Regional Economic Development Strategies

Introduction

Do you know what regional economic development is?

Virtually every candidate who runs for elected office will mention economic development or some version of it. “Creating good jobs.” “Building our economy.” “Attracting new employers.” Rarely do people stop to consider the question at hand: what is economic development and how do we do it?

Sigourney Area Development Corp Industrial Park signage
Sigourney Area Development Corp’s 27 acre Industrial Park

As the Executive Director of the Sigourney Area Development Corp (SADC), one of my roles is to promote economic development across Keokuk County. That involves some new strategies and new ways of thinking that are different than the way economic development used to be done.

Economic development, as the California Association for Local Economic Development puts it, is “anything a community does to foster and create a healthy economy can fall under the auspice of economic development.”

This can include:

  • Attracting new employers
  • Growing existing employers
  • Building new businesses
  • Increasing the supply of highly skilled workers
  • Decreasing the unemployment rate

And many other outcomes. Let’s look at how you can help your community with economic development and how economic development has changed over the years.

Phases of Economic Development

Phase 1: Natural Resource Exploitation

The first economic development strategies were those that, without the name “economic development” attached to them were practiced by the earliest settlers and colonizers of land. When a forest was cleared, and the timber used to build a cabin, this allowed the person shelter. When they later began to catch fish from a nearby lake, perhaps trading what they couldn’t eat, the basics of commerce emerged.

Phase 2: Industrial Employment

Second generation economic development is where many Chambers of Commerce and economic development organizations are “stuck.” Second generation economic development was the primary mode of economic development from perhaps the 1900s to the 1980s.

In this phase, the focus is on attracting large employers, sometimes called “smokestack chasing.” If you can get a new employer or a new factory in your community, that would provide dozens or hundreds of new jobs in one go. That approach is still the focus of many economic developers today, but it’s short-sighted.

In his book The Shortest Way Home, Pete Buttigieg explains how the closure of the Studebaker plant in South Bend in 1963 caused ripple effects still felt today. Many communities have “put their eggs all in one basket” as the expression goes, meaning that when one major employer closes the community struggles to adapt.

Instead, a more effective approach is the third phase of economic development: regional economic development.

Phase 3: Regional Economic Development

In regional economic development, the goal is not to attract one major employer but instead to assess your assets and figure out what types of small businesses you can create right at home. By examining your region instead of your just your town, city, or county, opportunities for collaboration exist.

For example, you may have a number of restaurants producing waste cooking oil as a byproduct, or a landfill or other waste management or garbage facility. A biofuels business can convert that waste oil into gasoline or diesel fuel and the garbage into biofuel to literally power other small businesses.

This is just one example of how regional economic development can help build up your businesses.

Economic Gardening

Economic gardening is linked to the third phase of economic development. It involves a focus on nurturing those numerous small businesses that a community can support, but with a specific focus on Stage 2 companies.

These are five stages business researchers often use to classify companies. One example, provided by Harvard Business Review is:

  • Existence
  • Survival
  • Success
  • Take-Off
  • Resource Maturity

In stage 1, the company is a start-up. Small and scrappy, they’re trying to prove their idea. In stage 2, the company is profitable and poised for growth. These are the companies that economic gardening targets.

Economic gardening helps these growth companies leverage the community assets to help continue growing. For example, is there a local supplier that can replace a far away one in order to lower shipping costs? Is there a market for their products in the next town over that may not have been properly marketed?

These economic gardening strategies help build these growth-potential companies and in doing so strengthen the entire business ecosystem.

How to Apply Regional Economic Development Strategies

If you’re ready to apply the strategies of regional economic development, start by assessing the assets in your community. This can include things like:

  • Where are the vacant lots?
  • Where are the vacant buildings?
  • What businesses are looking to expand?
  • What businesses are looking to close? (Can another business take their place?)
  • Where are the raw materials and basic supplies coming from? Is there a local supplier who can begin meeting that need?

It’s important to involve all of your stakeholders. Not just economic developers and business owners but elected officials, city and county staff and other residents, even those with no connection at all to economic development. You’d be surprised at the insight your local grocery store worker has.

A survey of the businesses in your region can help too. Try to understand why people leave your region, and if there’s a gap that can be filled? For example, in Keokuk County there is no auto care in What Cheer, Iowa. If you need an oil change or a tire rotation you have to travel to Sigourney, a 20 minute drive.

The issue with that is that by adding 5 more minutes to your commute you can instead travel to Oskaloosa, a community in Mahaska County that has many more amenities. You’ve lost that sales tax revenue and an opportunity to build up local businesses.

Keep economic base analysis in mind as you consider which businesses to launch or support. You want to identify businesses that can do more than just sell to the local community. Retail and restaurants are important, key to the local economy and part of a good quality of life, but they don’t build the tax base. They simply “recycle” the money that already exists, as local residents buy things from each other. Instead, try to identify companies that can export their goods to other communities and thus bring in new money.

Finally: be bold. Be willing to take risks. You can’t build a vision for a new community, especially in an economically depressed area without one.

Conclusion

Hopefully this article has helped you understand a little better what regional economic development looks like and how you can apply it in your own communities. Good luck!

Leave a Reply

Your email address will not be published.