Thinking about economic development in new ways

It's clear by now that this is no ordinary recession. The downturn is deeper and more widespread. These challenges will force us to think about economic development in new ways.  This commentary out of Minnesota makes the point.

The state must redeploy its resources to retain as many existing jobs and markets as possible, encourage entrepreneurship, and help companies and workers preserve expertise for a recovery that appears to be many months off.

Economic development is more than trying to attract the next plant as it moves from Michigan to Mexico. Recruitment strategies, while still important, are giving way to new approaches to encourage growth from within: organic growth. In the past, economic developers thought about this as "business retention and expansion".

But this thinking, too, needs updating.  Business retention has always been the backwater of economic development. But it is clear at focusing on existing firms and their opportunities for growth is quickly moving to center stage. Perhaps we need a new title for business retention and expansion: it is too defensive, static, out of date.

As the Lowe Foundation has clearly demonstrated from its work, economic growth  emerges largely from Stage Two companies: firms with employment in the range of 10 and 99 workers.  You can learn more about the Lowe Foundation work at its new website, youreconomy.org.

Rethinking economic development is the whole impulse behind economic gardening. This model of development, pioneered by Chris Gibbons in Littleton, Colorado, focuses on the steps that economic development professionals can take to stimulate organic growth. In rural communities, the focus is rapidly shifting toward entrepreneurship  With initiatives like HomeTown Competitiveness.

Technology-based economic development represents another basket of strategies designed to promote growth from within. Groups like SSTI and AURP focus on these approaches.

Increasingly, our attention is drawn to regions in order to connect the assets we need to compete globally. The Council on Competitiveness with its work on clusters has led this agenda.

These strategies of organic growth -- or as the economists prefer, endogenous growth -- represent where the future lies.