Economic Gardening Helps Communities Grow Their Own Jobs: "Economic Gardening" Is an Innovative, Entrepreneur-Based Development Strategy That Has Begun Gaining Attention Nationwide

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Often contrasted with "economic hunting" strategies that aim to recruit development opportunities from outside the community, economic gardening is designed to "grow your own" jobs through entrepreneurial activity within the community.

Economic development plans typically include four key tactics--business recruitment; retention; expansion; and entrepreneurial development. As economic developers in cities and towns across the country compete fiercely to implement policies that are both attractive to industry and promote sustainable job growth, emphasis on entrepreneurship is growing.

Traditional approaches to economic development have focused primarily on the first three development tactics and have relied on tax incentives and other financial benefits to strengthen local economies. Increasingly, urban and rural communities, and even states, are starting to shift their economic development focus to the fourth element--entrepreneurial development.

New perspectives in economic development policy

What is leading to this shift in economic development policy? First, a growing number of communities, particularly smaller cities and rural towns, have realized that investment of their resources in traditional economic development strategies has not produced strong results. Because only a limited number of large economic development projects materialize each year, only a handful of communities will be successful in winning these deals, regardless of the resources they commit.

Policymakers are also starting to question the use of incentives as a primary strategy for economic development because they recognize that large businesses' commitments to states, regions or communities are increasingly fluid. Incentives may not be sufficient to guarantee long-term investment in a community, and communities are concerned that once incentives expire, companies will leave in pursuit of a better deal elsewhere.

Finally, a growing body of research suggests that small and local businesses are important drivers of economic growth in communities. Encouraging the growth of more small businesses may lead to greater job creation than trying to lure one or two large corporations. A research study recently completed by the Federal Reserve Bank of Kansas City found that between 1990 and 2003, companies employing fewer than 20 employees accounted for 79.5 percent of the net new jobs in the U.S. (1)

Most communities will probably not abandon the traditional economic development approach completely, but many are realizing the need for a more balanced economic development portfolio. As a result, increasing numbers of economic development professionals are looking at how their communities can create an environment that supports entrepreneurs and small business development. Each community needs an economic development plan that leverages their unique strengths. Large cities may be able to compete for global corporations and capital, but smaller communities may find that concentrating on local businesses is more productive.

Economic gardening takes root

In the wake of this paradigm shift, the concept of economic gardening has begun taking root. The idea was first developed in 1989 by the City of Littleton, Colorado, then struggling with the loss of a major employer. Local officials decided they no longer wanted to tie their economic future to outside corporations; rather they wanted to shift all of their resources to supporting local businesses to develop jobs.

Research by M.I.T.'s David Birch helped fuel the development of economic gardening. He found that small, high-growth companies, also known as "gazelles," were critical for job creation. While major recruiting successes were more likely to capture public attention, it was these smaller companies that were creating the jobs. (2)

Interest in economic gardening started gaining strength outside Littleton by the late 1990s. …