Must, should and could: Three categories of economic development
If I had to distill my 30 years’ study of economic development into three words they would be: must, should and could.
Roughly defined, economic development involves efforts undertaken at the community level (or province or country) to ensure a strong and sustainable local economy.
When looking looking to attract the investment needed to build that strong economic foundation there are three categories (and maybe a fourth): investment that Must be in the community, investment that Should be in the community and investment that Could be in the community.
For those industries that ‘must’ be in the community, there is little effort required from the economic developer. Think about groceries, restaurants, etc. in this category. Some of this dribbles into the ‘should’ category below but for the most part economic development for this group of industries is about ensuring fundamental conditions are in place- enough workers, available land, reasonable development policies, etc.
Then there is a set of industries that ‘should’ be in the community. This category - surprisingly - is sometimes ignored or given little focus by economic developers. It focuses on all industries where there is a compelling case to be in the community but the investments have not been made. This covers almost every NAICS code industry from 11 to 81. It includes mostly local market capture but can extend beyond that. If local residents have to leave the community to access the service - and if there is enough demand for a business to be in the community - that falls into the ‘should’ category.
Economic developers will tell me they want to be out chasing sexy projects - not trying to attract pet groomers and physiotherapists. But the economic impact is the same - and the benefit from ensuring your residents don’t have to leave the community to find a pet groomer goes beyond the economic impacts.
You can do a simple local service gap analysis to see what is missing in your community or you can even ask your residents through a survey what they would like to see in the community.
The ‘could’ category is where most economic developers spend their time - they want to attract bioscience companies or cybersecurity companies or auto manufacturers. This is mostly investment that is not based on local market demand but on other factors such as geography, talent pool, R&D capacity, transportation infrastructure - or just that a local entrepreneur has a good idea and likes their local community.
In the ‘could’ category, economic developers need to be laser focused and developing clear and compelling value propositions - and then focused on a tight targeting exercise. If you really think your community is the bee’s knees for biosciences, you need to realize you are competing for this investment with dozens or even hundreds of really cool communities around the world.
The ‘could’ certainly includes natural resources - mining, forestry, fishing, agriculture, etc. as these industries are based on a core community asset - but not a unique one in most cases. We have uranium in New Brunswick but so does Saskatchewan - and they have it in large quantities and a population supportive of its development.
The ‘could’ also includes export-focused entrepreneurship. If there are folks locally coming up with good ideas that could resonate on a world stage, we need to have an infrastructure to support those entrepreneurs but we also need to realize that the entrepreneurs still need a compelling value proposition to built their business in the local market.
Some will say there is a fourth category: ‘Never’. They would say many communities make the mistake of focusing their time and money on industries without any chance of seeing a return on that effort. I don’t have a ‘never’ category because if a swamp in remote central Florida can become the world’s largest theme park - just about anything is possible.
But economic developers - and their shareholders (funders) - need to focus on what is right in front of them - the ‘should’ investments followed by tightly defined ‘could’ investments where there is a compelling value proposition and a clear plan with targets for investment attraction.
I’ve always wondered why the ‘shoulds’ have gotten short shrift and I think it is because the economic development agenda - particularly in smaller provinces - tends to be set at the provincial level. Provincial governments tend to not be too worried about pet grooming, dental services, hipster coffee shops and chic restaurants. They want to focus on export-focused industries that swell the size of the provincial GDP.
But thriving local economies roll up to a thriving province.
To sum up: Put more focus on the ‘shoulds’ and be much tighter with the ‘coulds’.