Tama County Economic Development defines “economic development” as facilitating processes to:
increase the level of capital investment
increase the number of fair market living wage jobs and
increase the efficiency with which capital and jobs (manpower) are combined for a for quadruple bottom line solutions that optimizes sustainable long-term economic health of the individual, enterprise, society, and the environment.
The International Economic Development Council defines economic development as a program, group of policies, or activity that seeks to improve the economic well-being and quality of life for a community, by creating and/or retaining jobs that facilitate growth and provide a stable tax base. (1)
But lets also address some of the most common assumptions that may not be exactly accurate.
MYTH #1: ALL THAT MATTERS IS ATTRACTING BIG COMPANIES
Yes, its easy to measure the direct economic impact of big companies that employ 100+ workers, and its easy to highlight big companies as a case study for success, but most of the time, after investing hundreds of hours helping big companies consider your area for an expansion, they will only locate in one of the handful of communities when many provided hours of staff time and resources to support them in their selection process. Statistically a community would see such a company settle into a brand new location once every 11 years. (Adjust number of years before this happens lower for metro areas, and higher for rural areas). (2) The reason this investment of resources is worth it, is because the long-term payoff when they do locate should be significant.
Business Attraction of bigger investments from outside the community borders is absolutely a part of economic development, but it’s not the full picture. Supporting startups that only employes a few people, or does not even employ any full time people (at first) is also a part of economic development
MYTH #2: ALL THAT MATTERS IS VISITING ONE-ON-ONE WITH EACH EXISTING BUSINESS
Visiting with each business one-on-one is a great concept, but not always practical unless a large pool of volunteers are mobilized. Lets break this down using Tama County’s numbers.
Fact #1: There are 2,178 businesses in Tama County, Iowa. (3)
Fact #2: There are 2,080 standard work hours in a year.
Fact #3: Not every business has an aggressive drive towards growth, and that is perfectly fine. For existing industry, economic development organization resources may be at their most valuable when a company is proactive and motivated to scale for new success or course correct through market challenges.
Rule of thumb: Budget less than 90 annual one-on-one business interviews and resulting projects for every budgeted full-time Economic Developer focused exclusively on one-on-one relationships. (4)
Therefore, targeted grouping approach to economic development is necessary.
Business Expansion and Retention is absolutely a part of economic development, but it is not the full picture either. The smart and mature economic development organization would thus put extra effort towards identifying companies positioned and open to new growth, and companies positioned and at risk that may need to change the way they look at the market.
MYTH #3: ALL THAT MATTERS IS THE FOR PROFIT BUSINESSES IN A COMMUNITY
It is critical that government and nonprofit leaders not neglect the fact that they are a very important part of the economic development ecosystem and that the decisions they make (or stagnate on) to help or hinder intelligence that presses forward through innovation. Other key players that may get neglected when thinking of economic development as an integrated system of increasing better solutions includes property owners (and renters), workforce, educators, volunteers, students, and the retirement community.
It is not just the fact that many of these economic players are the consumers on the other side of the supply and demand equation, but they also design the philosophical attitudes towards embracing:
- technologies (more efficient tools, machines, real estate and infrastructure)
- knowledge cultures (knowledge of nature, research and capacity to develop improved technologies)
- physical, technical and organizational capacities and skills of those engaged in production
(1) Source: International Economic Development Council, 2010
(2) Source: University of Oklahoma Institute for Economic Development, 2009
(3) Source: Iowa Department of Revenue, 2009
(4) Source: University of Oklahoma Institute for Economic Development, 2010