REVENUES FOR THE MUNICIPAL BUDGET VS. BUDGET STATE
In the case of the reintegration of the unemployed a trend between focus on reducing long-term
unemployment and lower deficit spending is possible, however further research is required to
confirm this observation visible in Figure 25.
FIG. 25: REINTEGRATION INTO THE WORKING ENVIRONMENT VS. BUDGET STATE
13
8
2
0
3
3
1
0
2
3
3
1
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
No
Yes (municipal
budget relies)
Yes (municipal
budget does not
rely)
13
9
2
1
5
5
4
00 0 0 0
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
No
Yes
Yes, with a focus
on long-term
unemployment

45
This is also the case for the tendency between the importance of external partners in evaluating
local economy support and the municipal budget state (Fig. 26). Results do not show an obvious
trend, however increasing the rate of response may yield more insightful results.
VS. BUDGET STATE
4.5 Clusters and Local Multiplier 3
The final section is closely related to examining the state of Dutch local policy when it comes to
the support or creation of clusters and the use of local multipliers, namely the Local Multiplier 3.
Hence, the final two research questions are being answered. First we concentrate on the evaluation
of cluster policy, that is: “How important are clusters in fostering regional growth and
development?”. From the available response we find that over 90% of municipalities with a
population exceeding 50,000 inhabitants actively support the creation of business hubs,
technological parks or industrial zones and are therefore implementing cluster policy, which
corresponds with the contemporary trends as described in chapter 2. In the case of municipalities
with a less than 50,000 inhabitants the support drops, however it still remains that 79% of the
9
4
2
0
6
8 3
1
2 1
0
0
1 1
1
0
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Do not know
Not important
Somewhat
important
Very important

46
respondents in this category also claim to support the creation of clusters. Further the analysis
looked into the numbers of business sectors each municipality is involved in both non-financially
(Fig. 27) and financially (Fig. 28).
FIG. 27: BUSINESS SECTORS SUPPORTED NON-FINANCIALLY
FIG. 28: BUSINESS SECTORS SUPPORTED FINANCIALLY
41% of municipalities support between 5 and 7 business sectors with non-financial means and the
number of supporting sectors increases with the increasing population size of the municipality.
1
1
0
2
0
1
3
1
0
0
2
2
3 3
1
0
1
4 6
1
0
1 1 0
2
0 0 0
1
2
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
10,000 - 25,000 25,000 - 50,000 50,000 - 100,000 100,000 - 200,000 >200,000
More than 10
8-10
5-7
2-4
1
0
0 0 0 0 00
1
0 0 0
1
2
1
3
0
2
4
4
4
2
1
1
2
3
1
0
1 1 2
3
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
10,000 - 25,000 25,000 - 50,000 50,000 - 100,000 100,000 - 200,000 >200,000
More than 10
8-10
5-7
2-4
1
0

47
This trend is also visible in the case of financial support, however, not surprisingly there is an
overall decline in the number of sectors supported financially. Here only 30,7% of respondents
remain in the category between 5 – 7. Equally large group of 28,2% respondents is now in the
category between 2 and 4 sectors supported financially.
Consequently, we have looked at which business sectors are present within the municipalities and
in contrast which businesses would the respondents like to attract to operate in their region. The
choices were selected based on a previous study conducted by the OECD and mapping the
structure of clusters within the Netherlands (Roelandt, Hertog, Sinderen, & Hove, 1999). Table 5
describes the current situation.
TABLE 5: SECTORS PRESENT VS. SECTORS DESIRED BY RESPONDENTS
The results show that despite there are differences between the business sectors present in the
municipalities and those desired by them, overall, the majority of sector changes does not exceed
three ranks. In the case of education there is no change as it is both the most desired and present
sector within the respondents municipalities. It needs to be stated however, that this is a subjective
choice from the view of the respondents and the aspiration for attracting education and health
sectors may be derived from the social aspects of these fields compared to the remaining ones.
Sectors present within the
municipalities in order of
importance
Sectors desired by the
municipalities in order of
importance
Education Education
Agriculture Health
Services Information Technology
Health Agriculture
Construction Chemical
Energy Services
Metal Processing & Electronics Communications
Information Technology Construction
Communications Transport
Transport Energy
Chemical Media
Media Metal Processing & Electronics

48
Another interesting finding is the strong demand for the increase of Chemical and IT sectors. In
general terms cluster policy seems to be a frequently applied tool within the respondent
municipalities. There is a considerable involvement in the support of business sectors with both
financial and non-financial.
At this stage we look at the LM3 and; “To what extent is the flow of money from and into the local
economy tracked by the municipalities? Does a local multiplier play a role in the evaluation?”.
Based on the responses regarding the use of local multipliers we have found that 74% of the
municipalities do not track the flow of money between sectors within their local economy, in fact
as many as 69% are unaware of the existence of the Local Multiplier 3 as depicted in Fig. 29 and
only one respondent claims to be actively using this tool.
FIG. 29: THE APPLICATION OF THE LOCAL MULTIPLIER 3
As such the results are unable to give a closer look at the effectivity of the LM3. Yet, it needs to
be said that 27 respondents claim to be tracking money flows going back to the local economy
when it comes to allocating investments and subsidies to the applicants. Suggesting that there is
room for the application of tools such as the Local Multiplier 3 as it is exactly the instrument to be
used in this case. The main reason for the absence of this mechanism is therefore likely to be the
unawareness of local administration in this aspect.
0 0 0
1
00
2 2
4 3
4
7 6
7
3
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
10,000 - 25,000 25,000 - 50,000 50,000 - 100,000 100,000 - 200,000 >200,000
No and we are
not aware of
the LM3
No, but we are
aware of this
mechanism
Yes

49
5 Conclusion and Discussion
In the final chapter the conclusions and limitations of the findings of this thesis as well as practical
recommendations are provided. Firstly, within the conclusions a summary of the answers to the
four research questions is presented and discussed. Secondly, the limitations and possible
improvements are evaluated. Third and final section offers recommendations both for the client’s
course of action and further research within this and closely related topics.
5.1 Conclusions
5.1.1 What are the common best practices of local economy support currently in use?
In order to answer the first research question we have asked the respondents about whether they
implement particular policies and how they do so. The policies included in our survey were
selected as per the structure of project ‘Intelligent Cities’ (M.C.Triton, 2012) and based on the
requirements of the client to focus the research on the area of local economy support.
In our findings we have discovered that Dutch municipalities regard the quality of residency and
living, investment and business opportunities as well as good infrastructure and public services as
the three most important indicators of a well-performing local economy. 90% of the respondents
claim to have a long-term strategy for local economic development in place and as much as 82%
do evaluate their local economic strategy at least twice per election period, 43% at least once a
year, which is considerably higher than in the case of the Czech Republic and slightly more often
than in Germany (M.C.Triton, 2012, p.5). All respondents have stated that there is a policy for
reintegration of the unemployed in place within their municipality, and 64% do focus on the
elimination of long-term unemployment specifically. Over three fourths of subjects in our research
have commercial revenues as a part of their budget. Germany displays the result of 33%
respondents which have commercial revenues, while in the Czech Republic this is the case for
60% of municipalities (M.C.Triton, 2012, p.14).

50
5.1.2 What are the main differences between regions with high and those with a low
performance in local economy support when it comes to regional policy?
When addressing the second research question, we contrast the results found in answering the first
question with three performance indicators, which are the level of unemployment, population
growth/decline and the state of the municipal budget. Our results in this case can only be use as
illustrative observations suggesting possible trends between certain practices and performance. In
order to evaluate the firm existence of these trends and causality linkages, further analysis is
needed. We look at these illustrative linkages in order to propose possible pathways for further
research by M.C.Triton. The reasons for not estimating some of these trends more thoroughly are
discussed within the limitations section below.
The main differences observed were found in the case of the focus on the reduction of long-term
unemployment that is frequent within the areas with high unemployment, the efficiency of this
policy should thus be analyzed. The involvement of external partners seems to be positively
correlated with the municipal population growth, a causal link needs to be established within future
inquiries. Finally, most clear are the results in the case of the municipal budget. In this case both
the frequency of the local economic strategy evaluation and update as well as the existence of
commercial inflows into the budget seems to be linked with lower deficits. A more thorough
examination of these trends is therefore highly recommended.
5.1.3 How important are clusters in fostering regional growth and development?
Reviewing the contemporary literature shows cluster policy as one of the most commonly used
tools within regional policy. As such it comes as no surprise that over 90% of respondents whose
municipalities are inhabited with over 50,000 inhabitants are focused on promoting the creation of
clusters. Dutch municipalities are also involved in the support of multiple business sectors within
their local economies both in a financial and non-financial ways. The three most sought sectors for
attraction to the region are within the fields of education, health services and information
technology respectively.
5.1.4 To what extent is the flow of money from and into the local economy tracked by the
municipalities? Does a local multiplier play a role in the evaluation?
In contrast to clusters, local multipliers such as the LM3 are relatively new and unexplored
mechanism of regional policies. As such the client was interested in knowing about the awareness

51
of this tool within the Netherlands, in order to find out whether further research regarding the LM3
should be conducted in this country.
Unfortunately, the results show that only one respondent municipality uses the LM3 within their
local economy policy, while 69% of respondents are completely unaware of the existence of the
LM3. Almost three fourths of the municipalities in this study do not track the flow of money
between sectors within their local economy at all. On the other hand, the local multiplication effect
of investment projects funded by the municipalities is considered during the selection criteria for
private bidders of these projects in 27 out of the 39 respondent municipalities.
5.2 Limitations
Designed as a quantitative and exploratory study, the findings of this thesis are limited as we
analyze many aspects of regional policy at once, which prevents the analysis to go into more depth
in specific areas. The purpose was therefore to uncover primary observations as a gateway for
further research by M.C.Triton and others. While standing out alone the use for our results may be
limited to narrow interpretation, in combination with the data gathered by the client within project
‘Intelligent Cities’ a comparison between regional policy within the three observed countries offers
a better insight into the differences in local economy support.
Furthermore, another issue is the limited generalizability of the results that may be only applied
within the context of regional governance in the Netherlands. While the sample group consisting
of 39 respondents, that is circa 10% of all Dutch municipalities, can be considered as a
representative sample, there still remains a risk of self-selection of municipalities based on the
questions asked within the survey as those exhibiting low performance in one or more areas might
have chosen not to complete the survey and thus favoring the results towards better results than
are to be found in all the municipalities. Results should therefore be confronted with related studies
and additional data in order to provide continuously more accurate picture of the local economy
support in Dutch municipal administration.
Probably the greatest limitation of this study arises when assessing the answer to research question
2. The results presented in section 4.4 lack the necessary steps to be taken to examine causal links
between some of the observed trends. Initially this was to be achieved by conducting follow-up

52
interviews with some of the respondents, however an insufficient number of respondents have
provided their contact details to attain a representative sample of interviewees for further
discussion with regards to some of the findings.
5.3 Recommendations
5.3.1 Recommendations for M.C.Triton
Based on the gathered responses and their analysis we recommend to the client to re-evaluate the
recommendations and outcomes of project ‘Intelligent Cities’ with regards to the comparison
between the original findings and the new observations from the Netherlands. It would be
beneficial for the company to conduct follow-up interviews with representatives of local
government in the Czech Republic and other EU countries to gather a better understanding of the
reasons behind applying certain policies such as the support of clusters. We also believe the
company should approach municipalities in a direct way, through personal meetings and or video
conferences in order to have the opportunity to gather detailed information about their local
economy support strategy.
In the context of the Netherlands, regarding future research, it would be wise to approach
municipalities through a local partner firm similarly to the manner applied during project
‘Intelligent Cities’ (M.C.Triton, 2012) in Germany, where a local consultancy firm has helped with
the process of approaching respondents. On the other hand, judging the results related to the Local
Multiplier 3, the Netherlands is not a suitable country for a deeper analysis of this tool as at this
stage the LM3 is generally an unknown tool within Dutch regional policy. The literature review
provides evidence that the LM3 has been applied numerous times within the United Kingdom,
where it has also been created and as such mapping the context of the British regional policy and
the importance of LM3 within it, is likely to offer more clues as to the efficiency and application
of this tool.
5.3.2 Recommendations for Future Research
Further research should focus on the closer analysis of certain observed trends between policies
and economic performance in order to establish causal links between these and verify the
observations of this thesis. In practice this means building up on the findings presented in section

53
4.4 and focus on evaluating the notions suggested in section 5.1.2. This would therefore involve a
quantitative analysis of secondary data, which would be able to more accurately estimate these
relationships. Getting a deeper understanding of these results is also possible through additional
qualitative research in the form of previously mentioned follow-up interviews with representatives
of municipalities in order to discuss the findings. In order to achieve this we strongly suggest a
direct approach as we were unable to get the representatives to cooperate in this aspect via the
indirect approach of sending out the survey electronically.

54
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59
Appendices
Appendix 1 – Survey Questions
A. DESCRIPTION
Local Economy Support in the Netherlands
This survey examines ways regional municipalities in the Netherlands help support their local
economy. The respondents should be representatives of municipalities with sufficient knowledge
of the economic policies in place. Please try to answer each question as accurately as possible.
Thank you for your time!
About the research
This research is conducted on behalf of Tilburg University and M.C.Triton ltd. a Czech
consultancy firm helping local governments find ways to boost their local economies.
https://www.tilburguniversity.edu/
http://mc-triton.cz/en/

60
B. BASIC DETAILS AND PERFORMANCE
1) What is the name of your municipality?
2) What is the population size of your municipality?
a. Less than 10,000 inhabitants
b. 10,000 – 25,000 inhabitants
c. 25,000 – 50,000 inhabitants
d. 50,000 – 100,000 inhabitants
e. 100,000 – 200,000 inhabitants
f. More than 200,000 inhabitants
3) What percentage of your inhabitants is 25 years of age or younger?
a. Less than 10%
b. 10-15%
c. 15-20%
d. 20-25%
e. More than 25%
4) What percentage of your inhabitants is 65 years of age or older?
a. Less than 10%
b. 10-15%
c. 15-20%
d. 20-25%
e. More than 25%
5) What percentage of your inhabitants currently receives social assistance?
a. Less than 2,5%
b. 2,5-5%
c. 5-10%
d. More than 10%
6) What is the average level of unemployment in your municipality over the past 5 years?
a. Less than 2,5%
b. 2,5-5%
c. 5-7,5%
d. 7,5-10%
e. More than 10%

61
7) What percentage of your inhabitants is composed of non-natives (allochtonen)?
a. Less than 5%
b. 5-10%
c. 10-15%
d. 15-20%
e. 20-25%
f. More than 25%
8) What was the population growth/decline in your municipality over the past 5 years?
a. Considerable growth
b. Slight growth
c. No change
d. Slight decline
e. Considerable decline
9) What was the state of your municipal budget within the past 5 years?
a. Surplus or balanced every year
b. Deficit 1-2 years
c. Deficit 3-4 years
d. Deficit 5 years
10) How would you rate economic performance of your municipality over the past 5 years in
comparison with the rest of the Netherlands?
(Much worse) 0 --- 1 --- 2 --- 3 --- 4 --- 5 --- 6 --- 7 --- 8 --- 9 --- 10 (Much better)
11) How would you rate economic performance of your municipality over the past 5 years in
comparison with municipalities similar to yours?
(Much worse) 0 --- 1 --- 2 --- 3 --- 4 --- 5 --- 6 --- 7 --- 8 --- 9 --- 10 (Much better)

62
C. LOCAL ECONOMY SUPPORT
12) What are the most important characteristics of a well-performing local economy? Please
select 3.
o Satisfaction of the public
o Quality of residency and living
o Clean environment
o Sufficient tax incomes, solid budgetary position
o Low unemployment
o Good infrastructure and public services
o Investment opportunities and business creation
o Positive job migration
13) Does your municipality have a long-term strategy for improving the performance of the local
economy (for example for investments in the infrastructure, subsidies for local businesses or
requalification programs for the unemployed)?
a. Yes
b. No
c. Inapplicable
14) How often do you evaluate and update your strategic plan and its implementation goals?
a. Once per election period
b. Twice per election period
c. Once every year
d. Once every six months or more
e. Other, specify ______________
15) Has your municipality received funds exceeding 5% of the annual budget from privatization
within the past 5 years (for example the sale of the electricity grid)?
a. Yes and we have spent the revenue proportionally with regards to the budget
b. Yes and we have allocated the revenues to a specific chapter of the budget (i.e.
investment)
c. No
d. Other, please explain _______________
16) Does your municipality have commercial revenues from, e.g. from services for other
municipalities or businesses?
a. Yes, but the municipal budget does not rely on these
b. Yes, they are an important segment of the municipal budget
c. No

63
17) Does your municipality have a policy for reintegrating the unemployed back into the working
environment?
a. Yes and we specifically focus on the elimination of long-term unemployment
b. Yes
c. No
18) To what extent are external partners (citizens/companies or experts) important for the
formation of your local economy support strategy?
a. Very important
b. Somewhat important
c. Not important
d. Do not know
19) Do you evaluate your local economy support based on feedback from citizens/companies?
a. Yes
b. No
20) Does your municipality coordinate its economic policies with other municipalities? For
example do you operate common services such as public transport?
a. Yes
b. No
21) To what extent does your local economy support strategy based on active (i.e. investment in
infrastructure, industrial zone creation) as opposed to passive (flexible administration, open to
business programs) tools?
(Only passive) 0 --- 1 --- 2 --- 3 --- 4 --- 5 --- 6 --- 7 --- 8 --- 9 --- 10 (Only active)
22) To what extent is your local economy support strategy and implementation based on your
local initiative as opposed to nation-wide central directives and regulations?
(Only central) 0 --- 1 --- 2 --- 3 --- 4 --- 5 --- 6 --- 7 --- 8 --- 9 --- 10 (Only local)

Local Economy Support Strategies in the Netherlands

Local Economy Support Strategies in the Netherlands

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