Time to Throw Away the Old Economic Development Playbook

Author Note

Hrishue Mahalaha, Innovation Economy Partners.

Special thanks to Growth in the Rural Ozarks communities for their local leadership; to Brian Fogle and Alice Wingo at the Community Foundation of the Ozarks for their continued support; and to Greg Burris for helping edit and refine this article.

Correspondence regarding this article should be addressed to Hrishue Mahalaha, Chief Economic Advisor, Innovation Economy Partners, 6500 Summit Circle, Cleveland, OH 44141. Phone: (216) 272-7655. Email: hrishuem@inoecp.com

Abstract

Rural communities in the United States are struggling to establish a sound economic footing in the age of globalization. The author suggests that community leaders should consider a more expansive view on recrafting a community “north star.” Based on work the author has conducted over the previous 5 years in various rural communities in Missouri, the article also outlines a set of key learnings and practical steps that local leaders can take to catalyze positive change.

Question to the reader: What is economic development? If you ask a dozen individuals this question, you are likely to get two dozen responses, ranging from a simple blank expression to detailed technical answers. Some of the technical responses may even include the definition found after a quick Google search: “Economic development is the growth of the standard of living of a nation’s people from a low-income (poor) economy to a high-income (rich) economy. When the local quality of life is improved, there is more economic development.”[1]

What I have often found perplexing is how loosely community leaders, business leaders, and politicians throw around this term—and how economic development is often interpreted as the effort to attract businesses to a community and to create new jobs. If this is, in fact, your interpretation of what economic development is, then the following question is worth considering: Hypothetically, is there a finish line, which, when crossed, allows a community to claim collectively that they have achieved their economic development goal?

What would this finish line look like, and how would a community define it? Perhaps you hold that the goal of economic development is to create new and perhaps good-paying jobs that equal or exceed the local unemployment number. If you agree with this, then I raise one final test question: If a community of 10,000 working-age residents has 50 unemployed and 100 underemployed individuals, then would creating or attracting 200–300 new good-paying jobs be sufficient? Could a community then claim economic-development victory?

I begin by posing these questions because, across the United States, this very pattern has emerged. Communities that have ample “good” jobs available continue to push incentives and tax breaks to attract new businesses. Yet, I challenge this fundamental assumption, which community and economic leaders often make.

Another point of reference. Allow me to highlight a few simple facts to contextualize where America stands in the great global economic development race:

  • Global Gross Domestic Product (GDP) in 2020: $83 trillion
  • U.S. GDP in 2020: $21 trillion

The U.S. GDP is approximately 25% of the world GDP, and this country is winning the economic growth war by a large margin. It is also worth noting that (1) China’s GDP is $15 trillion and (2) the current U.S. population—about 331 million—is approximately 4.25% of the global population (whereas China’s is 1.4 billion).

How can America be so far ahead of the rest of the world in terms of economic productivity and still face deep economic woes—in the form of inequity, homelessness, adult and child poverty, etc.—at the local level in every community, from Silicon Valley to Springfield, Missouri?

Myopic Economic Development vs. Pursuing a Holistic Community Ownership Agenda

I challenge the fundamental assumption that what is broken in communities is the lack of jobs and lack of businesses, that the path to economic prosperity is simply the creation of “better jobs.” Instead, I propose that what is broken in communities is not access to employment and jobs, but rather the enablement of every local citizen to create a path toward personal and communal prosperity. I believe that, rather than needing a fishing job on the trawler, people need the ability to learn how to fish so they can apply their own creativity in pursuit of opportunities of their own making.

I will take my case one step further. What makes humans the most unique creature on this planet? Is it our opposable thumbs? Our communication and language skills? Yes to both, but I argue that what makes humans most unique is that, unlike other creatures, we have the ability to decide who we are going to be, every single day of our life. Dogs, cows, and horses have a very limited ability to shift their capabilities in fundamental ways. Within very finite constraints, other animals can excel in a particular domain; perhaps a horse can learn how to run faster or a dog can learn a new trick or two. Yet, only humans have the ability to learn professional skills, from laying brick to transplanting a living human heart.

Community leaders must recognize this basic fact and begin to develop pathways that enable local citizens to achieve their greatest potential. Leaders must begin to foster a broader view of their whole community. Rather than seeing citizens as merely consumers and workers, they must view the community as an enabler of economic energy that is often lying dormant and underutilized. To tap into this potential energy requires a fundamental shift in thinking, which can then prompt the community to better integrate elements of its talent and economic supply chain together.

What Is the Path Forward for Communities? Where Can Communities Begin Their Journey?

Over the last 5 years, I have had the opportunity to work on a program called Growth in the Rural Ozarks (GRO). This program was designed in conjunction with Rural USDA and the Community Foundation of the Ozarks. The core premise behind this program was to evaluate whether small rural communities in the Ozarks could positively impact the direction of their local communities and economies. Over the course of the last few years, our team, Innovation Economy Partners, has often stumbled; however, we have also learned a tremendous amount about what it takes for communities to progress.

It turns out that there is a lot that communities can do to help unshackle their potential. Though much of this work is not intellectually complicated, communities often need help organizing so that they can better align themselves with a common set of priorities. Often, community leaders desperately seek to change the trajectory of their community but lack the tools to move forward. While there is much that could be discussed regarding where to begin, I would organize our learnings into the following critical “buckets.” Here are our top five lessons learned related to where communities interested in taking greater ownership can begin their journey:

  1. Strong and credible convening leader: The most critical element of the effort is to have a strong leader who can help initiate the process. The desired characteristics of this individual are as follows:
  • Community first: The individual has a strong orientation to helping improve the lives of local citizens.
  • Checking the ego at the door: The individual works well in a team because they know how to compromise and find the middle ground. They recognize that sometimes the best ideas will not be their own, and they are willing to make decisions that sometimes may counter their own beliefs.
  • Listening more and speaking less: We like to think of this as the words-to-value ratio. We want individuals who can use as few words as possible to convey their thoughts.
  • An orientation toward learning: The individual recognizes that the realm of economic and community development can sometimes be a very complicated space. As such, individuals who come to the discussion with a spirit of learning will do quite well in their position. Part of this attribute also involves the ability to reflect on what has been done and the willingness to have a healthy degree of critique, so that learnings can be garnered and improvements implemented.
  • Time commitment: While the amount of time needed to commit to the efforts will vary, the leaders should estimate approximately 2–5 hours a week. There will be more time required in the first 6 months, and then the efforts should stabilize after this initial period.
  1. A non-local Sherpa: While this point may seem self-serving, the reality is that communities where individuals have long histories and longer memories sometimes carry a lot of baggage that prevents conversations from progressing sequentially. The other challenge that communities looking to self-organize will face is that they may not have an individual who is able to challenge a community’s basic assumptions about what is and is not feasible. Long-time residents often take for granted that certain aspects of the community cannot be adjusted. In one community where we have been working, there happens to be a manufacturing plant that creates unpleasant odors at certain times of the day. The first time I experienced the odors, I was truly shocked. However, when I brought this up to the community, they seemed completely at ease with the situation. After all, it had been like this in the community for over a decade and, as such, was not even seen as a pressing issue. Communities need a fresh pair of trained eyes to help them navigate their own inexperience and blind spots.
  2. A team of diverse doers: Communities striving to take control of their destiny must ensure that a handful of critical partners are part of the effort. The five most critical organizations will be the following: city hall, the school district, the chamber of commerce or local economic development organization, philanthropic leaders, and a selection of key business leaders. A number of community resources are embedded within these entities. As a community looks to drive more outcomes, these entities can help bring personnel and resources to ensure that the work gets done. Typically, these entities are also involved extensively with the residents of the community, which makes gathering voices from various pockets of the community much easier.

One final point worth noting is the importance of finding diverse stakeholders. While rural communities tend not to be very ethno-racially diverse, it still helps to have a diversity of individuals with varying backgrounds (e.g., socioeconomic, age, and gender) at the table. Diversity of experiences among the leaders selected to support the community and economic development efforts is helpful, if not critical. This diversity helps bring distinct voices and innovative energy that may get overlooked if the group is too monolithic. For communities striving to create greater local citizen ownership of the future of their town, it is important to include the voices of those who sometimes get left out of such communal discussions.

  1. Importance of investing in the process: Data, objectivity, team building. The next focus should be on developing how the community will work together. What are the facts? What is actually broken? What is fact and what is fiction? How will the community make decisions? What behaviors are acceptable and which are not? Laying some basic groundwork helps the group develop a more stable foundation upon which it can build longer lasting programs.
  2. Generating and communicating wins: Too often, communities are not able to get past the planning and conversation phase. It is crucial that communities think about what goals they are going to set for themselves, how they will communicate these goals to all community members, and how they will recruit more leaders and secure more resources for the movement. Too often, communities do much heavy lifting but then are unable to inform and engage the community succinctly and consistently. This effort is of critical importance if the work is to gain long-term traction in the community. For further reference, we encourage readers to visit the GRO portal and learn how the GRO communities monitor their progress (https://www.GrowOzarks.org).

In conclusion, the future of economic development is no longer a discrete function. Local communities do not need to “create jobs.” Instead, communities need to take ownership of themselves and ensure that economic access is available to all of their members. The future of community and economic development is fluid, and it must help unleash the collective power of all of its citizens.

Is your community ready?

  1. https://www.toppr.com/ask/question/what-is-meant-by-economic-development/ ↑

Author

Hrishue Mahalaha is the Chief Economic Advisor at Innovation Economy Partners. Hrishue supports an array of domestic clients and helps define, assess and deliver solutions that help improve and develop economies for communities across the country. Hrishue has more than 14 years of experience working with the management consulting firm Accenture.  During this time, Hrishue worked closely with a variety of domestic and international, public, private and governmental organizations.  Hrishue also has launched a variety of entrepreneurial ventures that spanned from medical devices to a restaurant. Hrishue holds an MBA from Columbia University and a B.A. in Psychology and B.S. Business Management from Case Western Reserve University. Hrishue lives in Cleveland with his wife and three children.