Competition to attract corporate locations, particularly high-profile locations, is typically intense, and decades of evidence has shown that communities must be proactive and innovative to increase their chances of success.
Economic development programs can enhance opportunities and prosperity, but given the reality of scarce resources, communities must be efficient and analytical in their efforts.
We recently produced a report, in conjunction with the Texas Economic Development Council, which is a framework for thinking about economic development (available free at www.perrymangroup.com). Here’s a quick look at a few key points.
It can be helpful to consider the two parties involved in the process, usually corporations and communities, as participants in a relatively well-organized market. The firms “supply” economic activity, while the communities desire or “demand” it, creating a “Market for Prosperity.” Each has a very specific agenda. Companies are seeking certain attributes which will enable their success, while communities are typically trying to secure long-term prosperity for their residents and sustainable, high-quality growth.
An understanding of the corporate perspective can improve the effectiveness of economic development efforts by enabling a more targeted and efficient approach. A company seeking to locate or expand is going to be, of necessity, initially concerned with the fundamental factors that impact its success. Some of these items are beyond the control of local or state entities, such as proximity to customers, suppliers, or required raw materials. Others (including public education, workforce training, infrastructure, tax policy, regulatory matters, and quality of place) can be affected by community decisions. Incentives are often a critical element of the final decision (a topic for another day).
There is also presently a trend toward companies looking beyond a laser focus on lower costs in location and expansion decisions. Instead, they are beginning to place more emphasis on a longer-term view and the broader social implications of corporate actions. The corporate definition of success is expanding to include benefits to all stakeholders—customers, employees, suppliers, and communities—as well as shareholders. This changing perspective influences the economic development process, and communities can benefit from considering what they can offer beyond a low-cost location.
Building from strength remains an important component of any successful program. However, with nothing more than quality internet access and the right workforce, multi-million-dollar or even billion-dollar companies can thrive, and the scope of potential economic development options from a community’s perspective is broader than ever before.
Communities should be fully aware of implications a location may have for their residents, infrastructure needs, and quality of place. Optimal outcomes occur when a decision represents a “win-win” situation, with both the firm and the community benefitting in the immediate future and for years to come.