More than a century ago, Alexis de Tocqueville set out to explain a new kind of society in his classic Democracy in America. He argued that a great democratic revolution was transforming the world, leveling old hierarchies and creating a social order built on equality of conditions. In the United States, he saw its clearest early expression: democracy organized from the bottom up, in townships, juries, churches, and voluntary associations rather than imposed from the center.
Tocqueville captured something essential about that new order—a dense fabric of local self-government and association, constantly generating new institutions and ways of working together. What he could not see was what would come next. Over the following century, this local democratic capacity would be translated into an institutional system for organizing economic life—a decentralized apparatus of public, private, and civic organizations that turned local initiative into durable economic capacity. That system is best expressed in our decentralized system of local economic development. While it began in America, it has now spread far beyond—across advanced and emerging economies alike.
For more than four decades, I have worked at the intersection of economic development research and practice. I have worked on economic development in Pittsburgh, Detroit, Tulsa, Toronto, Miami, Austin, Nashville, Denver, Philadelphia, New York, Washington, DC, Newark, and countless other cities across America. I have lived in Canada for nearly 20 years and worked across the country—Toronto, Montreal, Ottawa, Calgary, Edmonton, Winnipeg, Kitchener-Waterloo, Hamilton. I have spoken and worked in cities across the globe: London, Birmingham, and Manchester; Sydney, Melbourne, Brisbane, and Noosa; Stockholm, Oslo, Copenhagen, Dublin, and Warsaw; Abu Dhabi, where I taught for NYU, and Dubai; Bogotá, Medellín, and Barranquilla; and Jerusalem.
I have a long relationship with this field and this organization—dating back to the 1980s, before the merger that created IEDC, when I worked with groups like the American Economic Development Council and the Council for Urban Economic Development. I remember being scheduled to speak at the conference in Philadelphia in September 2001. That conference was canceled in the aftermath of 9/11. The following year, I spoke at the conference in Oakland, just as The Rise of the Creative Class was being published. As a new author, I was amazed by the long line of economic developers lining up to buy that book—and by the invitations that followed to come speak to their communities. More importantly, the ideas found a receptive audience among practitioners who were already grappling with questions about talent, place, and quality of life. They pushed back on ideas that did not fit their experience. They adapted concepts to their own contexts. That experience taught me something important: this field learns.
The Decentralization Advantage
The genius of the system lies in its decentralization. Rather than concentrating power in a single centralized or planned economy, it spreads economic functions across cities, regions, and states or provinces, where they are carried out by a wide array of organizations and actors—some inside government, some in nonprofits, and many in hybrid partnerships that bring together universities, business leaders, civic institutions, and philanthropy.
Today, almost every community has an organized capacity to shape its economic future. That ubiquity is what makes the system powerful. Economic development is not episodic or elite. It has become part of the basic fabric of local governance. This is economic infrastructure—less visible than highways or ports, but just as essential. Taken as a whole, this multi-layered system functions as an invisible operating system for the economy—an invisible engine of innovation and economic growth.
This decentralized system runs countless experiments—across hundreds of metros and thousands of communities, with thousands of civic and economic development organizations all learning from one another. Organizations try different approaches to building their economies, each rooted in local conditions and capabilities. Some efforts fail. Others succeed. What works spreads through professional and civic networks. A centralized system bets big and hopes it is right. A decentralized system distributes risk, accelerates learning, and avoids lock-in. No single failure becomes a national failure. No single orthodoxy can choke off adaptation. The system generates new combinations and new growth paths. That is the source of long-run economic dynamism.
The practice of economic development has evolved as the economy itself has changed. Early practice focused on deals—attracting factories, plants, and headquarters. That work still matters, but transactions alone do not produce durable growth. The next shift was toward industry clusters—understanding how related firms, suppliers, institutions, and skills concentrate in places and reinforce one another. From there came a deeper focus on talent: attraction, development, and retention as central drivers of innovation and productivity. Then came attention to amenities and quality of place—the recognition that where people want to live shapes where economic activity can thrive. Over time, clusters, talent, and amenities converged into a more complete view of ecosystems—networks of firms, universities, workforce institutions, capital, infrastructure, and quality of place. Economic developers became system-builders, shaping environments where innovation could take root.
Pittsburgh is where I first came to understand this. I spent two decades there as the Heinz Professor of Economic Development at Carnegie Mellon University and founded its Center for Economic Development. The region's transformation did not come from the private sector alone, or from government alone. It came from the economic development function—the capacity to bridge sectors, align interests, and build institutions that outlast any single administration or business cycle. Carnegie Mellon and the University of Pittsburgh built world-class research programs. Civic organizations like the Allegheny Conference on Community Development and the Pittsburgh Technology Council created the connective tissue that linked universities to industry. Foundations—particularly the Heinz Endowments and the Richard King Mellon Foundation—provided patient capital for long-term institution building. I watched and learned as economic developers led and served as catalysts in building the region’s innovation ecosystem.
My understanding of economic development continues to deepen in my recent work in Nashville. As a Visiting Distinguished Professor at Vanderbilt University, I have been working with Vanderbilt Chancellor Daniel Diermeier, Mayor Freddie O’Connell and the business and startup communities to launch the Nashville Innovation Alliance and build an institute at the intersection of AI, digital technology, and innovative economic development. The city has done something few places have managed to do. Its music scene and music industry have caught up with and, in some ways, surpassed established centers like New York, Los Angeles, and London. Now Nashville is leveraging that cluster into broader entertainment, attracting film and television production, building a major tourism and conference industry, and developing a nationally recognized food scene. It all builds from music. That kind of strategic cluster development does not happen by accident.
A Learning System
In the early 1980s, excellence in economic development was uneven. A handful of leading regions had strong institutions and sophisticated practice. Many others did not. Knowledge was fragmented. Outcomes often depended on individual personalities rather than durable systems. That has changed. Today, capable professional economic development organizations exist across much of the world—in large metros and small cities, across political lines and national borders. The language of clusters, ecosystems, talent, and innovation is widely shared. The ability to convene stakeholders and execute strategy has spread broadly.
This leveling-up did not happen by accident. IEDC and its predecessor organizations played a pivotal role—setting standards, providing training, fostering mentorship across generations, and building networks that allowed knowledge to travel. They created forums where practitioners could compare notes, share failures as well as successes, and adapt ideas across very different contexts. Isolated local efforts became a system of practice. The result is a compounding effect: each generation builds on what came before. Tools improve. Frameworks become more sophisticated. The overall level of practice rises. A small or mid-sized city can now deploy strategies that would have been cutting-edge in major metros not long ago. That building up of capability across places and across the profession is one of the field's greatest achievements.
Today IEDC is an international organization, and economic developers from around the world contribute to and learn from this system. I experienced this firsthand when Mayor Nir Barkat invited me to help develop an innovation and economic strategy for Jerusalem. Israel is "startup nation," and Jerusalem had startups—but it also had tensions across religion, ethnicity, and nationality that ran deeper than anything I had encountered in American cities. The mayor wanted to apply my framework of technology, talent, and tolerance to a place where tolerance was the hardest variable of all. We visited startup companies, met with religious communities, held public forums, and developed a strategy to take Jerusalem to the next level. My work in Jerusalem showed me that economic development is not just an American invention or a playbook for superstar cities. It is a global craft that matters in communities everywhere. In a place as old and contested as Jerusalem, I learned that economic development is not just a tool for innovation and growth. It can be a way to ease old tensions and open pathways for shared prosperity.
This is the kind of learning that permeates the system of economic development. Across countries and across the world, cities and regions are able to learn from one another. Through constant experimentation, cities develop new approaches that fit their conditions and then spread to other cities and regions. The result is a complex, evolving system that is far bigger than the sum of its parts. No single place has all the answers. Each local economic development organization contributes to and draws from a collective intelligence that spans the globe. Together, the field of economic development knows more than any single organization, practitioner, or community could ever know alone.
Challenges Ahead
Economic developers have long concentrated on jobs, industry recruitment, and talent attraction. Today we face a different reality. When ideologically opposed figures like Donald Trump and New York's Zohran Mamdani are both talking about affordability, you know it is a defining issue. This is no longer just about superstar cities like San Francisco or New York. The affordability crisis has spread to virtually every corner of the United States and the world.
Housing costs, inequality, and other social stresses are no longer side issues to be left to social policy or community development, they have become direct constraints on innovation, job creation, and growth. When a city becomes unaffordable, it becomes harder to attract and retain talent. In a growing number of cities around the world, even highly skilled and highly paid professionals now struggle to afford housing. And cities do not run on highly educated professional talent alone. They depend on a much broader workforce—the people who teach and police, who staff hospitals and hotels, who keep restaurants, transit systems, and visitor economies going. If those service and essential workers cannot afford to live anywhere near the city and are forced into long commutes or out of the region altogether, the city cannot function. This is not a separate social agenda. It is now the core business of economic development.
We are moving from a model that treated social issues as someone else's job to one that makes building stronger communities the central task of economic development. I came to see this most clearly in my recent work in Tulsa. In 2019, the George Kaiser Family Foundation invited me to see its urban revitalization program. I expected the standard playbook—an incubator, a tech initiative, a talent attraction scheme. Instead, my first stop was the historic Greenwood neighborhood, once known as Black Wall Street, and then an early childhood development center. Early childhood development was the foundation's original mission. The economic development initiatives came later and evolved from that guiding star. That experience led me to think of this new model as "community-enhancing economic development": economic development that does not pursue innovation for its own sake, but deliberately strengthens the social foundations that growth depends on.
The same decentralized system that powers economic development also offers part of the answer to our political divides. Deep and growing political polarization is one of the hardest problems facing advanced democracies. In country after country, national politics has hardened into a zero-sum struggle over who controls the center. In the United States, the share of people who say they trust the federal government to do the right thing has fallen from roughly three-quarters in the late 1950s and early 1960s to around 20 percent today, while trust in local government remains the highest of any level of government, with roughly two-thirds of Americans saying they trust their local government to handle local problems. We choose the places we want to live—the mix of policies, economies, cultures, and tax rates that best fit us—and in that sense we vote with our feet, long before we ever step into a voting booth. That ability to sort into communities that match how we want to live is one reason we are still willing to trust local institutions in ways we no longer trust the national government.
The political system keeps nationalizing issues that could be better solved or reconciled locally. Every disagreement is pulled into huge fight at the national level. When more decisions are pushed closer to the ground, communities can pursue different approaches without forcing everyone into the same national model, and conflict can be managed locally instead of constantly escalated. As Fiorello LaGuardia famously put it, there is no Democratic or Republican way to pick up the garbage. Our decentralized economic development system provides a model for how we can live together with our differences.
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Economic development rarely makes headlines. Aside from the occasional spectacle—like the frenzy over Amazon's HQ2 search—most of what economic developers do each day is hidden from view. Beneath the surface are thousands upon thousands of local economic development organizations and community institutions, each experimenting, innovating, and working to create the conditions for lasting prosperity in their own place. Our capacity to innovate and grow comes from that broad base, not from any single firm, institution, government, or policy. This decentralized system of economic development is the fabric that holds it together—the invisible engine that drives innovation and economic growth.
Richard Florida has worked at the intersection of economic development theory, research and practice for four decades. He is a Visiting Distinguished Professor at Vanderbilt University, a University Professor at the University of Toronto, and a Visiting Fellow with the Kresge Foundation. He is the author of The Rise of the Creative Class, Who’s Your City? and The New Urban Crisis and is currently writing a book on how AI and digital technology are reshaping cities and the geography of how we live and work.