Economic Development, Growth Indicators & Financial Planning

Solid, regional economic development starts with government leaders who are able to look into the future and make decisions that will lay the ground work for continuous and sustainable economic growth.  This can be challenging however, because many people confuse economic growth with economic development. 

Definitions of each term make things a little more clear.  Economic development is defined as improvements in economic statistics like unemployment, literacy, per capita income, and gross product.  When these indicators are combined together, they show how well the economy will do in the future.  Economic growth is merely the increase of the value of services and goods provided by an economy. Theoretically speaking, a community must pay for economic development before they can experience sustainable economic growth.

So, when community leaders are looking at economic development, they are not necessarily promising immediate income for the area, but instead are looking at spending money to improve a community and in turn spur economic growth.  This doesn’t always meet with a favorable reception because raising taxes to foster economic development only promotes the area’s broad economic objectives.  So these changes may not initially be welcome or understood by taxpayers who are looking for more immediate economic growth instead of intangible economic development for the future.

For example, to increase short term revenue, a city council in a depressed area could give a corporation free land and tax incentives to build a factory in their town.  This would immediately provide jobs and increase the productivity of the community.  However, without proper economic development like highways, utilities, and a trained labor force, the success of the new factory would be short lived.  The town would then be in the same position as it was before, with the addition of an abandoned factory.  For a venture like this to work, the local government would first have to raise taxes, pass a bond, or otherwise raise money to build the infrastructure a manufacturing plant would need in order to operate long term.

However, once the government has made it physically possible for a factory to relocate to their area by allocating land, securing loans, and raising funds for an infrastructure, people will really begin to see a positive change in the area.  It is now time for locals to look to the state and federal government to establish a higher quality of life for the community including funding for education, parks and recreation, crime prevention, and affordable housing for the existing and new residents that will live and work in the area.  At this point, the general population is better able to understand that in order to enjoy economic growth, they must experience economic development.

Economic professionals, like a local chamber of commerce, can now take a town that has a factory and a basic support system and create more revenue through specific efforts.  This will take place through promoting and marketing real estate, encouraging small business development, creating neighborhoods and a downtown, and providing accessible business financing through regional banks in cooperation with the federal and state governments.  As well, because economic development can be deeply rooted in social structure, other organizations like foundations and charities, churches, universities, news media and health care providers can become involved in communities and essentially become part of their success.

Eventually, this kind of economic development will work to provide economic growth, but more importantly, will allow citizens to enjoy a higher quality of life, longer life expectancy and more leisure time in the community and the area.