“Economic development” is one of the most misused and misunderstood terms within the civic arena. While I don’t hate interventions in the marketplace that result in increased and more inclusive economic growth (my definition of the term “economic development”), I do hate how the term has lost all meaning as it is used to describe nearly anything that resembles economic activity.
For example, a colleague laments that the mayor of his community is fond of ribbon cuttings where he can announce that the opening of a new car wash or some other service business as “economic development.” My friend, who I would describe as a true economic developer, observes that no additional cars are being washed as a result of this “development.” More than likely there’s a car wash down the street that recently went out of business or one that is about to see its customers wash their cars elsewhere.
Another friend gets very frustrated when politicians tout the relocation of a business that merely crossed a municipal boundary. This is tax base development, not economic development.
A third goes bonkers when physical developments (casinos, stadiums, museums etc.) are touted as economic development. Unless these developments are actually able to attract large numbers of people from outside your economy to visit (or better yet, move), they really don’t do much for the overall economy. They may make your community a better place to live, and that can have a long-term positive effect on the economy; but it’s a reach to call such investments economic development.
Each of these activities may be good for the economy, but they don't necessarily mean the economy is outperforming the competition. And the more civic leaders are able to pass off such activities as "economic development," the odds increase that sustained, inclusive economic growth won't occur.
Bob Weissbourd of RW Ventures in Chicago cuts through all the noise when he notes “neighborhoods don’t have economies, they have assets.” I would go farther and say cities and counties don’t have economies either, they too have assets. Strengthening and connecting those assets to the regional economy (or metropolitan economy, if you prefer) is what will result in increased economic activity and opportunity within the neighborhoods and communities we care about. Strengthening and connecting assets is at the root of economic development.
Imagine how differently a city’s “economic development” department would operate if it was called the “asset development” department. Every city’s number one asset is its people, and perhaps all city halls would focus more on effective workforce solutions. The second biggest asset is a city’s existing business base. An “asset development” department would make sure those companies have what they need to grow -- including providing access to workers.
I don’t expect there will be any “Asset Development Departments” formed in the near future, but I sure do hope we see less misuse of the term “economic development.”