Strategic Planning For Economic Development

By VIRGINIA L. WOLF
Economic Development Specialist

Midwest Research Institute (MRI) has assisted communities across the United States in setting up their own economic development programs. MRI's experience has shown that the key factors of a successful economic development program are well-defined goals and objectives, a focused marketing effort, and people who can make the best use of available financial and technical assistance programs.

Although mid-size towns and metropolitan areas have been involved in this process for many years and are competing effectively with their counterpart communities across the nation, many smaller communities and rural areas have just recently become involved in economic development efforts. Largely as a result of the changing role of agriculture, many of these smaller communities have chosen to promote their area's economic development as a way to expand or diversify the local economic base. This article discusses the process that should be followed by a community wishing to start an economic development program. Based on MRI's long experience, the process is essentially the same, regardless of the size of the community.

The first step in the process is to establish an organization to lead the effort. To be effective, the organization must be broad based so as to have the best possible financial and resource support. It must include representatives of the following groups: chamber of commerce, civic groups, educational institutions, elected officials, existing industry, financial institutions, labor, media, retail sector, utilities, and interested citizens.

The first task of this organization will be to establish goals and objectives. Matters to consider are:

• What does the group want for the community?

• Are some forms of economic activity favored over others?

• Are some types of industry not wanted in the community?

This organization must set a clear direction, and a group which is represented by all sectors is in the best position to provide this direction.

The next step in the process is to conduct a resource assessment which identifies community factors that either positively or adversely affect industrial development. These factors include the existing industrial base, industrial sites and buildings, labor force, population, transportation, and utilities. The material developed during this phase of the analysis can be used in preparing promotional materials and documents relative to prospect marketing. Among the questions to be answered are the following:

• What is the current profile of the community's population and labor force?

• What industries currently exist in the community; and historically, how have they grown or declined?

• What is currently being done to promote the central business district?

• Are there specific resources, such as tourism or education, which make the community particularly attractive?

• What does the community have to offer in terms of industrial sites and buildings?

• Does the existing labor force match the needs of prospective business?

• Can the city's physical infrastructure meet the requirements of new industry?

• What were the successes and failures of past economic development programs?

If a community already has organizations formed for economic development purposes, they should be reviewed. Usually, in both large and small communities there are too many organizations to be effective because of their overlapping purposes and memberships. The goals and objectives of each existing organization should be reviewed and, if possible, a single organization formed to promote industrial development. A single organization whose sole purpose it is to promote industrial development will more likely make the best use of community resources.

Once a community has assessed its resources for promoting economic development, the next step is to identify those industries which show the best potential for locating in the community. This identification process, called a target industry analysis, provides a focus to marketing efforts and makes the best use of community resources. At a minimum, a community should examine its own industrial base, the industries of the county in which it is located, and those of surrounding counties. Personal calls should be made on major area manufacturers to ascertain their expansion plans, the location of their supplier industries, and industries which use their finished products. A list of the state's manufacturers who are new or who have expanded should also be reviewed to determine the types of manufacturers who are choosing to locate in the state.

MRI recently conducted a target industry analysis for the Missouri Division of Community and Economic Development. The end result of this study was the identification of industries best suited for locating in metropolitan, in mid-size, and in rural areas. This information should provide the basis for a Missouri community involved in targeting efforts.

The last step that a community takes in promoting its economic development is to formulate a develop-

August 1986 / Illinois Municipal Review / Page 17

ment plan. This plan should include, at a minimum, strategies, identification of person or groups responsible for implementation, and a timetable for implementation. Some general areas to be included in the plan are:

• Marketing: A marketing program must be focused and consistent. It does not have to be elaborate. The use of local resources such as academic institutions, newspapers, or existing industry can often help provide technical assistance in the development of marketing materials.

• Industry Retention: An average of about 80 percent of all economic growth across the United States is attributed to the expansion of existing industry. Communities are only recently starting to put resources into this important activity. An active and effective retention program is not only beneficial to keeping existing business and industry in the local area, but also it serves as an attractor for generating new industry. These new industries will perceive the community as pro-industry.

• Local Incentives Plan: Local incentives include the latitude the community has in using state development incentives such as property tax exemption or industrial revenue bonds. Also, a community can utilize special arrangements on land, buildings, and utilities. It is important to have an established plan so that when the community representative approaches a prospect, the incentives that are available can be discussed at initial meetings.

• Technical Assistance: Many communities, both large and small, tend to isolate themselves from resources provided by state economic development organizations, utilities, and railroads. This is a mistake since these organizations are in daily contact with prospects and can serve as an important resource for referrals.

This article has outlined an approach to the structuring of an effective industrial development program that MRI has found to be highly effective. Attracting development to a community is a time-consuming process which requires considerable support from the entire community and active involvement and commitment from local leaders. If the proper organizational structure is in place, and it includes people and organizations that are committed to the program's implementation, a well-designed program can succeed. A focused, coordinated industrial development program can result in considerable economic gain for the smaller community that is willing to pull together. •

Page 18 / Illinois Municipal Review / August 1986