Glossary of Terms

The terms listed below appear in this report to describe findings and recommendations. They are presented and defined here as the Advisory Committee used them, which is in the context of local and regional community and economic development.

Capacity Building
Mobilizing of individual and organizational assets from the community and combining those assets with others to achieve community building goals. ²⁰ In its work for this report, the Advisory Committee considered the special needs for capacity building in distressed communities and regions for convening civic, business, and governmental partners and collaborators to formulate and implement strategic plans and to access resources under the Strengthening America’s Communities Initiative. In addition, the Committee sees an important component of capacity building to include strengthening the skills of state, regional, and community economic development officials to allow them to facilitate regional governance models, strategic competitiveness strategies, partnerships, actions, performance, and accountability.

Challenge Grants
Challenge grants are competitive grants available to communities or regions that have adopted economic development strategies and taken action to encourage investment and business expansion. An Economic Development Challenge Fund is a specific component of the Strengthening America’s Communities Initiative that was proposed by President George W. Bush as part of his FY 2006 budget request to Congress. The initiative proposes a bonus grant program for low-income communities facing economic challenges that have already taken steps to improve economic conditions and demonstrate readiness for development.

Clusters
Clusters are geographic concentrations of interconnected companies and institutions in a particular field. Clusters encompass an array of linked industries and other entities important to competition. They include, for example, suppliers of specialized inputs such as components, machinery, and services, and providers of specialized infrastructure. Clusters also often extend downstream to channels and customers and laterally to manufacturers of complementary products, and to companies in industries related by skills, technologies, or common inputs. Finally, many clusters include governmental and other institutions — such as universities, standards- setting agencies, think tanks, vocational training providers, and trade associations — that provide specialized training, education, information, research, and technical support.

Clusters represent critical masses of unusual competitive success in particular fields. Clusters can be concentrated in one economic region or may spill across several regions. The success of the cluster depends on taking full advantage of the distinct assets and knowledge of the places involved. The enduring competitive advantages of a region increasingly lie in the things located within the region — knowledge, relationships, and motivation — that distant rivals cannot match. Untangling the paradox of location in a global economy reveals a number of key insights about how companies continually create competitive advantage.What happens inside companies is important, but clusters reveal that the immediate business environment outside companies plays a vital role as well. This role of locations has been long overlooked, despite striking evidence that innovation and competitive success in so many fields are geographically concentrated. ²¹

Community Development
Activities that increase positive outcomes within a community by linking individuals and organizations working toward common ends. The U.S. Department of Housing and Urban Development more broadly defines community development as being “many different programs that provide assistance to a wide variety of grantees.” (See the section of this report titled “A Definition in Flux” for an expanded discussion of the meanings and uses of the terms “community development” and “economic development.”)

Competitive Grants
Grants awarded by means of a review of relative merits of multiple proposals, whereby grant requests proposing activities with greater impact and more certain outcomes are given priority over requests where activities will have less impact and less certain outcomes. Competitive grants typically require matching funds and leveraging of nonfederal investments and job creation.

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