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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