Economic developers: Don't get too distracted
When I started in economic development in the early 1990s there were basically two main activities: 1) trying to get companies to set up in your community or 2) convincing firms that were already there to expand. At the municipal level that took the form of trying to sell industrial or commercial land to boost the tax base and some form of trying market or promote your community. The goal was to grow the economy. Provincial governments wanted this because it meant jobs for young people so they wouldn’t have to move out of the province and also tax revenues to pay for public services. Municipal governments wanted a growing tax base to invest in things like roads, parks, arts, green spaces, etc. - to make more livable cities
I am connected to dozens of economic developers among my 3,500 network on LinkedIn (people who get paid to do something called economic development) and increasingly the practice has morphed into something much larger. Someone posted a kind of economic development manifesto on their LinkedIn page recently and there was almost nothing related to those two points above. The person talked about resiliency, climate change, DEI and a bunch of other worthy concepts but that was the economic development plan.
I have said that economic development efforts should be based on the will of council (at the municipal level) and if council wants resiliency, climate change, DEI, etc. and not interested in attracting industry, growing tax base, etc. - I guess it is fine. However, across the country economic growth has been underperforming for years now and the projections are not great. This is the certainly the case in Atlantic Canada.
Part of the change is who the sector is hiring. When I started in 1993, it was mostly ex-salespeople or real estate folks. They saw their job as hustling, long dinners, endless golf, presentations, wooing, getting deals inked, etc. Now, the folks seem to be more cerebral, more technocratic. I used to joke with my partner in Ontario that I was the capitalist and she was the socialist in our partnership. I was interested in attracting big bad companies and she was interested in helping small businesses thrive, promoting fairness and balance between industrial and environmental outcomes.
I realize economic development is about more than just attracting companies and investment. Now we know we have to work far more on the environment (business and physical) and other adjacent issues. But if we lose sight of the basics - lose interest in exports and the fundamentals - collectively we could be in for a long period of weak growth.
The new left-of-centre Labour government in the UK recently said that a robust economic growth agenda was at the heart of their plan because without growth their wider plans for social justice, environmental stewardship, etc. would be challenged. We need a little of that mindset over the pond.
Finally, one quick point on the coddling of local firms. This idea has been turbocharged since the pandemic. It is not the job of economic developers to try and ensure that companies with bad business models survive. Our market economy works best when entrepreneurs try out ideas and fail fast if the idea is bad (hopefully, getting back on the horse and trying again). When I hear terms like business resiliency, local supply chains, etc., I worry this is code for pumping cash and effort into local firms to keep them alive at all costs. It is not the economic developers job to keep every business alive in the local community. It is to work with governments to ensure a highly competitive business environment and do related things and to sell the region for business investment but it is not to keep zombie companies alive.
Thank you, David Campbell, for the exhortation to refocus on the basics while acknowledging the value of the "latest stuff" too. How does an EDO attract industrial development is key (and for many, especially Councils, FDI remains the "grail"); I have found that commercial investment usually follows, once a population hits certain levels, and and EDO provides the site selection info to interested parties. On occasion, if a community is lacking a business that is resulting in severe disposable income leaks, then consideration to be proactive may be warranted. As for the proliferation of non-profits, as long as they can sell the benefits, and make a true ROI pitch, good for them. But not my role, except to provide advice, if it fits into either supporting business expansion or reducing disposable income leaks.
I have always stressed the larger benefits of working with the companies one already has in their area. Again, industrial manufacturers and service providers are the key focus. However, to your point about "coddling local firms", I work to identify the ones that have the capacity (management and production) to grow. And especially to consider export opportunities, which first means outside the "region", if not the province.
I think some of the dilution of our roles had its start when the University of Waterloo program began to alter its core Year 1 and Year 2 to incorporate more and more community and social issues at the expense of land development and other critical "hard" infrastructure considerations, often due to the priorities of whoever was the government-backed sponsor at the time. It is decades since a speaker like Bill Buck was the highlight.
Finally, my economic development mantra has been "How do we maximize the value of the resources we have for the benefit of our community/region?" These resources can include the raw resources, land, institutional assets, workforce, key existing industrial sectors, and especially the leading firms within which want to grow and are ready to do what is needed, etc.
Thank you again for a welcome and stimulating piece.
Everything related to how society works has evolved. Profit has become dirty, and social activism is the holy grail. The issue is not whether something works; the issue is, "Can we sell it?" We are working our way away from a meritocracy into a fantasy world where the economy is increasingly defined by social issues. Action is often a reaction to an emotional issue.
Profitable corporations, which have traditionally been the recipients of government development funds, are increasingly displaced by government-supported non-profit organizations. Corporations must navigate this transition using the growing power of public relations in all its evolving forms. We are in a new world that is changing faster than many organizations and people can adapt, and change is accelerating. Darwin's theory still applies—adapt or fade into extinction. The industrial revolution is long gone, the computer revolution is behind us, and the social revolution has begun. Economic development is a three-legged stool supported by social benefit, environmental adaptability, and lastly, economic viability.