Economic Gardening, a strategy that focuses on nurturing second stage growth companies and growing an economy from within, has caught the attention of many economic developers. Over 700 communities have contacted Littleton, Colo., where the concept originated, to learn more about the project.
The program has helped entrepreneurs double the job base in Littleton from 15,000 to 30,000 and triple the retail sales tax from $6 million to $21 million over the past 20 years. At the same time, the population only grew 23 percent over those two decades.
Littleton’s project began with the idea that "economic gardening" was a better approach than "economic hunting." This means growing jobs locally through entrepreneurial activity, rather than recruiting those jobs. The idea was based on research by David Birch at MIT. His research revealed that that the great majority of all new jobs in any local economy were produced by the small, local businesses in the community. While recruiting coups draw major newspaper headlines, they typically represent less than 5 percent of the jobs created in most local economies.
In developing its "economic gardening" project, Littleton's economic development team found that for every successful recruiter who represents a hot office/industrial park in a major metropolitan area, there were literally hundreds of economic developers in rural areas, inner cities, and small towns who struggled without much real success. Similarly, if an outlying area was successful at attracting new industry, it seemed to be a certain type of business activity: the branch plant of industries that competed primarily on low price and thus needed low cost factors of production. Rural towns with cheap land, free buildings, tax abatements and especially low wage labor would "win" these relocating businesses. Experience indicates that these types of expansions stay around as long as costs stayed low. If the standard of living starts to rise, the company pulled up stakes and headed for locations where the costs were even lower, often Third World countries.
Many communities are struggling to regain a sense of control over their future, and see investments in local entrepreneurs as less risky and more certain than continuing to play the high stakes recruiting game. Still, Economic Gardening is not a quick answer to a plant shutting down: These strategies take time to put into place and time to reach a critical mass of growing companies.
The three basic elements of Economic Gardening are:
1. Providing critical information needed by businesses to survive and thrive.
2. Developing and cultivating an infrastructure that goes beyond basic physical infrastructure and includes quality of life, a culture that embraces growth and change, and access to intellectual resources, including qualified and talented employees.
3. Developing connections between businesses and the people and organizations that can help take them to the next level — business associations, universities, roundtable groups, service providers and more.
An entrepreneurial approach to economic development has several advantages. First, cost per job is much less than the $250,000 to $300,000 incentives typical in major relocations. Second, the investment is in the community and its infrastructure; should a business choose to leave, they do not take that investment with them. Third, it is a healthier approach in that a community’s future is no longer tied to the whims of an out of state company. Its future is entirely a function of its own efforts and investments.
Click on the links below for more information on Economic Gardening
A Local Perspective: Littleton’s Economic Gardening Strategy
http://www.nlc.org/articles/articleItems/NCW011110/gibbonslocalperspective.aspx
An Entrepreneurial Approach to Economic Development
www.littletongov.org/bia/economicgardening/
Economic Gardening: Next Generation Applications for a Balanced Portfolio Approach to Economic Growth
http://www.sba.gov/advo/research/sbe_06_ch06.pdf
Florida’s Economic Gardening Program
http://www.growfl.com/
Northeast Florida Economic Gardening Program
http://www.secondstagebusinessdevelopment.com/
When speaking and/or writing about key elements of a recovery from an economic recession, economists frequently assert that small businesses are key components of the recovery process. This assertion seems to fit with the theme of this blog entry. Locally developed businesses emerge to address regional needs for products or services and can be developed with greater speed. Such businesses have roots in the region and, as a result, are less prone to relocation. Though a single small business may have a small number of employees, many small businesses can have a pronounced effect on local employment. For small businesses to have longevity, though, there needs to be a continuing demand for the products or services they provide. Thus, there is a need for advanced research and a sound business plan. If economic gardening is a component in a regional economic development plan, it should be designed to create the conditions, and provide the services needed, to foster development of those businesses. Any regional economic development plan that does not include an economic gardening component should probably be considered incomplete.
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