Economic Development Targeting: Laying a Sound Foundation for Your Strategy Plan (cont.)

New considerations in target analysis

Understanding your area’s current employment composition, as well as the growth performance of each sector relative to U.S. industry movements, are integral aspects to assessing your economy. Diagnosing the relative competitiveness of your region in the context of specific industries for retention or attraction activities requires bringing more data into the assessment. There is now a strong consensus on the key business location factors, which represent local competitiveness factors for economic developers. Those factors are shown below.

Business Site Location Factors²

• Suitability of business parks, land and buildings
• Scale and skills of the labor market/workforce
• Scale and socioeconomic characteristics of the consumer base
• Availability and quality of infrastructure – roads, power, water/sewer, broadband telecom, inter-modal transportation terminals and connections
• Access to markets, as well as to airports, marine ports and intermodal rail terminals
• Business support services and business climate – job training, regulations, business organizations
• Quality of life – including climate, arts and culture, recreation, and school quality
• Cost of doing business – including labor, utilities, infrastructure and taxes

A notable characteristic of this list is that many of the factors relate to availability, quality and scale of local resources, in addition to the cost of living and cost of doing business locally.While early economic models attempted to evaluate business attractiveness based primarily on cost differences, it is now widely recognized by economic developers that availability, quality and scale factors are equally important site location factors. These same factors are important in re-evaluating whether the growth orientation of your area is working.

Therefore, a successful economic development strategy must first determine the nature of the above factors in its own community relative to other competitor communities, and improve non-competitive factors to the extent possible. Once competitive factors have been determined and shortcomings have been improved upon, a marketing campaign can be targeted to inform the relevant business and investment interests about local advantages.

The components of assembling an economic base analysis for your area and for comparison areas – combined with evaluating relative competitiveness attributes and diagnosing which of your area’s attributes are obstacles to growth but fixable – may be out of reach for agency staff in smaller jurisdictions. New analysis tools, such as the Local Economic Assessment Package (LEAP), are now available to make the evaluation of these additional considerations possible. Pioneered by the Appalachian Regional Commission, LEAP coordinates many of the otherwise time-consuming techniques in the economic development process to produce a target list of appropriate opportunities for economic growth and business attraction.³

The right knowledge

Defining and implementing a successful targeting strategy plan must start from a realistic self-evaluation and decisionmaking process. The process must first identify a suitable growth orientation (path) for your area and then set priorities that cater to the area’s strengths. Knowing your local economic conditions is the first step to solidly articulating what is working well in your area, what could be growing better, and what are the barriers to growth that policy intervention can alleviate. An analysis that assists in answering these questions should build from core techniques that persist in the regional economics field, and evolve to also identify the influence of your area’s relative cost factors, market access conditions, and the quality of infrastructure and workforce on business growth prospects.

Economic Development Research Group, Inc. (EDR Group) provides advisory services and conducts research studies for government agencies, private firms and other consulting firms. For more information, visit www.edrgroup.com.

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²These same factors are cited in numerous sources on business location decisions, including: (1) Sloagett, Gordon and Mike Woods. “Critical Factors in Attracting New Business and Industry in Oklahoma.” Oklahoma Cooperative Extension Service; (2) Kotler, Philip et al. Marketing Places. The Free Press, 1993; (3) Lyne, Jack, “Quality of Life Factors Dominate Many Facility Location Decisions,” Site Selection Handbook, August 1988; (4) Finkle, Jeffrey. “Developing Strategies for Economic Stability and Growth”, National Council for Urban Economic Development, 1987; and (5) Portland 2002: Strategy for Economic Vitality, Appendix 2-3: “Location Factors,” 2002. For quality of life, also see (6) Segedy, James. “How Important is Quality of Life in Location Decisions and Local Economic Development” in R. Bingham and R. Mier (Eds.) Dilemmas of Urban Economic Development, Thousand Oaks, Sage.

³EDR-LEAP is now available in a web-based version. For more information, see www.edrgroup.com/leap