Trends in Economic Development Planning

June 2008

by Katie Bullard, AngelouEconomics Senior Project Manager

Over AngelouEconomics’ 13-year history, our staff has developed more than 130 strategic plans for communities across the United States. We have worked for communities large and small, rural and urban, struggling and succeeding. It has been our pleasure to develop innovative, implementable solutions for our clients that respond to trends in the dynamic economic development marketplace. 

Over that 13-year period, the trends that have driven our industry have fluctuated – from site-specific industrial recruitment to technology-focused strategies to regionally based models of growth and innovation. These models still exist and are vital to successful economic development, but they are being augmented by new, emerging strategic planning trends. Based on AngelouEconomics’ recent work, those emerging trends include 1) the development of talent attraction and retention strategies, 2) international positioning and marketing efforts, 3) creative economy strategy development, and 4) a focus on downtown business recruitment. 

1. Development of Talent Attraction and Retention Strategies

Historically, economic development has been synonymous with business recruitment and targeted tax incentives. Cities and regions would design incentive packages to entice companies to locate operations in their area. However, as the nature of the global economy shifts and labor force becomes the driving concern among employers, communities are recognizing that talent is the key ingredient of successful regions. The major determinant of the economic capacity of a region is its primary workforce between the ages of 25 and 44 – the young professional workforce. As the age cohort shrinks in relative size, only those regions that can successfully retain and recruit this age group can sustain economic success.

In the face of an impending labor shortage over the next 10 years, regions must become “talent magnets” to succeed in the new economy, and many are developing talent strategies to accomplish this goal. Noted expert Richard Florida has noted that “access to talented and creative people…determines where companies will choose to locate and grow, and this in turn changes the way cities can compete.” 

2. International Positioning and Marketing

International recruitment has become a top strategy for many economic developers in the U.S., and communities of all sizes are developing international marketing strategies. This trend is influenced by multiple factors, including rapid economic growth particularly in Latin America, Southeast Asia, and the Middle East; opening of new, improved trade routes to the U.S., and a weak dollar that makes the U.S. market attractive to foreign investors.

States that aggressively recruit foreign investment see the dividends in investment and employment. For instance, in 2006, foreign investment accounted for more than 20% of manufacturing employment in a handful of states, including Kentucky and South Carolina.

Proactive economic development organizations are spending more money on international marketing missions and international conferences and trade shows. Many have established foreign offices in strategic locations, while others have designated U.S. staff as responsible for international territories.

3. Creative Economy Strategy Development

Ralph Waldo Emerson noted that, “ A creative economy is the fuel of magnificence.” Clearly, many of our clients have recognized this fact. Over the past six months, AngelouEconomics has completed 4 strategic plans with a “creative economy” focus. Why? Globally, creative industries are estimated to account for more than 7% of the World’s GDP, and the annual growth of the creative industries is twice that of the service industries and four times that of the manufacturing industries. In f act, the Los Angeles Economic Development Corporation has found that the creative industries are now the number one engine of the Los Angeles economy, outpacing tourism and international trade.

Creative economy strategies are not simply focused on recruiting the creative class. They are built upon driving job and income growth in select sectors, including digital media, gaming, film and music, graphic design, industrial design, and arts manufacturing. Opportunities to drive this growth abound as creative entrepreneurs are attracted to places with creative resources, educational institutions adopt new degree and certification programs in these fast-growing sectors, creative incentives programs are established at a rapid pace, and live-work friendly regulatory policies are adopted by city planning departments.

4. Downtown Economic Development Strategies

Downtowns are a critical component to any region-wide economic development strategy because they are traditionally the hubs of economic activity in any community. Typically, more companies and employees are concentrated in the downtown area than anywhere else in the community. However, given the accessibility and lower cost of development in the suburbs, most economic development organizations (EDOs) have long focused attention on the recruitment of companies outside of downtown cores - leaving that work to city and downtown-focused non-profits.

Buoyed by strong downtown residential growth, shifting business values, concern for energy-efficiency, and the increasing cost of infrastructure development, many EDOs are now creating separate downtown economic development strategies to recruit high-impact businesses and development. As a complement to these strategies, AngelouEconomics has noticed a trend towards measuring the economic impact of downtown, in order to provide support for the strategy and calculate the immense value that downtown investment creates regionally.

If your organization is interested in capitalizing around the four trends described above, AngelouEconomics is available to support your strategy development. Undoubtedly, the next few years will bring along with them new advances in strategic planning practices, and we are excited to be on the frontline of these trends and to innovate along with your organization.