Economic development programs play a pivotal role in fostering growth and prosperity within communities. Economic development success – especially for incentive programs – has primarily been measured by job creation and new investment. While these metrics are important, there’s a growing recognition that they only scratch the surface of what truly matters. New metrics are needed to help tell the story of how business incentives support the economic development mission and ensure that economic development activities benefit people, businesses, and places.
Here we present a summary of alternative economic development metrics that we and our partners have identified in our recent work.
People-Based Metrics
- Workforce Development: Beyond just job numbers, it’s essential to track metrics related to workforce development. This can include the number of individuals engaged in training programs, earnings of program participants, credential attainment, measurable skill gains, and job placements and retention.
- Job Quality: It’s no longer sufficient to focus solely on the quantity of jobs. Metrics related to job quality, such as benefits, hours and scheduling, worker voice and autonomy, job security, working conditions, and skill and career advancement, provide a more comprehensive view of employment outcomes.
- Equity and Inclusion: Metrics can assess the inclusivity of programs and participation of underrepresented populations in economic activities. This includes considering the impact on diverse demographics and examining geographic disparities.
- Long-Term Impact: Programs should consider tracking long-term outcomes, such as the percentage of affected households reaching a sustainable income threshold, or other metrics that reflect the program’s contribution to lasting economic well-being.
Place-Based Metrics
- Infrastructure Development: Measuring the creation or renovation of critical infrastructure, such as broadband, helps determine a program’s impact on regional development.
- Regional Governance: Assessing the establishment and effectiveness of regional governance structures, like economic development or workforce coalitions or industry consortia, highlights the program’s ability to foster cooperation and collective action.
- Community Engagement: To ensure programs are relevant to the community, metrics that capture company collaboration with local workforce service and training providers, identify where community voice is incorporated into decision-making processes, and describe participation in community organizations or partnerships with other community groups can be valuable.
Business-Based Metrics
- Innovation and Technology Adoption: Helping businesses adopt new technologies and enter new markets is vital for economic growth. Metrics related to innovation, such as patents and research and development (R&D) activities, participation in accelerator programs, technology collaborations, and new technologies or products developed or commercialized can indicate program impact.
- Business Formation and Growth: Encouraging new business growth and entrepreneurial activity is crucial. Sample metrics that can reflect the ability to foster a dynamic business environment include the number of new businesses, private investment attracted, business revenue growth, number of new markets or customers served, firm survival, and the number of high-growth firms.
- Business Assistance: Helping businesses in a community prepare for the next generation economy remains a critical economic development function Assessing the impact of assistance programs in areas like cybersecurity and technology adoption or participation in industry ecosystem programs and partnerships, can convey important information about the value of many business support programs and indicate industry sustainability and competitiveness.
- Global Competitiveness: Measuring foreign direct investment, exports, and participation in international markets can indicate the program’s contribution to regional global competitiveness.
As economic development programs evolve to address diverse community needs, so should the metrics used to assess their impact. These alternative metrics offer a more comprehensive view of how these programs influence the lives of people, the vitality of businesses, and the prosperity of regions. By embracing a more holistic approach to measurement, economic development programs can better serve their communities and drive sustainable growth and prosperity.
I see your point. The post reminds me of the report issued by IEDC in mid 2014 on metrics.
Just a few years ago economic and community development were separate creatures with separate programs and metrics. EDOs were at the table, but not the driver. Today it appears economic and community development are blended. As a result, it leads to less emphasis on job creation, diversification of an economy, and investment. Investment usually means increasing the tax base.
However, I would add these thoughts. These comments are based on investor EDO programs and not a mix of economic/community development.
1. Most of these measures an EDO cannot determine which they can take credit for vs. others. Subsequently an EDO cannot justify to investors why it exists.
2. A number of these metrics require or are secondary research. This means the timing is what the third party determines, not the EDO determines the timing.
3. Several of these metrics require primary data collection. Surveys are time consuming and require considerable resources.
An example is a state board I had the pleasure of serving for four years. It was for a federal program administered by the state and partners. One partner used its own metrics, which was not accepted by the federal governing agency. It required one staffer (and sometimes a part time staffer) to continually survey private sector recipients of the assistance.
4. EDOs in a formal program of job creation, diversification of of an economy, and investment can immediately report on their progress in achieving thresholds and set metrics. That is primarily because they are the main player in job creation and investment. Hence, report to boards or governing agencies are immediate and a course correction can be swiftly implemented.
I realize this is somewhat old school. But job creation, diversifying an economy, and investment is an important foundation. Economic development is like a short and long term gain. I consider economic development like exercise. Once you stop, you have a significant challenge to get back to your peak.
Thanks for sharing your insights, George. Excellent points.Your comment about resources is spot-on.