Through three surveys conducted over the past decade, changes in economic development strategies employed by localities have been observed.
Academic research has identified three waves of economic development.
The first wave strategies look outward for economic growth is characterized by a focus on business attraction through financial incentives and infrastructure investment.
Second-wave development strategies seek to retain and expand existing firms.
Third-wave strategies focus on strategies such as quality of life and environmental concerns that are more commonly referred to as “community development” (including sustainability initiatives) and small business development.
In comparing the use of these practices between 1994 and 2004 it was discovered that local governments progress through these stages in an evolutionary manner - even while still relying on strategies from all three waves.
- Municipalities are the primary entity responsible for local economic development
- Chambers of commerce experienced a considerable decrease in their recognition as economic development partners.
- Less than half of municipalities have a written economic development plan
- Municipalities are feeling increased competitive pressure from abroad
- Distressed areas face the most competition because they compete for the lowest skilled jobs.
- Availability and cost of land, along with a lack of capital, are among the top barriers to economic development.