“Economic Development” is a term that is often used but not always clearly understood. The challenge with understanding and using it correctly lies in the fact that (1) the term has uses and meanings; and (2) those definitions tend to be abstract, complex, and not easily understood.
In order to try to clarify the concept, let us state that there are three primary meanings to the term “economic development.” It can be understood in one of the following three ways:
- Practice: first of all, economic development means something economic development professionals do. Like law, economic development is a true profession (like law or education) with a body of knowledge, education, skills, and experience, and it is a profession that is practiced, where all of that knowledge, education, skills, and experience are applied. It’s what is meant by calling TSEP an economic development organization.
- Projects: second, economic development is something businesses do. When an entrepreneur starts a new business, when an existing business invests into new equipment, and when a new business locates into a community, this is economic development. These investments, which also usually involves hiring people, are called economic development projects and represent a second meaning of the term. It’s what is meant when Tiffin and Seneca County rank in the top ten percent nationally among rural counties for economic development.
- Progress: third, economic development is something a community experiences in terms of quality of life improvements and is often used for developing countries wanting to become developed countries. It is what is meant when an online article says, “A longer life expectancy, for example, is one of the results of economic development.”
Let’s look at each in more detail along with a video illustrating each of the three meanings.
1. Economic Development as Practice
The first meaning of economic development defines economic development primarily as a practice done by professionals in order to develop the economy (jobs and opportunities), which in turn develops the community and makes it a better place to live. The International Economic Development Council (the largest professional association of economic developers in the world) created the following video to try to emphasis that would want to emphasize what economic developers actually do to help make that happen.
For the first 1 minute and 16 seconds, it talks in general terms about developing the economy and developing the community, about new businesses, and workforce development, about job creation and opportunity. It then makes the claim that professional, skilled experts help make it happen, and asks, “How do we do it?” It then spends the rest of the video mentioning the activities of economic development professionals, albeit without a lot of detail.
It says economic developers “work hard to champion for the ones (businesses) we have, and “with education and expertise, we collaborate to attract new businesses and work hard to champion for the ones we have” (practice).” Similarly, the video also touches on other economic development activities – entrepreneurship, workforce development, tech development, incentives, research, export promotion, cluster development, etc.. It says economic development is the “thousand different things” that economic developers to do help develop the economy and make their communities a better place to live.
2. Economic Development as Projects (Business Formation, Jobs & Investment)
The second way economic development is understood is as the projects themselves. Economic development “projects” are the new businesses, investment, job creation, company attraction, and even community development projects. A well-done stop-motion video was created by Economic Development Winnepeg to explain this sense of the term. It kicks off the video with an abstract definition and then says it is going to show us what economic development is, by talking about different kinds of economic development projects (new business start up, expansion into manufacturing, new companies locating in the community, tourism, etc.)
3. Economic Development as Progress
A third way “economic development is often used is to refer to the process whereby emerging or developing economies improve economic well-being and quality of life (progress) to the point of being like “developed” nations such as the US, Canada, Western Europe, Japan, South Korea, Australia, and New Zealand. (See Wikipedia article on developing countries for details.)
In the following short, one-minute and 14 second video, economic development is first defined as “the process in which a country’s economy becomes more advanced – richer and more developed.” This is very similar to the Cambridge Dictionary definition given in the Winnipeg video: “the process by which an economy changes and becomes more advanced especially when both economic and social conditions improve.” It then talks about how it’s not just about money, or about projects, that define a “developed” economy and therefore economic development. The video says that economic development metrics include things like literacy rates, infrastructure, internet access, academic achievement, overall standard of living, life expectancy, industrialization and then transition to a service economy, as well as access to decent housing and good quality healthcare. It then uses South Korea as an example of Economic Development.
Proceed to the next article in the series – Laws of Economic Development.