by Norman Halls, contributor
At present, national and state governments are stepping up the process of changing economic accountability to the local level. “Knowledge gained from local economic analysis will help communities to control growth and development in ways that benefit their social, political and economic welfare. Supporting responsible local businesses is imperative. Local firms circulate money in the community.” by H. Gunn at Cornell. The effective cumulative impact of money at work in the community-is a well-known phenomenon. In addition, local firms are embedded in the social fabric of the community and are not apt to leave the area for lower-wage parts of the country, or world.
Retaining locally produced capital and increasing recirculation of money in the local economy are two key economic development strategies. The reason local government should be concerned about regional businesses is taxes that will be gained from these companies. When a business moves, closes or downsize the region loses its income.
“Local governments do have avenues open to them to become direct competitors in their economic development process. Controlling growth is one such avenue. Few people have difficulty thinking of reasons why at least some forms of economic growth should be controlled in their community. A distinction must be made between economic growth and economic development. Growth implies more of the same. Development implies changing relationships between people and their environment, changing institutions, and even changing the criteria for what is considered good or bad in life.” by H. Gunn at Cornell.
Local communities must develop more of a proactive awareness at an earlier stage of growth. Zoning, greenbelts, and impact fees are all used by local governments to constrain growth. Economic Development Commission inventiveness, e.g. attempts to keep BOX STORE or a mall from locating in a community and other business that may take space without any employees. The point is to be proactive, to plan for the future so that growth can be channeled to the greatest community benefit.
“The tax system funds routine expenditures of the public sector, but how does a community build new foundations for development? Some have managed to shift assets into the social and public domain in an era when privatization has been considered efficient and wise.” by H. Gunn at Cornell.
Economically successful communities will hold competitive and comparative advantages over other economies, though a single community rarely specializes in a particular industry. This means that the community’s economy will be made of various industries that will have different advantages and disadvantages in the global marketplace.
“A strong majority of executives say business must proactively and regularly engage with government, even though many find that dealing with government is often frustrating and consider government officials to be uninformed about the economics of their industries. Yet companies aren’t doing as much to counter those problems as they could; for example, only a third say their companies are “extremely” or “very effective” at building strong relationships with key government stakeholders. In fact, despite the variety of practices that can help a company successfully manage its relationship with government; a majority of companies aren’t effective at even one of them.” by Andre Dua at McKinsey.
This is crucial for the creation and retention of good jobs and a good standard of living for working families. We have to think in the right direction. We must collaborate on this together. There are spaces available for highly talented people that are available for businesses to start-up. Ultimately, what many employees want most of all is clarity about their future with the company. Creating that clarity requires significant hands-on effort from employers, including the ongoing work of tracking progress so that companies can quickly intervene when problems arise. Successful businesses in communities will hold competitive and comparative advantages over other economies..
