This article examines local business environments and their improvement as a foundation for Local Economic Development (LED). The international experience of LED points to the need for public administrators to acknowledge the significance of local business environments. It is contended that enhanced local state-private sector relations are necessary for undertaking reform of local business environments. Recent research surveys of private sector business chambers show that in many parts of South Africa there exists consider-able mistrust between the private sector and local governments. Accordingly, the need exists for expanding communication, building greater dialogue and forging more solid relationships between the public and private sector in order to support the achievement of 'competitive local economies' and of LED objectives in South Africa through programmatic reform of local business environments.