Why (Good) Economic Development is about People: Exhibit B

Money doesn't grow on trees, but maybe if we cultivate our economies it can... By Frozuki, CC license

Money doesn’t grow on trees, but maybe if we cultivate our economies, it can… By Frozuki, CC license

In my previous post on economic development, I concluded that “Cities desiring economic development should prioritize people: both their current residents and those they wish to attract.”

I’d like to affirm but also move beyond that conclusion a bit today, asking the question: which economic development strategies are willing to appreciate and bring about the most good for the people already present in our cities and neighborhoods? I like this question because it removes the possibility for any sort of easy way out. Too often our leaders and economic developers are tempted or pressured into quick-fixes and shortcuts, providing solutions which address the symptoms but not the causes of the problems.

How Not To Create a Job

A really engaging perspective on this dilemma can be found from NPR’s 2011 Podcast, “How to Create a Job.” Overall, it’s a fascinating analysis of what it really means for politicians or businesses to promise jobs, but the most insightful piece for me was NPR’s visit to the International Economic Development Council Conference.  Now, IEDC is a well-respected organization and often does some creative work, but the folks at This American Life provided an outsiders perspective that IEDC perhaps sorely needed.  I encourage you to to check out part three of the podcast, but the one sentence summary is this: while economic developers are often very hard-working and passionate about their cities, much of their work is a game of futility as they hope to steal jobs from others to replace the ones that have just been stolen from them.

In the previous post I outlined how this “chasing smokestacks” or “business attraction” strategy is an ineffective strategy for increasing the population base of your city and especially your neighborhood, but I believe that it is also often ineffective at adding additional jobs to a city, especially in the case of retailers. This seems counter-intuitive, of course a company that moves to a town and hires 500 people is providing additional jobs!  But the research backs me up.  From the Harvard Business Review:

Our research shows that regional economic growth is highly correlated with the presence of many small, entrepreneurial employers—not a few big ones. In fact, a study of U.S. metro regions showed that cities whose number of “firms per worker” was 10% higher than the average in 1977 experienced 9% faster employment growth between 1977 and 2000.

A study from Penn State University and a whole host of resources compiled by the Institute for Local Self Reliance echo this conclusion.  What is happening is that large, non-local firms play the role of driving out smaller local competition and entrepreneur innovation. This means that while large firms create the appearance of adding jobs, local competition slowly closes down in the face of competition and cancels out the positive impacts of the new arrival. Whether the other impacts of firms like Walmart arriving are positive is a discussion for another day.

Cultivating an Economy

Fortunately, economic and community developers (even those economic developers at the IEDC conference) have some other tools at their disposal. Though far from comprehensive, here are three alternatives which I believe better appreciate and nurture the economic actors already present in a community.

Economic Gardening

I’ve chosen the word “cultivating” intentionally, as it’s a perfect metaphor for the difficult and nuanced work required to attempt any one of these solutions.  The first strategy, however, goes so far as to include gardening in its name.  Economic Gardening, in a nutshell, is an approach that targets existing entrepreneurs and already growing businesses to help overcome hurdles that are keeping them from really being successful stakeholders and leaders within the community. This approach developed in response to the vulnerability of small towns dominated by one or two large employers.  For more information and ideas, check out the Edward Lowe Foundation and a great local project happening near Boone, Scale Up WNC.

Local First Organizations

Business networks come in all shape and sizes and play vital roles both nationally and in small communities–many towns have successful chambers of commerce which promote and aide businesses in their communities–but I haven’t come across any more innovative or passionate about fostering civic pride than local first organizations. Similarly to economic gardeners, these organizations try to help small businesses grow, but they also engage consumers to start taking responsibility for the health of their own economies. Local First Organizations often initiate Buy Local campaigns, help create economic partnerships between community businesses, work for policies that are small-business friendly, and even act as caretakers of a unique local culture.  For more resources on this type of economic development, consult the websites of the Business Alliance of Local Living Economies (BALLE) and the American Independent Business Alliance (AMIBA).

Asset Based Community Development

This last strategy is even further from traditional economic development than Local First Organizations, but I think  it is important to mention as an approach that effectively elevates the gifts and abilities of people already present in a city.  Instead of taking a needs-based approach to community and economic development (here are all of the problems in our city, now how do we solve them?), ABCD strives to ascertain the skills that each resident can contribute to a community, then helps connect them to others who may benefit from their knowledge or talents.  Being very focused on the neighborhood and the personal level, ABCD does not brand itself as an economic development strategy per se, but it’s not too much of a stretch to say that it could be used as such. In fact, it is in some ways similar to the economic development strategy of cluster development, which asks: what is our city good at and how can we use that specialty as a driver of our economy. For more on clusters, see the US Cluster Mapping Project and for more on Asset Based Community Development, see the ABCD Institute.

I’m not sure that any of these approaches can be a one-size-fits-all antidote to our local economic struggles, but I do know that they are able to counteract them with much more intentionality and positivity than what we’ve fallen back on doing previously.

Learn anything new? Disagree with my suggestions? Leave a note in the comment section below!

5 thoughts on “Why (Good) Economic Development is about People: Exhibit B

    • Thanks! It just seemed natural in the context of economic gardening! I’m curious what you are trying to get at with “mulching around businesses” though. Like, insulating them from outside pressures?


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