It has often been said that “preparation is the key to success.” When a community seeks to strengthen its economy, the validity of such a statement certainly becomes evident. As the global mobility of products and personnel increases, corporations have far more options concerning their locations. Companies are no longer as constrained to one locale; they can choose where they want to be for various reasons.
Any community that wants to enter the “market” for economic development can take part. Think of the firms who are looking for a place to locate or expand as the “buyers.” The cities trying to attract those firms are the “sellers.” Each place has its own strengths to offer, and by being well prepared can greatly increase its probabilities of attracting new activity.
Over the past 25 years or so, my firm, The Perryman Group, has worked with hundreds of communities and advisory groups that have been charged with economic development responsibilities to help determine appropriate objectives and provide assistance on the most effective ways and means to reach them. Through this work, we’ve identified some of the keys to successful competition in the market for corporate locations.
Every community has positives and negatives, some of which are more important than others in determining economic potential, especially in the ever-changing atmosphere of the 21st century. The challenges a community faces can curtail economic possibilities; problems such as infrastructure or workforce insufficiencies can make it difficult to attract large firms.
To ensure sustainable long-term prosperity and stability, communities must have a clear vision for the future. In fact, for any economic development plan to succeed, it must be consistent with the desires of the residents and community leaders.
One of the keys to the success of an economic development plan is the degree of consensus of those involved. To build widespread community support, it is imperative to identify the groups that have influence on the economy, discover each group’s priorities and expectations, and ascertain the stake each group has in future growth. The potential consequences of economic stagnation or growth in undesirable directions must also be at the forefront.
For the greatest success, communities must be aggressive and proactive in seeking new, while also retaining current, economic activities. Resources must also be invested in initiatives to attract new businesses. For long-term success, it is necessary to decide what avenues will yield the greatest results and then be systematic and consistent in the approach to garner them. One aspect of the strategy must be competitive local incentives. While their merits can be legitimately and endlessly debated on a philosophical plane, they are essential in the “real world” where decisions are made. Major employers are aware of them and face pressures from shareholders to maximize profitability and returns. Moreover, they must seek every advantage possible to remain viable in the complex modern economy.
Among the best ways to create the highest potential for economic development success is to identify, analyze, and select target industry clusters suitable for a specific community. To accomplish this step, a region’s resources, both current and future, must be evaluated with regard to the types of production it is capable of supporting.
Further examination of industries that may be appropriate for a community should reveal the net export capabilities of the goods or services produced within their area. Generally, if the industry generates more than is required locally, it has the potential to become a net exporter. Local workforce and training capabilities to improve necessary skills are also important aspects of the picture.
This process can be quite involved as consideration should be given to market patterns, state and national econometric models, and global trade and production forecasts. However, a targeted strategy is an essential key to successfully attracting economic activity and allocating scarce development resources efficiently.
Once emerging industries and sectors that have a reasonable likelihood of opening or expanding existing plants are identified, target clusters can be selected and coordinated with a community’s resources, competitive strengths, and prospects for future development.
Today’s highly competitive environment requires that communities desiring to enhance their economic opportunities be diligent and determined in fashioning strategies that can create potential for the future. Like most aspects of today’s world, it is an increasingly information-intensive process. With a purposeful plan and proper preparation, a community’s prospects for sustained prosperity can be greatly multiplied.