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Phone: 773-768-7779
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Chicago, IL 60651
Phone: 773-287-8333
FAX: 773-287-8335
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Matteson, IL 60443
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Westchester, IL 60154
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Branch Office (Cook County)
9415 South Western Avenue, Suite 201
Chicago, IL 60643
Phone: 773-233-2900
FAX: 773-233-9183
Hours: Monday - Friday 8:30 am to 4:30 pm

Branch Office (Cook County)
9415 South Western Avenue, Suite 200
Chicago, IL 60643
Phone: 773-651-4011
FAX: 773-651-4047
Hours: Monday - Friday 8:30 am to 4:30 pm

Community and Economic Development

Community and Economic Development

General

Economic Development 101

What is economic development?
Economic development is a sustainable wealth creation process that works within the framework of community parameters to maximize the efficient and effective utilization of community resources for economic gain for the local population. More simply, the process of creating wealth for as many people as possible. Ultimately, economic development is the development of economic wealth of geographic areas for the well-being of their inhabitants.

What is community development?
Community development is capacity building for designated geographic areas. It involves the increased presence of good schools, jobs, libraries, parks, services, hospitals, healthy citizens, safe environments, new homes, entertainment, amenities and the presence of effective social and political systems. In summary community development results in an enhanced and effective 'quality of life' for a designated geographic location.

Which comes first – community development or economic development?
There is a difference. Simply – economic development is the process of wealth creation; an activity or group of policies that attracts investors (public or private) that results in creating wealth. While community development is capacity building for a 'better quality of life' for a designated geographic area.

Which comes first? It depends. For example, economic development may be initiated first if investors or commercial developers identify potential economic opportunities for a geographic area. This may be driven by a regional evaluation report, ne policies, or an increased need from a specific industry. On the other hand, community development corporation (a CDC) may initiate the process. For example if a CDC may be formed in a geographic area at the request or interest of local or regional leaders. They may see the need for increased services, retail or housing.

In either case, both economic development and community development must play integral roles to make the entire initiative successful.

What is community economic development?
Community economic development (CED) is a people-initiated strategy which seeks to develop the economy of a community, region or country for the benefit of its residents. CED is a systematic and planned intervention that is intended to promote self-reliance. A principle objective of CED is to help consumers in becoming producers, users in becoming providers, and employees in becoming owners of enterprises in the context of a community's economic, social, cultural and political values. CED focuses on local ownership, building the capacity of local people and public needs, rather than focusing solely on business profits and investments.
SOURCE: "Why Teaching a Man to Fish is Not Enough", by G. David Miller,
New Hampshire College, Graduate Scholl of Business

Points about economic development finance
Every aspect of implementing economic development projects or programs involves securing financing – it is the core tool. Financing is a team effort that involves investors, entrepreneurs, businesses, developers, the community, and local, state and federal governments.

Types of financing:

  • Private sector lending institutions such as debt financing or equity financing (developers, business leagues, etc.)
  • Public sector financing such as community development corporations (CDCs), federal, state, and local financing programs.

For example, the federal government's current goal to stimulate the economy is to position the government as an investor, through funding infrastructure projects; which then creates construction jobs, demand for supplies from businesses, increased incomes for communities, and in return the government receives taxes (dividends) as a result of these activities.

Funding strategies are often very difficult because of scarce resources and competition for other investment needs, the political climate and the local, state, national and global economic climate. The demand for financing by the government is often times difficult for elected officials to justify when there are scarce resources (i.e., a budget deficit) because short time horizon responses are often perceived as more important than economic development initiatives that have a longer time horizon and whose benefits may not be immediately apparent.

What about economic development policy?
Often the best way to address a problem or issue is to develop and implement a new or better policy. To affect a governmental or organizational policy, the issue must be brought to key decisions makers' attention. Policies that could support economic development:

  • Initiatives that governments undertake to meet broad economic objectives
  • Policies to provide infrastructures and services
  • Programs explicitly directed at improving the business climate such as business retention and expansion programs, marketing and business finance (often funded and managed through SBDCs).

Why are partnerships so important to the economic development process?
To accomplish meaningful economic development, many actors and stakeholders must be engaged. Each partner has different constituencies or stakeholders, funding sources, regulations and motivations. And that's ok – when you understand the overall economic development process. Some examples of partnership players:

  • Local, state and federal governments
  • Private investors
  • Special authorities
  • Public-private partnerships
  • Chambers and business associations
  • Universities and community colleges
  • Neighborhood groups
  • Community development corporations
  • Utilities
  • Others

Why is strategic planning used as a tool to implement economic and community development?
Strategic planning has to do with the grand design for a successful economic development process within a geographic area. There are several components in developing this plan:

  • Leadership and commitment of key stakeholders is key to moving forward on a plan.
  • Environmental analysis determines land use, structures, transportation, and systems.
  • Resource analysis is a realistic appraisal of available resources including its people and their capacities; how many and what types of organizations and agencies are present; what do public facilities such as schools look like and the evaluation of the communities social, economic and cultural capacities.
  • The final process is the establishment of goals and action steps that will make the economic development plan become a reality.

ADDITIONAL RESOURCES

Community and Leadership University of Missouri Extension has a website dedicated to community and economic development with various modules such as: diversity and inclusion, economic viability, leadership development, organizational development, planning and public policy http://extension.missouri.edu