Understanding Economic Development

Why Economic Development?

The Falcon Field Area Alliance is in the economic development business; but just what is economic development? It is a term that we hear about all the time, but it is frequently misunderstood. The formal definition of economic development is the process in which a community, a state, a region or country organizes to improve the economic well being and the quality of life for the community as well as to create greater wealth in the community by bringing in new "outside" dollars.

These "outside" dollars create jobs that produce goods and services that are sold to customers located primarily outside the community. These jobs are called primary jobs. This creates new money for the community. Once the employer is paid for the products and services, he redistributes this money through wages for his employees and payments to his suppliers. So, the bottom line in economic development is that people get jobs. Their income increases. Their quality of life improves. They buy things, pay taxes, raise families and invest.

Why Do Communities Need Economic Development?

Quite simply, economic development helps pay the bills by:

• Providing better public services such as police and fire protection, parks and recreational areas through the increase of the tax base.

• Providing more job opportunities for citizens.

• Providing diversity in the economic base of a community. A community that has not diversified its industrial base will find itself in trouble if a major industry downsizes or suddenly leaves the community.

Why Do Companies Locate or Stay in a Community?

Based on a recent survey of corporate site location decision makers conducted by Area Development Magazine, the top reasons for a company to locate or expand in an area include:

1. Highway accessibility

2. Labor costs

3. Energy availability and costs

4. Availability of skilled labor

5. Occupancy or construction costs

6. Available land

7. Corporate tax rates

8. State and local incentives

9. Environmental regulations

10. Tax exemptions

11. Proximity to major markets

12. Availability of advanced ICT Services

13. Low union profile

Why Economic Development Now?

Economic development has increasingly become an integral part of public policy decision making. Major changes in world and national economies are now taking place. Engineering, programming, and accounting jobs are leaving the United Statesin pursuit of low cost, readily available labor. The significance of economic development programs has never been greater than now. The stakes are so high because success means millions of dollars in taxes, in wealth creation, and in jobs. Economic development is the lifeblood of the community.