Functions of an Economic Development Corporation
An economic development corporation is an organization whose mission is to promote economic development within a specific geographical area. The function of these entities is to assist businesses within their respective geographical area to get started, and also to succeed and grow, helping to develop economic growth.
More often than not, any individual economic development corporation will operate within one individual city as their respective region. Economic development corporations and agencies are a part of every state government and many local-level governments as well. Economic development corporations work very similarly to Chambers of Commerce, often working in a complementary capacity. These corporations are quite common in the United States, and are typically structured as a 501(c)(3) non-profit. Occasionally, economic development corporations may also be a branch of a government division that acts in the same way, instead of being an official 501(c)(3).
Many of the services that economic development corporations develop include but aren’t limited to:
- Providing advice, guidance and resources for people starting up new businesses within the corporation’s territory
- Offering financial assistance to businesses with grants, loans and tax-exempt bonds
- Assistance with site selection and determining business locations within a community
- Recruitment of new employees for businesses and providing assistance with job training
These services provide invaluable resources for business owners, many of whom would not have executed in starting up their business without such guidance. Many of the services can provide a “safety net” for business owners to ensure that their businesses are operating in ways that can lead to additional profits, which will allow for growth in output and employment.
Part of the function of an economic development corporation is to establish an economic base for their respective region. By establishing an economic base, an economic development corporation is able to analyze the data collected and determine which areas need particular focus in order to bring more money into a particular region. The focus is to increase exports and employment. In this case, exports are not viewed as necessarily international, but simply products or services which can be consumed by customers outside of a local region, which even at the level of small communities, is important for bringing new money into an economy. Without exports, an economy may only recycle the same money over and over again, which causes no growth. Once an economic base is established and certain industries become a focus for economic development, working to attract related businesses is one smart way to increase a community’s employment, which also increases a company’s output, leading to higher exports. Many industries, such as manufacturing, tourism, technology and artisanship, lead to exports more easily than others. Playing to a community’s strengths is what is important. It is also important to decide whether to seek to attract existing businesses looking to expand into new locations or foster entrepreneurship in local industry professionals who may end up forming new companies. With these tools and with a helpful array of services, economic development corporations work to keep the economy of their region growing year after year.