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Home > Liberal Moments(SM)
#21. Principles of Economic Development
by Bob Powell, 12/4/07
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Here's the Liberal Moment (SM) Handout on Principles of Economic Development.

The diagram in this paper is from a 2003 EDC presentation by Rocky Scott, then president of the Colorado Springs EDC. He regularly included this slide in his PowerPoint presentations to educate his audience on the importance of the EDC's emphasis on attracting what are known as "primary" employers and on the importance of recirculating dollars within the community.

The model shows that employers that sell to outside the region bring dollars that are circulated and recirculated. It shows that these dollars eventually go outside the region to purchase goods and services. Healthy economies have enough primary employers to keep dollars in and dollars out in balance. Having companies that purchase locally minimizes dollars going out.

Wal-Mart-like "import companies" are the polar opposite of primary employers. They don't ship goods out to bring dollars in. They send their funds to company headquarters every night so they don't recirculate. Their employees shop there, so much of their income doesn't circulate in the community.

Economic Development Principles:

  • Attract primary employers
  • Attract companies that purchase locally
  • Discourage Wal-Mart-like companies

The Key Thing from the EDC Diagram:
"Without primary employers, we only export our wealth, get poorer."

So, if we know this, why do we let the U.S. trade deficit grow to such enormous proportions? And yet so many maintain it's not a problem?

It's not "trade." It's "transfer of the factors of production" ... building products over there, so we don't have to build them over here using a cost of labor that can support an American's mortgage payment.

And it's not just "low tech" "trade" & jobs; it's "high tech", too. As of Sep 2007, the Advanced Technology Trade balance is -$49B (using the Oct-06 to Sep-07 value); it was +$39B in 1991.

Big Problem!

For more on this, see Principles of Economic and Workforce Development and How a Regional Economy Works.


URL: http://www.exponentialimprovement.com/cms/princeconwork.shtml

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© 2003 Continuous Improvement Associates
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