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At a 30,000 foot level, economic development is about managing three flows of money. "Good Money" flows into the economy from businesses that trade outside. These are businesses, which account for usually about 30% of the employment in an economy, generate higher incomes. Traditionally, economic developers have focused on recruiting these businesses.
Economic development is also about increasing the velocity of "Neutral Money" that circulates within the economy. When economists talk about a multiplier effect, they are referring to the circulation of Neutral Money within the economy.
Finally, economic development involves "plugging leaks". That means reducing the flow of money (we can call this "bad Money") from the economy.
Increasingly, communities are taking a more balanced, integrated approach of economic development that includes all three flows. (After all, there are no bright lines segregating these flows.)
Here's an example. Check out the web site of the Farmer-Chef Connection, a business-to-business network that promotes the development of "local living economies".
You can read more here about how this type of network works.
The Farmer-Chef Connection is one of a broad number of networks that are forming around the country to support sustainable local economies.
Last week, I was at the Lowe Foundation for a retreat, where I met Leanne Krueger-Braneky of the Sustainable Business Network in Philadelphia . She introduced me to the work of the Business Alliance for Local Living Economies, where her organization is a leading network.
To learn more about the Business Alliance for Local Living Economies, visit their website.
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