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What is Economic Development?

by | Oct 30, 2021 | Economic Development

Defining Economic Development: A Place to Start

Stuart Fullarton & Heather Thomson

What is economic development?

Chances are, if you ask ten people this question, you’ll get ten different answers. Sure, you’ll hear some common themes and acronyms: BRE (business retention and expansion), BIA (business and investment attraction), business incubation, business development, import replacement, entrepreneurial development, succession planning, placemaking, talent attraction, labour force development, chambers of commerce, downtown business associations, and so on.

But even each of those differ greatly in their respective meanings.

Economic development isn’t about ‘chasing smokestacks’, but it is about strategically targeting and luring those businesses identified as being missing, necessary, or complementary. It’s not quite the same as tourism, although it does share the common trait of requiring the development and communication of incentives in order to be successful (in other words offering and communicating reasons why someone should visit your community; why a business should relocate there; why it’s worth moving your family to). It’s not about simply lifting the phone and convincing a prospective business your community represents an advantageous and profitable investment, but such contact can be immensely beneficial in establishing relationships — a key component of ‘planting the seed’ toward attracting and retaining businesses and entrepreneurs in the long-term.

And so, defining what economic development is not does lend some insight into what it is, but there still remains plenty of ambiguity to be addressed.

What’s certain, however, is that municipalities and service providers on their own accord are respectively limited (by legislation, budget, capacity, skill/ability, or otherwise) in what they can and can’t do in order to develop, contribute to, and/or foster an environment that’s conducive to, and supportive of, economic prosperity.

By reframing the approach to defining such a multi-faceted and multi-disciplinary area of practice, however, it becomes clear that it’s not in fact the definition that matters when it comes to pursuing what economic development, by its most traditional (and occasionally loose) definition, sets out to achieve. Instead, relevance and value are found in the activities that lead to economic prosperity, vitality, and sustainability. 

Thus, instead of thinking of economic development as a function, consider it rather in terms of actions: Actions that can realistically and feasibly be completed within your existing means, ability, and capacity. Things you can be doing that help develop and foster an environment in which business can thrive. Things you can be doing to support businesses — both directly and indirectly. 

One’s own creative ambitions notwithstanding, there may not be an acronym to fall beside each one of them; however, each of the following items, if effected properly and appropriately, can still feasibly comprise an equally important component of your attempts to develop and promote an economic environment in which businesses can start, grow, and flourish — and stay, if they’re already there.

So, let’s ask the question again: What exactly is economic development?

Here are four areas of consideration that might not fall under the traditional definition of economic development, and may not cost a lot of money, but whose importance in building economy and contributing to the development of community is becoming increasingly clear.

1. Economic development is quality of life.

People can now work remotely. Thanks to the pandemic, we as a workforce have had the luxury of experimenting with working remotely. Being centrally located isn’t as imperative as it once was. This isn’t to say that people will not work downtown: They might less frequently or in alternate hours. So the ‘gridlock’ that we grew up with is dissipating and people don’t mind driving further because it doesn’t take as long. More importantly, there will be people who do not need to live in a large urban centre at all. So people will now choose where they want to live based on the amenities and vibe instead of the economic outlook. 

Check out this example of a Canadian city that’s leveraging that very notion.

Taking a look at the numbersSource: https://www.flexjobs.com/blog/post/remote-work-statistics/
“In May 2021, a Mercer study found that 70% of companies said they were planning to adopt the hybrid model.”
According to FlexJobs’ 10th Annual Survey (conducted between July and August 2021), 58% of respondents report wanting to be full-time remote employees post-pandemic, while 39% want a hybrid work environment. That’s an astounding 97% of workers who desire some form of remote work!”

2. Economic development is events and vibrancy.

In our travels, dialogues and discussions, we’re hearing more and more of events as being a major contributing factor for both prospective residents and businesses in deciding where they want to locate. More specifically, there’s a pronounced and recognized desire for events that are fun, inclusive, and spontaneous. And in fact, planned and executed well, events can actually act as revenue generating driver for your municipality or community.

The benefits of a well-run, well-organized, and well-advertised event are both numerous and immense: Firstly (and most simply), they give people something to do. They’re a means of drawing people away from their homes, desks, and workplaces, and putting them in a leisurely, relaxed atmosphere. Secondly, they create foot traffic for nearby and adjacent businesses, allowing (and encouraging) those businesses to both participate in and offer their support for whatever it is that’s taking place. Thirdly, they contribute to the community’s overall sense of vibrancy, and in doing so attract people from outside the municipal boundaries. Resident and visitor attraction will closely follow, resulting in the development of a labour force that’ll prove attractive and beneficial in your attempts to attract and lure new business.

(Note: This may be an extraordinarily simplified explanation of how to achieve economic development — but it’s not all together unrealistic. Check out our blog and the 13 Ways Community Revival Podcast where we regularly share stories of communities who have been successful by undertaking similar such efforts.)

Yet, while the benefits of community events are widely recognized, the capacity of communities to both plan and host them is often sorely lacking. How can such an integral part of community economic development be so often and emphatically overlooked?

In most instances, communities recognize and have a desire to put on more events, and yet their economic development strategies often don’t provide for the funding, staffing, capacity, and budget required in order to effectively do so. Granted, there might be a line or two somewhere in their strategic planning documents that references their intent to enhance, increase the frequency of, and/or plan and facilitate community events. And make no mistake, some communities are doing a phenomenal job of leveraging events as a means of generating vibrancy both on their Main Streets and beyond (see: Amherst, Nova Scotia — among a growing number of other communities as revealed through a simple Instagram search probe). Nonetheless, an informal poll of communities of a certain size would demonstrate economic development officers as heavily outnumbering event planners, administrators, and coordinators within their respective municipal organizations. Outside of this particular context, neither role is necessarily more important than the other, and the two can (and should!) most definitely co-exist. Generally speaking, however, there still remains considerable work in recognizing the true value events bring to and generate within our communities — and in ensuring our plans, organizational structures, and budgets reflect this.

As a municipality, evaluate your existing ability to either plan, facilitate, or simply support community events. There’s no right answer when it comes to determining your appropriate level of involvement. That said, ask yourself: Are we doing enough as a municipality at present? Does my municipality or organization recognize the value these events create within my community, and is this recognition reflected in the level to which we support, plan, and facilitate them?

3. Economic development is understanding and communicating on behalf of your business community.

In a municipal setting specifically, EDOs retain the unique ability to act as an effective intermediary between local businesses and elected officials (via the CAO or town/city manager). Accordingly, ensuring an accurate and informed understanding of the needs, challenges, barriers, gaps, and opportunities being faced by (and presented to) local businesses is paramount in being able to help them respectively mitigate or capitalize on whatever it is that’s in front of them.

Often, however — due to a lack of engagement with business owners or otherwise — there’s a disparity and misalignment between the decisions being made around the council table and the true needs and wants of the local business community. Ensuring a sound, well-informed understanding of these needs and wants — and communicating them diligently to the representatives inside Council Chambers — will help to reduce this disparity, and ultimately ensure alignment between the business community’s needs and council’s plans and efforts to address them.

There are various means of developing this understanding, and granted, many of them are achieved through a standard BRE (business retention and expansion) program or survey. Key to remember here, however, is that, even if your community or municipality lacks an economic development function (and/or the relevant staffing capacity), there are still means of ensuring the true needs of your business community are reflected in your decision-making processes and outcomes.

Bring your businesses and stakeholders to the table. Or better yet, go to where they are (if you have the means and ability to do so). Even if you don’t have an EDO, encourage your councillors to take regular business walks — on your Main Street and in your industrial parks alike. A casual chat over coffee, although absent of some of the quantitative data produced by some of the more formal means of gathering data (i.e., a survey), will bear insights that’ll prove more valuable than you could ever fully anticipate or imagine.

4. Economic development is bringing skills, knowledge, and capacity together.

Municipalities (and economic development-focused organizations, agencies and service providers) can’t achieve economic development on their own. Nor are they expected to do everything on their own. By mapping and creating an inventory of all of your local economic development-related entities (chambers of commerce, small business lenders, mentors and coaches, business incubators, and the like), you’ll soon begin to uncover a plethora of other groups and organizations that share your same (or similar) goals and objectives. Chances are there’ll be tremendous opportunities to pool resources, to share information, and to collaborate toward the pursuit of collective interests.

Utilize and leverage your resources to establish a network between all of your stakeholders in economic development, and devise a means of regular, ongoing communication. By sharing information, intelligence, and details around your respective goals and priorities, you’ll all be able to quickly identify where synergies and alignment exist, and determine areas in which you can all take advantage of each other’s skillsets, resources, and service offerings. If a non-profit workforce development group is offering skills and job training, then you as a municipality won’t need to do so yourself. Instead, support them within the means available at your disposal. If a private-sector entity is willing to offer incubation space to budding entrepreneurs, then it’s one less investment the municipality will have to make. Find out how you can contribute to or support what’s already in place.

Ultimately, collaboration with and among members of the community won’t just enhance the services and supports available to local businesses, it’ll also remove the likelihood of program and service duplication and redundancy. Doing so will maximize the effective and efficient use of all of our limited resources and capacity.

At the end of the day, when it comes to economic development, it shouldn’t matter who’s doing what — as long as your business community is getting what it needs.

Economic development is … much more than all of this?

To put it mildly and succinctly in summary, economic development is so much more than we’ve discussed in this column. In fact (and in reality), we’ve only just scratched the surface of what economic development truly can be and achieve. We haven’t yet mentioned beautification. Or walkability. Or environmental sustainability. Or some of the many other key factors that are helping businesses, residents, and workers determine where exactly they want to be.

What should now be clear, however, is that, in the absence of a universally consistent and accepted definition, the very practice of economic development grants us license to be innovative and creative in fulfilling what we feel it should mean — or what we’d like to achieve through it. Be bold and get creative in exploring what unique and innovative solutions might work for you.