Economic development of community

The economic development of community

Definition

The process of creating wealth through the mobilization of human, financial, capital, physical and natural resources to generate marketable goods and services. The economic developer’s role is to influence the process for the benefit of the community through expanding job opportunities and the tax base.

The purpose of community development is to produce assets that may be used to improve the community, and the purpose of economic development is to mobilize these assets to benefit the community

GROWTH VS DEVELOPMENT

Growth by itself could be either an improvement or a detriment to a community.

For instance, a facility that paid very low wages might open in an area and the population and overall size of the economy might increase, but per capita, incomes might fall, and the quality of life might suffer. Such growth could bring more congestion, pollution, and other negative externalities without a commensurate increase in public resources or commitment to address them.

Of course, many communities would be happy to get any new facility regardless of the wage rate. A minimum wage job is better then no job, and there is a portion of the labor force in most communities that is a good match for minimum wage jobs (e.g., teenagers and adult low-skilled workers).

Since growth does not always equate with a better standard of living, a higher-order concept of economic development is needed that better reflects the actual well-being of residents.

Comprehensive economic development efforts, therefore, should be directed toward improving the standard of living through higher per capita income, better quality, and quantity of employment opportunities, and enhanced quality of life. Increases in per capita income (adjusted for inflation) are often used as indicators of welfare improvements. There are many other indicators of welfare and quality of life for a community residents such as poverty rates, health statistics, and income distribution, but per capita income or income per household is a common measurement of economic well-being.

Whether a higher per capita income equates to a good quality of life depends on the individual. Some individuals would rather have an income of $20,000 per year in a scenic rural area than $100,000 per year in a large city. Moreover, per capita income is not necessarily a measure of purchasing power. The cost of living varies from place to place, and a dollar goes further where prices are low.

Like community development, these descriptions portray economic development as both a process and an outcome – the process of mobilizing resources to create the outcome of more jobs, higher incomes, and an increased standard of living, however, it is measured.

From this discussion it should be apparent that development has a very different connotation than growth. Development implies structural change and improvements within a community, systems encompassing both economic change and the functioning of institutions and organizations.

Development is a deliberate action taken to elicit desired structural changes. Growth, on the other hand, focuses on the quantitative aspects of more jobs, facilities construction, and so on – within the context that more is better.

One should carefully distinguish, then, between indicators that measure growth versus development. By these definitions, a community can have growth without development and vice versa.

The important point to note, however, is that development not only facilitates growth but also influences the kind and amount of growth a community experiences. Development guides and direct growth outcomes.

The relationship between community and economic development

While conceptions and definitions of community and economic development vary, in practice, they are inextricably linked on many levels and are highly synergistic. To understand these synergies, consider another definition of community development is a planned effort to produce assets that increase the capacity of residents to improve their quality of life.

These assets may include several forms of community capital like physical, human, social, financial and environmental.