End of recession means back to basics for economic development

The global financial crisis that triggered a global recession has also spawned a new era for economic development. That, at least, is the perspective of Ed Blakely and Nancey Green Leigh.

The academics — a professor of urban policy at the University of Sydney, Australia, and a professor of city and regional planning at the Georgia Institute of Technology, respectively — are the authors of “Planning Local Economic Development: Theory and Practice.”

With the recent release of the book’s fourth edition, the two recently sat down with staff at the Federal Reserve Bank of Atlanta to talk about changes in economic development theory and practice.

“Economic development practitioners are entering a new era for certain,” Blakely said. “We’re competing with the world. Federal, state and local policymakers have to be on the same page.”

Blakely said that means communities looking to entice new business development and expansion have to not only address issues of infrastructure on the ground — in the form of developable land, facilities and transportation networks — but also “human infrastructure,” in the form of an available skilled workforce and a livable community.

“In the fourth edition of (the book) we include a discussion on the practice of community economic development that focuses on the neighborhood scale, seeking to improve conditions within a geographic area that is populated by the disadvantaged who are unable to control their socioeconomic direction or resources,” Leigh said.

For Greg Rawls, executive director at Enterprise Flagler, the county’s public/private economic development agency, there are other issues facing economic developers as well.

“Obtaining capital funding is one of the biggest issues now for any company relocating or expanding, and the lack of ability to get it,” he said. “That is the No. 1 complaint.”

Another change that is becoming apparent in the practice of economic development according to Blakely and Leigh is a greater appreciation for nurturing existing businesses in a community. In addition, emerging “green” technologies offers new opportunities for community development efforts.

That is something that is already under way in Flagler County, with local governments making strides in enacting environmentally friendly laws and offering “green” incentives for new and existing businesses.

And that effort is important as economic conditions improve, Rawls said.

“Many companies, local governments and agencies are preparing for the recovery, making sure their communities and companies are prepared for the recovery,” he said. ” I would say there are a lot of indications we have hit the bottom.”

Rawls said the recent recession was different from past economic downturns.

“The boom-bust cycle was a little different because there was more uncertainty at the beginning,” he said. “The uncertainty is becoming more certain.”

Another important factor facing economic development efforts is working against residents, Blakely and Leigh said.

“Sometimes, economic development activity comes as a surprise to the community, and that shouldn’t happen,” Blakely said. “There should be consistent education, training and development of people in the community about economic development options.”

One area which tends to cause confusion and foster negative attitudes about economic development is incentives, specifically tax abatement packages.

For Rawls, the misconception about tax abatements — which many believe involve up-front cash payments to companies looking to expand or relocate — is exacerbated by the sometimes slower pace of projects.

“A lot of people fuss about the delay with the current economic climate,” he said.

But residents need to remember that most economic development incentives are performance based which means if a company receiving an incentive package does not live up to the agreement — such as in job creation — “they don’t get the incentives,” Rawls said.

“Very few of the incentives are any kind of cash up front,” he said.

The final change in economic development that communities face is the need to look beyond traditional industries and sectors, Blakely and Leigh said.

“Today’s local economic developers are not just attracting industries, they’re helping to create new ones,” Blakely said.

That is important given the increasingly global nature of the economy, the potential effects from economic changes around the world. And it also means that local governments have to be out in front of economic development efforts, Blakely and Leigh said.

“There has to be a political will that supports strategic economic development plans that will cushion citizens from the effects of what are now global, not just national, recessions,” Leigh said.

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