The Challenge of Defining Economic Development

There is a constant resonating buzz across the country on the topic of economic development. Politicians, business leaders, labour, anyone who has a vested interest in the field uses their own platform to announce the "best practice" to the economic development "problem". We are constantly inundated with a particular vision of what economic development is and how economic development can be achieved. The great rhetoric of industrial planing, business growth, business retention & expansion programs, place marketing, and job creation are the mantra. These are temporary programs and results of specific actions around business development, workforce programs, business programs, or business planning.

It is not surprising that many community leaders are challenged to determine the most appropriate path to pursue for their particular community’s best interest. The purpose of Integrated Economic Solutions’ discussion is to remove the rhetoric and emphasize the importance of why, how, and what frameworks integrate into the fabric of Canadian communities. This current exploration and challenge of defining economic development is a part of our commitment to supporting, educating, and creating greater awareness in the field of development for small, rural, and underserved municipalities, First Nation administrations, and economic organizations.
This article begins the first in a series of discussions on the topic relating to economic development within the broader development landscape of community adaptability.
Before we can explore more thoroughly the why, how, and what of economic development, it is imperative to remove the rhetoric from the discussion.  This first instalment of Integrated Economic Solutions’ discussion on development explores the challenges and misunderstandings of economic development.

Misunderstandings of Economic Development:

Existing economic development programs appear to be a broad range of tools that support a multitude of needs for a community to address economic development.  In general, however, the current approach to economic development focuses on a common core of marketing, investment attraction, business retention and expansion, and job creation. These approaches are based on external, imposed programs that are "done" to a community.

Economic development is not attracting new business and it’s not creating an investment ready profile or some other program designed to market the community to outside investors. It isn't developing a overarching industrial or economic growth strategy (euphemistically called an economic development strategy) with the intent to create a path that fills the gaps and gives rise to greater business growth, employment, training, or some other targeted and easily measurable metric. Economic development is NOT a competition with other communities; it is a challenge to enhance the qualities of YOUR local economy.

Economic Development Program: Something that is "DONE" to a community:

These traditional approaches to filing a business gap, solving joblessness, or some other overarching business development process is isolating and temporary: they focus on specific elements of a community with little or no consideration for the integrated impacts in the longer-term. They are more often than not based on the “next big trend” or are only a stop-gap measure that depends on the funding available for job creation, tax incentives, or other hidden subsidies to encourage outside investment.  In other words, these programs are short-term results that serve the immediate needs: they show temporary success that are easily measured. These approaches pander to the current quarter or yearly statistical result for reporting purposes.  These are approaches to roof top or smoke stack chasing.  They are programs designed to chase jobs for the sake of jobs—and not the quality of the employment. Filling in the gaps or deficiencies of economic development frame the backbone of these ideas and provide the answer to resolving the problem. Economic development is building on the qualities of YOUR community NOT filling the gaps or deficiencies.

Whether a community is chasing the next roof top, smoke stack, or low skill, low pay jobs for it’s residents, it is still not pursuing economic development.  Business growth and employment is not synonymous with economic development. If anything, this approach is based on business growth programs—but with little regard for the quality of growth.  There is a broader view of business growth that emphasizes economic growth (a topic for a future discussion). At present, it is important that business growth is a part of the cycle of community adaptability but it does not address the current development conditions of a community. Nor does it examine the economic growth opportunities.

The "Best Practice" Panacea:

The final element unpinning traditional models is the idea that communities should address the “gaps” and the “problem”of economic development through “best practices”.“Best practices” is inaccurate and inappropriate when applying solutions to opportunities for communities. If “best practices” can be mirrored in every community, why isn’t every community successful in implementing these practices? Why do they work in some communities and not others? These are important questions to address when considering “best practices”.  Best practices, by definition, are past practices and hindsight does not lead to foresight (Cynefin Framework, David Snowden). More than this, though,  “best practices” appear to proliferate through “mimicry” rather than an informed understanding of development.

Pursuing an approach based on “best practices” to address the “gaps” and “problem” of economic development is a formula for failure.  Building economic development from this vantage point is based on a position of weakness and does NOT create confidence, adaptability, or success. Emphasizing the gaps (however defined) implies that the deficiencies are the solution to the problem rather than the advantages as the solutions to the opportunities. Framing economic development from a problem paradigm fails to recognize the advantages and potential opportunities available that can be built on the current level of development.  Achieving a “seal of approval” for undertaking specific “best practice” prescriptions for economic development ensures no real development of the local in the economy.  In this approach, communities “assess the facts of the situation, categorize them, and then base their response on established practices” (Cynefin Framework, David Snowden).

The idea of “best practices” is characterized by oversimplification: decision makers are blinded to new ways of thinking (Cynefin Framework, David Snowden). Communities and economic development is a complex environment. Doing the same thing twice will give a different result. The simplicity of traditional approaches assumes the environment of each community is ordered in a similar way and, therefore, “best practices” can be across different communities and local economies. Communities and local economies are different and dynamic: traditional models do not recognize the complex and, sometimes chaos nature of individual communities. Traditional models do not recognize the connection and integration of unique solutions that are required for each community and local economy.  Traditional models are based on expected and anticipated results, using a standard model of implementation without realizing the need for an integrated process that extends beyond the short-term gains of temporary solutions.

Next Steps: Finding A Process for Success

We have just completed a brief overview of the current challenges to understanding economic development. We have outlined the short-comings, limits, and even, misunderstandings of what some in the field believe economic development means, the various programs for implementation, and the expected results. We have demonstrated that economic development is NOT something that is done to a community or local economy.  Most importantly, we have discussed that economic development is NOT a program, a “best practice”, filling in a gap, or fixing a problem.

Now that we have examined the limits of traditional models and approaches to economic development, the next discussion paper will begin to explore the various elements, components, influences, connections, processes, and other factors that define economic development. We will discuss the why, the how, and the what of the economic development process.