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NC State Extension

Community and Economic Development

N.C. Cooperative Extension CRD staff promotes the concept of Community Economic Development. This concept of economic development refers to an approach that begins at the roots of the community. Development that grows from the inside out will be more closely aligned with the values and aspirations of the people who reside in the community and is therefore more sustainable.

Sometimes called the strength-based approach to community development, Community Economic Development recognizes that community development and economic development are closely intertwined. The overarching goal is to draw upon the skills and talents of the local residents and to use those strengths as the foundation for future development.

What is Economic Development

The traditional definition of economic development emphasizes wealth creation through the mobilization of human, financial, capital, physical, and natural resources. More recently, the term has been expanded to include the enhancement of economic well-being and quality of life of the community. Until about the 1990s, economic development solely concerned itself with business attraction, industrial growth, home building, and construction generally. Why this focus? Investing in a manufacturing facility that promises to create 500 jobs in your community is a quick way to build both individual wealth and community wealth for a community. However, often business recruitment is dependent on the level of incentives provided by the community to the business. The problem is what happens to that business when the incentives run out? A bigger problem is the limited number of large concerns seeking to expand or relocate. In 2012 only 200 new facilities opened across the entire country.

In order to determine whether economic development has occurred and how it might be strengthened, a community’s economic base must be examined. What types of businesses or industry sectors make up the community’s economic base? Who are the major employers and what are their revenue sources? Economic developers are looking for a net gain of money flowing into the community and are mostly interested in businesses that produce and sell more product, service, or activity outside of the community than inside of the community. These exporting businesses are known as “Primary Businesses” which provide funds from outside of the community to their employers who then spend those funds in “secondary businesses” – those who serve the local population, like a local restaurant, grocery store, or clothing store.

Community Economic Development

While some economic developers stick to the traditional notion of industrial recruitment as their primary strategy for economic development, current thinking is to merge community development principles into economic development strategies (and this is where Extension’s role becomes so important). Community Economic Development (CED) is generally thought of as a field of study that actively elicits community involvement when working with government and private sector to build strong communities, industries, and markets. CED is a multifaceted comprehensive approach to community change that is not limited to just poverty programs, nor is it synonymous with industrial recruitment.

CARE Strategies

Community Economic Developers use a number of strategies to achieve economic growth in their communities. The acronym for these strategies is CARE. C = Creation; A = Attraction; R = Retention; E = Expansion. Community Economic Developers are no longer solely focused on industrial recruitment.

Creation strategies include entrepreneurship, business incubators, youth entrepreneurship, and business coaching. Support for these strategies includes access to capital, education, networking, intellectual stimulation, and community support.

Attraction strategies typically include community business matching models, which matches the needs of a business to the assets and goals of the community. For example, a business is surveyed about the amenities and infrastructure they seek when making location decisions. These could include a skilled labor force, broadband, access to transportation, high quality education, recreational opportunities, etc. Communities sometimes have gotten in trouble through the use of incentives (grants, low interest loans, tax deferments, tax abatements, build to suit, infrastructure development). By matching the business needs with what the community already has (which could include a supply source through existing businesses), there is greater likelihood that the new business will locate there as well as stay there after the incentives run out.

Business Retention and Expansion (BRE) programming typically includes a business visitation and/or survey protocol, which uncovers both “red flags,” those businesses who need special attention, and general challenges that can be addressed through community planning. It is extremely important for economic developers to keep and possibly expand existing businesses, especially within a strong industry cluster in a region. A key tool in building a successful BRE program is effective workforce development.

The following list of resources may be useful in understanding economic development programs :