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                                                                                            Economic Development


                                                                 the local level have changed. Thus the rules of local eco-
                                                                 nomic development as they relate to attracting new busi-
                                                                 ness in order to promote economic growth also have
                                                                 changed. As communities compete with each other to
                                                                 attract new businesses and hence jobs to the local environ-
                                                                 ment, they are discovering that the traditional methods of
                                                                 tax abatement and low-interest loans, coupled with job
                                                                 training, are not sufficient to guarantee a level of develop-
                                                                 ment that improves the economic base of the community.
                                                                 In fact, communities are looking for ways to ensure that
                                                                 they will get more from the investment than it will cost
                                                                 them in terms of tax abatements and infrastructure costs.
                                                                    As firms increasingly engage in multilocation opera-
                                                                 tions, communities are finding that, in addition to attract-
                                                                 ing new businesses, encouraging local firms to develop is
                                                                 a valuable economic development tool. The community’s
                                                                 view of its resources has expanded beyond providing the
                                                                 traditional tax incentives to expand a community’s eco-
                                                                 nomic resources to include factors such as a well-educated
                                                                 work force and adequate public services. Communities are
                                                                 more likely to target the type of firm that is right for the
                                                                 community.  The emphasis on locating manufacturing
                                                                 enterprises has diminished as communities look to healthy
                                                                 businesses that fit the changing needs of the work force
                                                                 and infrastructure. Explicit consideration of the impact of
                                                                 the new business on economic equity in the community is
                                                                 also becoming more important, and growth and equity
                                                                 are increasingly recognized as complementary rather than
                Economic Development in Seattle, Washington. © JOEL W.
                ROGERS/CORBIS                                    opposing goals.
                                                                    Many of these changes can be summarized in the
                                                                 phrase “sustainable development.” The case of sustainable
                                                                 development is appearing more and more frequently in
                impact local economic development planning. For  discussions of community economic development. Sus-
                instance, if the real GDP of a country has increased, then  tainable development is a process of development that
                we conclude that the country has experienced economic  “ensures the needs of the present are met, without com-
                growth and the economy has improved. This information  promising the ability of future generations to meet their
                sends a signal to local economies suggesting that the  own needs” (World Commission on Environment and
                national economy is in the growth phase of the business  Development, 1987, p. 9).  The vision of sustainable
                cycle. Communities can use this information to identify  development is one of developing within the capacity of
                their position relative to the current trend and to plan  our resources an ability to replenish themselves; by anal-
                future economic development. If, however, real GNP has  ogy to the financial sector, it means living off of the inter-
                declined, then the economy is thought to have experi-  est as opposed to the capital of our investment.
                enced an economic downturn and a community can use  In the context of sustainable development, economic
                this information to anticipate the impact of future eco-
                                                                 development is managed and controlled in a way that rec-
                nomic downturns.
                                                                 ognizes the dynamic nature of social, political, technolog-
                                                                 ical, and economic factors in a local community.
                TRENDS IN ECONOMIC                               Ultimately, the process of economic development is
                DEVELOPMENT IN THE UNITED                        changed from one of identifying incentives for business
                STATES                                           growth to one of comprehensive planning to address
                Positive trends in growth at the national level do not guar-  social, economic, and environmental concerns.  The
                antee that individual communities are or will be success-  themes of economic development also change. Traditional
                ful in developing their local economies. The needs of local  local economic development policies pursue increases in
                communities have changed as the patterns of growth at  economic activity and thus in the income levels of local


                ENCYCLOPEDIA OF BUSINESS AND FINANCE, SECOND EDITION                                       219
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