2015. Dragoș Dinc ă & Cătălin Daniel Dumitric ă. This is a research/review paper, distributed under the terms of the Creative Commons Attribution… [601753]

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2015. Dragoș Dinc ă & Cătălin Daniel Dumitric ă. This is a research/review paper, distributed under the terms of the Creative
Commons Attribution -Noncommercial 3.0 Unported License http://creativecommons.org/licenses/by -nc/3.0/), permitting all non-
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G
lobal Journal of Management and Business Research : A
A
dministration and Management
Vo
lume 1 5 Issue 9 Version 1.0 Year 2015
Type: Double Blind Peer Reviewed International Research Journal
Publisher: Global Journals Inc. (USA)
Online ISSN: 2249 -4588 & Print ISSN: 0975 -5853

T
he Theory of Minimal Risk in Local Development Processes
By
Dragoș Dincă & Cătălin Daniel Dumitrică
Na
tiona l School of Political Studies and Public Administration , Romania
Summary- T
he pap er starts from two practical findings: one is that in Romania, as in many other
Eu
ropean countries (see Bulgaria, Spain, Greece, Poland, Hungary etc.) there are many local
communities living in poverty, where one cannot speak of a local economy (there is a very small
number of companies with low turnover), of competent local authorities or developed civic spirit (so a development process cannot be mentioned). There are communities in a T zero state of
development, stage persisting despite the existence of national or European policies in the field.
The second finding is that over time a number of theories / methods / models of local
development have been formulated, applied with more or less success.
Thus, this paper aims to summarize the main theories on local development and, as a
result of their analysis, to propose a model / theory to be applied in local development processes
to identify the most suitable model of development.
The p roposed model is based on risk analysis in local development processes, thus
generating the theory of minimal risk within them.

Ke
ywords : local development, local community, risk analysis, endogenous, exogenous resources.
G
JMBR – A Classification : JEL Code: M19
TheThe
oryof MinimalRisk inLocalDevelopmentProcesses

Strictly as per th e compliance and regulations of:

The Theory of Mi
nimal Risk in Local
Development Processes
D
ragoș Din că
α & Cătălin Da
niel Dumitric ă
σ
Summa
ry- Th
e paper starts from two practical findings: one is
t
hat in Romania, as in many other European countries (see
Bulgaria, Spain, Greece, Poland, Hungary etc.) there are many
local communities living in poverty, where one cannot speak of
a local economy (there is a very small number of companies
with low turnover), of competent local authorities or developed
civic spirit (so a development process cannot be mentioned). There are communities in a T zero state of development, stage
persisting d espite the existence of national or European
policies in the field.
The second finding is that over time a number of
theories / methods / models of local development have been
formulated, applied with more or less success.
Thus, this paper aims to summari ze the main
theories on local development and, as a result of their analysis, to propose a model / theory to be applied in local development processes to identify the most suitable model of development.
The proposed model is based on risk analysis in
local development processes, thus generating the theory of
minimal risk
within them.
K
eywords :
local de velopment, local community, risk
analysis, endogenous, exogenous resources.
I.
Lo
cal
Devel
opment
evelopment corresponds to a process of
mobility, of change
with deliberate character
for achieving economic- social objectives.
Specialists1
Local devel
opment is "the process of
development, mainly economic in a given region or
administrative -territorial unit, which determines an
increase of the quality of life at local level" identify two phases of development –
the
virtual (VD) and real (RD). Real development has, is or should be accompanied by economic growth and is obtained from the conversion of VD in real development, process mediated by management.

2. L
ocal
develo pment has as objective "economic prosperity and
social welfare by creating a favorable business
environment, along with community integration of
vulnerable groups, using endogenous resources, private
sector development”3
Aut
hor α σ: Facult y of Public Administration, National School of Political
Studies and Public Administration Bucharest, Romania . .

1 D
umitrescu M., Strategies and strategic management , Ed.
Economic ă, București, 2002, p. 96.
2 la
t. Disolvere – to grow, to evolve .
3 P
arlagi A., Dictionary for public administrat ion, Ed. Economic ă,
București, 2004, p. 86.
L
ocal Economic Development (LED) is "the
process through which local public administration
and/or the community, based on groups, manages
existing resources and enter into a new commitment to
partnership either with the private sector, or each other, to create new jobs ,
employment and
to stimulate
economic activities in a well -defined economic zone”
4
E
conomic d evelopment requires "regional or local
economic capacity development and formulating the response to economic, technological and social changes etc. ”.

5
DS
EL actors include
"authorities and
government bodies (local, county and central) responsible for sectoral policies (industry, environment, labor, public works, transportation, etc.), representatives
of economic activities and public services (businesses,
banks, unions etc.), educational institutions, NGOs, mass -media etc .” Local socio- economic deve lopment (LSED) is a
process of development in a specific region or geographical area, which results in a better quality of local life. LSED refers to the development capacity of a local or regional economy to stimulate steady economic
growth and thereby to
create work places and
conditions for capitalizing its own opportunities of rapid
changes in economic, technological and social fields.
LSED ’s
major objectives are to contribute to
economic prosperity and social welfare by creating a
favorable business environment, along with community
integration of vulnerable groups and promoting a dynamic and positive attitude of the population towards their own region development issues. LSED considers
the social and cultural aspects of development.

6

4 Ec
onomic development – A strategic way for local public
administration , Don Morrison, ICMA, quoting Edward J. Blakelz,
Planning Local Economic Development: Teory and Practice
5 Matei L., St
rategies for local ec onomic development , Ed. Economic ă,
București, 2004, p. 86.
6 C
itizen pa rticipation in decision -making – Training m anual”, USAID –
RTI, București 2002, Coordinators Matei L., Dinc ă D., p. 165. .
D
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e
-mails: dragos .dinca@administratiepublica.eu ,
catalin.dumitrica@administratiepublic a.eu

II. Th
eories Rel
ated to Lo
cal Devel
opment
Local development envisages the transition of a local community from a state A to state B, superior in terms
of quality of life and standard of living, emplo yment, social and environmental conditions etc.

Fig. 1 : Objective of local development
The methods and tools through which a
community can move from state A to state B, have been the subject of numerous theories whose practical application has proven more or less successful, the conclusion of various specialists in the field being that existing theories can be applied to a limited number of
cases. It cannot be affirmed that one of the theories
enunciated represents through implementation , a
development panacea, of shifting from VD to RD, from
state A to state B .
Most theories focus on the foundation of
development, resources needed to support and their background environment. There are a number of other
theories of development, derived from the first category,
starting from communities’ autonomy / dependence to communities neighboring / bigger / state / growth poles or in whose area of influence they are positioned. There are also theories that focus on the space or time of
development.
In other words, development theories revolve
around two categories of factors , the second category
derived from the first : endogenous / exogenous
resources and autonomy / dependence.

Poi
nt P0:0 ( autonomy and development base d exclusively on own resources) would correspond to an utopian isolationism of local
communities.
Point P1:1 corresponds to a perfect balance between dependency/autonomy, endogenous / exogenous resources.
Fi
g. 2 : Foundations of local development theories
a) Theories based on endogenous and exogenous
factors /resources
i. The theory of endogenous development7

7 It
is know n also as the "S elf-centered development theory".
Forme
d in the late 70s, endogenous
development theory was developed due to changes in existing economic and political conditions at that ti me,
more exactly in the context of economic growth stagnation and crises triggering in all industrialized countries.
L
ocal
communi ty
State A L
ocal
communi ty
State B
Local dev
elopment
D
ependenc y
A
utonomy
E
ndogenous resources E
xogenous r esources P
0:0 P 1:
1 8Global Journal of Management and Business Research Volume XV Issue IX Version I Year (
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he Theo ry of Minimal Risk in Local Development Processes
T
he theory of endogenous development as a
means to development has two major components,
namely:

•
se
lective isolation;
•
capitalizing on the local strategic advantage;
According to this view, the regions cannot
specialize in what they do best and thereby to benefit
from the results of their own efforts, since the resources
at the disposal of other regions give the latter
a higher
negotiation power on the market, and the only solution
conceivable is to refuse to play this game, based on
rules according to which by definition they will be
overcome.
Selective isolation means an action that aims to
satisfy the needs of the region within its own territory, starting from the adoption of appropriate economic policy measures at local level.
The second component of endogenous
development, namely the use of regional strategic advantage means an export resource development through a parallel export s ector, under tight control and
developed only for products for which the region has a foothold in the market, regardless of political or
economic requirements, which gives it a limited nature.
A model of endogenous development capable
of ensuring the auto nomy which is sustainable must be
based on local characteristics and on the ability to control certain fundamental variables. In particular, such
a model can be based on:
"-
using local resources (labor, historic capital
accumulated, entrepreneurship, specific knowledge of the manufacturing process, material resources)
–
the ability to check
the local accumulation process;
–
innovation capacity;
–
the existence of inter -sectoral productivity both intra
and inter -sectoral locally ;
8
I
n this way the local economy is now the
product of using and completely developing of local resources and its future can be controlled from within .
9
ii.
E
xogenous development theory
10
E
xogeno us development theory aims to analyze
the impact and influence that
the exter nal
economic and
administrative environment exert
over a local
development system, mainly endogenous, with the aim

8 Edited by Huyn
h Cao Tri ( 1998), Participative administrat ion and
endogenous development, United Nations Educational, Scientific and
Cultural Organization, pag 8
9 S
tephen Gyrett ( anul), Local Development, ED Ashgate Publishing
Company, p. 91.
10E
xogenous development theory aims to analyze the impact and
influence that external economic and admin istrative environment exert
on a local development system , mainly endogenous, with the aim of
achieving a uniform local development focused on developing an
innovat ive space. o
f achieving a uniform local development focused on
the development of an innovative area.
Both endogenous and exogenous factors
contribute to the achievement of "a process of
development, mainly economic in a given region or administrative -territorial unit, which increases the quality
of life at local level", local development representing " the
expression of local solidarity, creating new s ocial
relations and it manifests the will of the residents of a
region to harness local resources ”.11
L
ocal deve lopment is conditioned by factors
external from the local level. The local development
framework emphasizes the importance of an
environment and
a policy, capacity building and transfer
of resources for local development. Political and
institutional environment for local development includes
formal institutions such as laws, policies, an
organizational system and an informal system
represented by a set of values, norms and social
practices that support autonomy and local governanc e,
service delivery and the growth
of the
private sector at
local level.
12
iii.
S
ystemic an alysis of the development
Systemic analysis of local development tries an
integ ration of endogenous and exogenous factors by
analyzing complex environmental and local
development process flows.
We can speak of a European system of regional
development, in which subsystems of local
development can be found. The European system of regional development, like its other subsystems are
systems with a mixed architecture, incorporating their own feedback mechanisms and whose evolutions have well defined finalities in the European or national regulatory framework.
Systemic economic administrative local
development model (SEADL) includes the following:
–
existence of three levels of systemic organization: selector, transducer and achiever, each of which having the features a cybernetic subsystem;
–
in local development activities corresponding to the
first level belong to the institutions or public
authorities (county councils, municipal etc.) or their associative structures and have as object of the foundation of public decision making on local
development strategies, selection of policies
developme nt, accessing development funds etc.;
–
intermediate level –
transducer –
includes activities
conducted by civil servants and civil employees for the operationalization of public decisions,

11A
lina P rofiroiu, Sorina Racoviceanu, N Ț arălungă ( 2008), Local
economic development, Editura Economic ă p. 8.
12C. Dumitrică
(2008), “ Analysis of the actors involved in regional
development process ” in the volume „Innovativeness -foreign direct
investments relationship – European challenges and opportunities”,
Institutul de Economie Na țională, Editura Universitar ă, p. 61.
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he Theo ry of Minimal Risk in Local Development Processes
mo
nitoring the implementation of local development

p
olicies, e valuating their results and the social and
economic impact ;13
b)
Th
eories ba sed on the dependency/autonomy

i.
The theory of uneven development14
I
n the ea rly 1960s a number of theories of
uneven development center -periphery relationship have
been highlighted, among the most important
representatives of which are John Friedmann, Stuard
Holland and Gunnar Myrdal. The basic idea of the development theory as chronological differentiation was
developed by Nobel Prize winner for economics, Gunnar
Myrdal.

15
T
herefore, u nderdeveloped regions and areas
continue to exist, to the extent that growth process
mechanisms merely amplify existing development
schemes, as hypothesis evidenced by Gunar Myrdal as
well. It is believed that areas / regional
disparities are
based on chronological gaps inherent in the integration processes, gaps which result in imperfect mobility of
production factors. This theory brings up the issue of
economic time homogeneity, the developm ent gaps
being interpreted as chronological gaps.

16
ii.
Th
eory of g rowth poles
The concept most often associated to
development is that inequality is itself the essential element
of development, both in time and space.

François Perroux
17
T
he concep t of polarized space designates "all
forces of attraction and rejection that an economic unit
exerts upon goods and people in geometric space
and
the ensemble of attraction and rejection forces exerted
on itself “ formulates a theory based
on a simple postulate: economic growth i s not the same
everywhere, and since it is geographically concentrated around key enterprises, Perroux considered
that the
polarizing agent is the "pilot enterprise". Development
does not occur everywhere the same, as it manifests in growth poles that have
a variable intensity, spreading
through various channels having varying effects on the
overall economy.

18

13 M
atei A., M atei L, Systemic Models of Local Development,
Theoretical and Applied Economics , nr.1/2007, p.16,
www.store.ecta p.ro
14 T
his th eory can be interpreted from the both perspectives of
chronological differences and cumulative causation.
15 H
e was a Swedish economist and politician, representative of the
School of Stockholm, Nobel laureate for economics (1974).
16 G. Myrdal (195
7), Economic Theory a nd Under – Development
Regions, London, Duck worth.
17 F
rançois Perroux, is the one who introduced in 1949 the economic
growth poles theory. Perroux defined economic growth poles in terms
of what he called "abstract economic space" According to Perroux, the
concept of abstract economic space is represented by three elements: "economic field", "a field of forces or influences",
"homogeneous aggregate"
18 F
. Perroux (1954), L’Europe sans rivage, Paris, PUF , p. 353. .
B
alanced metropolis policy has as main
objective the polarization of an area / region around
several towns.
iii. Von Thunen model 19
H
istory of lo cation theory begins with the issue
of "Isolated state" written by Johann Heinrich Von Thünen in 1826. Thünen was not the first specialist who analyzed the economic phenomena in space, but he
was the first who teated such phenomena using spatial
analysis
20
Vo
n Thünen 's analysis shows that the structure
of rural areas depends on its articulation to the urban environment; specifically th e closest distance to the
urban market determines the location of crops and
agricultural landscape structure, thus directly influencing
the urban landscape of a certain geographical area. .
The notion of isolated economy in an idealized
space was a new, radical idea justifying why Thünen
what considered the "father" of spatial economy.
iv. Weber model
21
W
eber's boo k, "Theory of branches location" ha s
to be considered a successful treaty in the theory of location in that it shows a continued interest and it
stimulates analytical work in the theory of location as a specialized branch of the economy.
Alfred Weber's main area of interest was the
choice of industrial localization. He was preoccupied
with the analysis of the general factors of localization, applicable to a greater or lesser extent in every branch of industry.
It can be argued that a "strong" point of Weber's
model lies in its ability to be operational. Appreciable influences of this theory are met in the analyzes regarding the optimal location of hospitals, warehouses, fire stations and other objects of interest, or production units of certain multinational companies .
v. Hotelling model
22
T
he essen tial contribution which the localization
interdependence theory brings is easing this hypothesis, considering the spatial implications of oligopolies with
no understanding among participants.
The first work developed in this direction
belongs to Hotelling, the theory being extended by
Lerner and Singer. – models of the localization
interdependence theory

19 J
ohann Hei nrich von Thünen's lived in Germany (1783- 1850)
bringing its contribution to the development of modern science
through the work "Der Isoliert Staat " – The Isolated State (1828) which
was the first work of German origin in the history of the "theory of central place s" .
20 M
. Blau g ( 1992), Economic Theory in Retrospect , Editura Didac tică
și Pedagogic ă, București , p. 650.
21 A.
Weber ( 1929), Theory of the Location of Industries, Edited by C.J.
Friedrich, Chicago, University of Chicago Press .
22 H
arold Hotelling (1895 – 1973), graduate of the Faculty of
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H
otelling' s model remained an important
starting point in the analysis of spatial and non – spatial
oligopoly.
vi. Christaller ’s model23
T
he deve lopment model focused on central
places theory is one of the most elaborated space
analysis models. It is affirmed that without this theory "it
would not have been possible to speak of an
independent theoretical geography from other
sciences,"
– models b ased on the theory of
central places
24
T
he purpose of this theory was to explain the
size and number of cities, as well as the distance from where they are located within a given territory. The
theory is based on the definition of the city, which is
perceived as representing "a distribution center of
goods and services for a certain number of
inhabitants" this theory being initially developed by W
Christaller and A. Losch.
25
Therefore, C
hristaller considered that a central
system consists from: "a number of central locations grouped around a main central place", and the differences between these
centers that provide goods and se rvices to outlying
areas.
26
• a
main urban ce nter located in the middle of the
system; this being the
hypothesis that constituted the base of the theory of
central places formulation.
Thus elements that make up such a system
have been identified by Christaller as being the following:
• a certain number of urban centers positioned
around the main urban center;
• the distance among urban centers;
• the position in which the urban centers are
compared to the system of central places, and to other central systems within the region;
• area occupied by such a system of central places ;
27
T
he notion of centrality
28

23 W. C
hristal ler ( 1966) , Central Places in Southern Germany,
translated by C.W. Baskin, Editura, Englewood Cliffs, N ew Jersey:
Prentice -Hall, Inc.
24 D
. Jula ( 1996) , Regional economy , Universitatea Ecologic ă
București. ju
stifies g rouping of
services , with the same standard , for the public in one
place, these being subsequently provided to additional regions or areas of influence, which are thus polarized by the center.
25 T. L
. Bell, S . R. Lieber, G . Rushton ( 1974) , „Clustering of Services in
Central Places”, în „Annals of the American Geographers, Vol.64,
No.2. p. 216 www.jstore.org
26
R. E. Preston ( 1971) , “Th e structures of Central Place Systems”, în
Economic Geography, Vol.47, No.2., p. 137, www.jstore.org.
27 id
em.
28 T
he feat ure of certain urban centers offering quality services to
outlying areas is called centrality. vii. L
osch ’s model29
I
n relation to theories based on cost, placed in
the spatial monopoly context and to the theories of
location interdependence, seen in the spatial oligopoly context of a small number of producers, the school of attraction area of a market leads the structure of competition one step further, placing it in the spatial
oligopoly with a large number of manufacturers
30
L
osch, as well as Christaller showed that
regional networks have multiple dimensions. But
regional networks are reducible to the functions of
supply and demand for products of the same or
different type. When it comes to an economic
environment such simplifications can no longer be made, because, as Losch exemplified, an economic
environment is a system of different markets, it is a body
and not an organ.
31
viii
. Zipf’s model.
32
Zi
pf's law known as the law of "Rank – Size"
correlates the size of a city (population size) with its rank
(the position it occupies in the hierarchy of the urban
system).
The rank-size relationship considers cities as
elements of a system within which each of them is
closel y interdependent with the others, showing the
hierarchical organization as the main form of
organization.
Rank- size distribution of the urban system
highlights its particular elements, such as the evolution
of urban growth or competition between cities, providing an overview of the representation of cities' sizes in the
territorial profile of the country.
Zipf's Law, states that the population of a given
city, tends on average to be equal to the ratio between
the population of the most important center and the order number of that city rank, rank determined from the
size of the population.
In these circumstances , knowing the population
number of the most important city, both the population
of the other cities and the total urban population can be
deduced.
The relationship rank -size has a high diagnostic
power of urban systems, being able to absorb and to
produce spatial information for short periods of time.
III.
Mi
nimum Ris
k Th
eory
Dictio nary of Finance and Banking defines the
risk as the possibility of suffering a loss or damage in

29
A. Losch (1954), The Economics of Locat ion, tradusă de către W.H.
Woglom, New Haven, Connecticut: Yale University Press,
30 V
. Nicolae, Daniela Luminița Constantin ( 1998), Regional and
Urban Economics Basics , Editura Oscar Print, p. 76 .

31 id
em
32 G
. K. Zipf ( 1932) , Selected Studies of the Principle of Relative
Frequency in Language. Cambridge (Mass).
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he Theo ry of Minimal Risk in Local Development Processes

tra
nsactions33. Risk
is defined as the "potential adverse
deviation from expected results34
Autho rs
like M. Blaug".
In this logic, risk in the local development
process represents the non- achievement of the goals
undertaken or the inability to move from VD to RD.
35orF. Kn
igt36
a)Loca l de
velopment risks identification suggest
that risks can be calculated. In fact there are methods of
calculating the risks of the public organizations in
Romania.
The minimum risk theory in the local
development involves identifying risk, calculating the
probability and their impact, risk tolerance assessment
and formulating measures to counter the risks. Real
local development means, according to this theory, a
sum of processes with minimal risk. Calculating the risks
and applying those processes whose risks are minimal, it is possible to implement, as appropriate, any of the
above theories. Each, depending on particular cases,
may be applicable, may have results or may not.
According to the formulated definition, the
application of risk theory in the local development process assumes the completion of certain stages.
Risk identification is closely related to the
formulation of development objectives. Risks can be formulated only related to objecti ves whose
achievement is affected by their materialization. Risk
identification process is not and objective but a subjective process, related to experience and
knowledge of the one who identifies them. Risks are
actually perceptions on factors that may affect the
achievement of certain objectives. The same objective
formulated in different communities may be subjected to
the same risks, but with different probability and impact,
or may be subject to different risks.
But beyond individual cases, we intend t o
identify common risks specific to the general objectives of local development, the transition from the VD to RD or moving from the state A to B. These general objectives are subsumed to their specific community goals, SMART objectives.
Specific risks of the endogenous growth theory
are: physical capital risks, risks relating to technological innovation, human capital risks and public capital risks.
From the exogenous development theory, we
can identify the following categories of risks: risks concerning t he macroeconomic environment, risks

33Oxfo
rd , A Dictionary of Finance and Banking , Ed. Oxford University
Press, 1997, pag. 309
34A. Ku
ritzkes, T. Schuermann, What we know, dont know and can’t
know about bank risk: a view from the tre nches, Ed. Princeton
University Press, 2007, pag.3
35M. B l
aug, Economic Theory in Retrospect , Ed. Didactic ăși
Pedagogic ă, București,
36F. Kn
igt – Risk, Uncertainty and Profit , Ed. Signalman Publishing,
2010rega
rding the technological environment, ecological
environmental risks, risks relating to the cultural environment, infrastructure risks, and risks relating to the
political, governmental or legal environmental risks.
The first phase of local development is the
construction of the development partnership. By the theory of endogenous development this is about the
representatives from local business, public sector and
civil society.
In any of the cases, there is a risk of non –
participation and non -involvement of either category.
b)Risks evaluation
Once the risks are identified , the next stage is
their evaluation from the probability of materialization
and of the impact (consequences) over the objectives. The combination of the estimated probability and impact
levels represents the exposure to risk based on which
the risks profile is developed .
An evaluation method is the one proposed by
The Internal Control Framework / Committee of
Sponsoring Organizations of the Treadway Commission (COSO)
37:
12Global Journal of Management and Business Research Volume XV Issue IX Version I Year ( )A 2015
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Journals Inc. (US) 1The
Theory of Minimal Risk in Local Development Processes

•37P
resented in METHODOLOGY FOR IMPLEMENTATION OF
INTERNAL STANDARD CONTROL "RISK MANAGEMENT", Ministry
of Public Finances, January 2007 .F
rom the exogenous perspective, represent –
tatives of the macroeconomic, technological, ecological,
cultural, political / governmental, legal environment are
involved.

By apply in
g this method of assessment for
identified risk, it is possible that, for example, for the
non-participation of citizens in local development
processes in a community, the risk to have a medium
probability and low impact, resulting in a score of 6, and in another community, the probability to be very high and the impact high, resulting in a score of 20.
In the case of support or interest from
macroeconomic environment, in a community the risk may have a high probability and moderate impact, resulting in a score of 12, and in another community, the
probability to be low and the impact low, resulting in a
score of 4.
In such a hypothetical situation, applying
minimal risk theory, the first community will be based predominantly on endogenous elements and the
second on exogenous .
c)
Formulating responses to risk
Once identified and measured, risk minimization
plans, measures are necessary, Response to risk
depends on the nature of risk seen from the perspective of controlling possibilities (of power). In fact, it is about
the answer to the following questions: can risks be controlled by the community or not? If yes, can the community control the risks to a satisfactory level? If not, can the community outsource risks or risks generating
activities?
IV.

Conclusions
Lo
cal development is a process that is based
on endogenous and / or exogenous factors. The ratio of these factors and the success of the development
process starting from one or the other category of
factors can be determined / calculated by applying the risk theory. The success of development processes requires consideration of processes with minimal risk
and a greater probability of achievement. It is true that
the economic theories argue that results can be achieved in conditions of maximum risk, the private investor being the one to decide to what extent and which risk categories are assumed. However, in
the
case of the local development process, coordinated by
public policy makers involving public resources one
cannot speak about a maximum risk taking. In these circumstances the minimum risk theory becomes
applicable, as a source of local development.
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Very high 5 I
M
P
A
C
T5 10 15 20 25
High 4 4 8 12 16 20
Moderate 3 3 6 9 12 15
Low 2 2 4 6 8 10
Very low 1 1 2 3 4 5
0 PROBABILITY
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Very low Low M ode
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14Global Journal of Management and Business Research Volume XV Issue IX Version I Year ( )A 2015
©2 0 15 Global Journ a
ls Inc. (US) 1The T h
eory of Minimal Risk in Local Development Processes