| CREATING COMPETITION IN LOCAL DEVELOPMENT A low level of economic welfare and a high level of unemployment are the result of two factors: Few economic competitive activities in the settlement and a low rate of employment out of the area. An understandment of the economic local and out of area frame is required. A policy of strengthening main foundations of infrastructures and human resources is needed. There are a number of approaches to local economic development, these two approaches have two main areas: Physical development - Includes promoting focused projects, for example: Shopping centers, leisure projects, and physical restrictions of buildings. Business development - Bettering the ability of businesses to survive and to grow. The involvement shows itself in counseling, guidance, retraining workers and helping unemployed, helping to focus activities for minority groups, entrepreneurs and women. These activities create employment and lessen the dependence on the establishment. 1). Physical rehabilitation of city areas - rehabilitation of the economic basis of the area through financial incentives for economical and business activities, mainly infrastructures and land development. 2). Economic development through community development - The economic development on a community basis wants to bring to the rehabilitation of old city areas. The rehabilitation is done by involvement of the community in the process. 3). Economic development through business development and encouraging small businesses - Encouraging the small business sector and finding different solutions for the problems of small firms - this approach claims that smell businesses grow in a local area and contribute to the local employment balance. And so, they create important economical factors in the local economy. 4). Creating partnerships with the private and voluntary sectors - building a strategic plan for the economic development in which all the economical factors in the area participate: local institutions, industrial companies. The aim is towards the business community. 5). Local business development - By encouraging the development of new and technological products - in this approach groups are built for developing products. The groups are supported by government funds but work in the local area, their goal is to increase economic activity and local employment by supporting the developers and manufacturers of the new products. Because the risk level in this new activity is high, there is required public intervention in order to carry the growth potential that is latent in this activity. From all the mentioned above approaches - The approach of economical development through business development of encouraging small businesses, is widening, in accordance with the realization of the importance small business have in economic development of the economy. Small businesses are seen as inside units, new (modern), with a high level of reaction , with the ability to adjust to the changing needs of the market and most importantly, as a main source of creating new work places. THE IMPORTANCE OF SMALL BUSINESSES: The awareness of the part of small businesses in local development is getting bigger in the last decade in all the world, in the west and in the east Europe countries, Russia and the third world. The growing interest in small businesses comes mainly because of: 1). Preventing unemployment - Small businesses have a special importance in times of unemployment because they give a job opportunity to unemployed, the entrepreneur creates a source of employment for himself and his family. From researchers in England it is found that a third of entrepreneurs that opened businesses in the eighties stated that the main reason for opening the businesses was unemployment - some were already unemployed when they opened the business and some were expected to be fired. In other words the decision to open a business according to some of the entrepreneurs wasn't necessarily because of the business idea, but simply because they couldn't find another source of employment. 2). Attractive employment, a road to economic and social mobility - Small businesses are seen as an attractive economic option which raises the self image of the entrepreneur. They also are a way of employment for population groups that have difficulty in finding permanent jobs that are suitable for their talents and expectations. For this reason a high number of the people that go into small businesses are intellects over the age of 40, with families and with professional experience. In a large number of cases the knowledge is in technical areas. Part of them don't have jobs in the present and others are worried that they will be fired in the future (Military industry, Airforce industry, Army ect). In part of the cases a decision to open as business is to give employment also to spouses. This is the situation also with new immigrants that followed this path. Small businesses are a source of innovation and transferring technologies and so they are a necessity in competitive economy. Some of the businesses work in developing other products, identifying needs and some work at mediation and marketing new products and technologies. This factor has special meaning especially when associated with new immigrants, most of who have professional and technological knowledge. 3). Additional Jobs - Small businesses have been proven as an important factor in crating new employment sources. Researches published in the seventies and eighties show that in this period small businesses were a main factor in creating new work places in the United States and many countries in Europe. For example 66% of new jobs that were added to the American economy between the years 1972 to 1987 come from businesses with up to 20 employees, and 80% of new work places come from businesses with up to 100 employees. Similar data was found in other developed countries and are probably correct regarding the Israeli economy. 4). Economic dynamics and economic growth - Small businesses create an atmosphere of economic dynamics that is very important to growth. They react quickly to the needs of the market. They identify new business niches, they supply services and products that are important to the activities of big businesses. They give factories function flexibility and help them to integrate in world economy. 5). Local economic growth - Small businesses have a strong local affinity. The source of entrepreneurship of small businesses is generally local, a large number of entrepreneurs and owners of businesses have connections with local factors, meaning, the source of buying inputs, business services and their market for the product or service. Also, small services can take advantage of using production factor that isn't taken advantage of. That is the case of businesses in the agriculture sector that can take advantage of existing infrastructures that aren't taken advantage of, for example: Village overnight stays ect. For this reason small businesses give an important donation to the economical growth of the areas they are in, especially in the periphery areas that suffer from a shortage of employment sources. I can summarize and say that small businesses are an important and necessary factor for economical growth and especially for adding more jobs. It is obvious that this economic activity of building small businesses is not the only solution for employment and it should be a part of a wider economical policy. This direction is relevant only to part of the population and to the new immigrants it is relevant only to some. But it seems that small businesses have an important economical contribution to the economy and this economic activity should be encouraged. The Writer of this Article: Ben Shabat Shuki Director of Mati Ashdod | 
