Economic development concerns the creation, attraction, expansion and retention of jobs and income. A community or region can pursue many avenues when attempting to encourage economic development. Economic development usually means improving or expanding existing business or attracting new business and industry.
There are several reasons why attracting new business or industry is a popular approach to economic development.
Ø New business or industry can provide needed expansion and diversification to a community’s or region’s economic base.
Ø Recruiting business and industry, as opposed to assisting existing business development, is an easy concept for community leaders and the general public to understand and support.
Ø New business and industry can have a quick, highly visible impact with new jobs, income, families, and potential community leaders.
Ø Recruiting business and industry is an accepted, traditional approach that has an established support system in the development programs of state governments, utilities, and other organizations.
Industrial recruitment involves the attraction of manufacturing industries to a community or region to increase the local economic base. Leaders of many chambers of commerce, towns and regions are pursuing a limited number of new or relocating industrial plants. For this reason, recruiting programs should be well thought out and this effort should be balanced with other economic development efforts.
Since local economic development resources are often limited, recruitment efforts should be targeted on industries for which the community has a comparative advantage.
A community’s comparative advantage may be in one or more areas of production. A community with a large underemployed labor force may have a comparative advantage for labor-intensive industry. Other potential comparative advantages may include abundant water supplies, electric power, transportation opportunities, location, natural resources, particular labor skills, educational facilities, etc.
It is important for community leaders to be aware of situations giving their area a comparative advantage.
Firms that are searching for a new plant site generally make a systematic analysis of plant location factors. The number and types of factors affecting location vary in each case and they sometimes run into the hundreds. However, the breakdown of location factors examined usually includes the following: markets, industrial sites, labor, utilities, raw materials, financial capital and transportation.
The importance of these factors varies widely from one industry to another. Moreover, with changing technology and economic conditions, their role will vary within a given industry and from one time period to another. They are interrelated and interdependent so that the desired location usually requires a compromise among factors.
The important factors to a firm’s location decision may be attainable in several places. In these cases, personal factors enter into making the final decision and can be influenced directly by activities of the industrial development committee in promoting their community.
Among other factors for the industrial development committee to consider are: local and state taxes, and laws that may affect the industry being recruited, and any special inducements for industry that may chose to locate in the community.
Regardless of the type of industry that may be recruited, some very basic items are important in attracting new industry. Traditional costs associated with production, transportation and marketing will continue to be critical for many industries.
The availability of financial capital will also be crucial. Local, state and federal sources of capital will have to be explored and utilized to their fullest potential. Cutting “red tape” is also becoming important for small business and industry.
Local leaders should approach industry recruitment efforts with enthusiasm and with a realistic assessment of the facts. Local areas should build on their strengths and identify their own areas of advantage.
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