Credit Co-operatives in Locally Financed Economic Development - Using Energy Efficiency as a Lever

This paper focuses on the failure to develop institutions capable of supporting economic development with localized saving-investment cycle. The author argues that:

• In most transitional and developing countries, institutions capable of supporting economic development with localized saving-investment cycles have not developed.
• The gap is not addressed by either country level macro-programs dealing with 'development finance' or by donor driven 'micro credit' schemes.
• Even if the 'micro credit schemes' evolve into financial institutions, they do not operate on a sufficient scale to trigger dynamic local-level economic growth.

The author feels that the local developmental growth model' would require creation of a local finance system, and states that:

• The advantages of credit co-operatives in mobilizing and financing local economic development are contrasted with the disadvantages of both conventional micro-credit and the most recent neo liberal fashion of so-called 'new wave financial institutions'.
• This is a promising space for development of a localized financial system based on credit co-operatives.

The author concludes that:

• Local and regional governments have a crucial role in simulating growth of various types of business activity;
• The natural synergy between savings/credit co-operatives and production units with cooperative or partial employee ownership is evident in Nordic and other experiences, and is especially relevant in transition or post-transition economies;
• At the enterprise level, various forms of full and partial employee ownership are appropriate, not excluding the local government as a possible equity co-owner.