Topic guide
Economic development is often discussed as if it means any new building, store opening, or tax break. A more useful definition is narrower: activity that brings new money into the community from outside, through goods and services sold to people elsewhere, and then keeps more of that money circulating locally. Restaurants and shops matter enormously for quality of life, but the businesses that sell beyond your borders are what make a place more prosperous over time.
That definition leads to practical habits. Know what your economy is actually good at. Spend more energy keeping and growing the businesses already here, and helping new ones start, than chasing distant relocations. Treat downtowns and commercial districts as shared projects that need organization and steady management. And ask hard questions about who benefits before public money goes into any deal.
Before choosing a strategy, find out which industries bring outside money into your county or region. A location quotient compares the share of local jobs in an industry with the share statewide or nationally; a number well above 1.0 points to a local specialty worth building on. Federal employment data by county and industry is free, and an economic base study can be done by volunteers with some patience. Look at the wider region too, since your town's fortunes are tied to it.
Existing employers are usually the best source of new jobs. Set up a regular business retention visit program: a small team that meets with local owners and managers, listens for problems such as workforce, space, permits, or roads, and follows up quickly. These conversations often reveal expansion plans, supplier gaps, and early warning signs of a closing or move while there is still time to help.
Helping local entrepreneurs succeed is one of the most cost-effective things a community can do. Connect founders with free counseling and training, mentors, small loans, and affordable space; consider an incubator, shared kitchen, or maker space if demand is there. Pay attention to who is being left out, including young people, immigrants, and residents of lower-income neighborhoods, and remove local barriers such as confusing permits or home business rules.
Districts with many separate owners rarely revive on their own. They need a formal organization, steady and nearly full-time leadership, targeted recruitment of the businesses the district is missing, attention to buildings and streetscape, good maintenance, and comfortable parking and walking. Many states allow property owners to create a business improvement district that funds extra services through an assessment they vote on. Auto-oriented commercial strips may need deeper redevelopment, and retail recruitment works best when it favors experiences people cannot get online.
Local ownership, access to fair credit, and strong community organizations help money circulate at home. Community development financial institutions, including community development banks and loan funds, lend to businesses and households that conventional lenders often overlook. Community development corporations can take on real estate and business projects in places the market has skipped, but they work best with transparent boards and genuine resident involvement. Tourism, the arts, and local colleges can also bring in outside spending when the basics for visitors are in place.
Tax increment financing, tax abatements, and other subsidies can make a worthwhile project possible, but they also shift costs and risks to taxpayers. Before supporting a deal, ask what the public is paying, what it gets in return in jobs, wages, and infrastructure, how long the commitment lasts, and what happens if promises are not kept. Community benefits agreements can put commitments in writing. Choose projects that serve residents broadly, not only a single developer or company.
Questions to bring
What changes where you live
The tools available depend on state law and local choices. States decide whether and how local governments may use tax increment financing, tax abatements, business improvement or special assessment districts, and local sales taxes for economic development, and the names and rules differ (for example, special business district or community improvement district). Who leads economic development also varies: a city or county department, a chamber of commerce, a regional development district, a nonprofit downtown organization, or a public-private partnership. To find your local rules and players, ask your city or county economic development office, your state economic development agency, and your regional planning or economic development district.
Current national resources
U.S. Small Business Administration
National Main Street Center, Inc.
U.S. Bureau of Labor Statistics
U.S. Department of the Treasury
International Economic Development Council
From the library
Guide · Economic & rural development
Guide · Economic & rural development
Guide · Economic & rural development
Guide · Economic & rural development
Guide · Economic & rural development
Guide · Economic & rural development
Guide · Economic & rural development
Guide · Economic & rural development
Visitor question · Economic & rural development
Visitor question · Economic & rural development
Visitor question · Economic & rural development
Guide · Economic & rural development
Guide · Economic & rural development
Guide · Economic & rural development
Visitor question · Economic & rural development
Guide · Economic & rural development
Visitor question · Economic & rural development
Visitor question · Economic & rural development
Original guidance from A Good Community: How to Make and Keep It, owned and edited by Nancy Thompson (formerly Useful Community Development), shared with permission. Community Compass notes and updates are our own and have not been reviewed by Nancy Thompson.
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