Justifying Economic Development

Recently I semi-promised to track Mayor Doug Wilder’s budget cutting proposals in the City of Richmond. One of the items Wilder proposed to cut was the city’s participation in The Greater Richmond Partnership (GRP), a regional economic development group that includes Chesterfield, Hanover, and Henrico counties. The annual savings to the city would be $390,000.

Before Wilder’s formal budget submission, some in Chesterfield County also proposed withdrawing financial support. The GRP has just released their response to Chesterfield. Snoopy over at River City Rapids says the response is a slam-dunk justification of the value of the GRP: $195 returned for every dollar Chesterfield spent.

Not so fast. The GRP response is a sharp, glossy document, as befits a first-class organization. Such an impressive format lends credence to its main point: “All told, in ten years in Chesterfield, GRP has been involved in bringing 71 companies, 6,700 jobs, and $651 million in taxable capital investment.”

What does “been involved” really mean? Time and again, the GRP says it “helped” or “assisted” in all this economic development activity. Just what was the nature of all this “help” and “assistance?” The GRP doesn’t say. There are no examples of what the “help” was for any individual project, so it’s hard for anyone outside the insular world of economic development to judge if the “help” could have been provided at a lesser cost. The awards touted by the GRP were mostly bestowed by economic development organizations; the accolades from economic development consultants with a vested interested in praising the GRP.

My point is that if the GRP provides a similar document to the City of Richmond in an effort to retain city funding, I would expect the wily Wilder and his sidekick Paul Goldman to be a little more incredulous than Snoopy. There’s a case to be made for all Richmond localities to continue providing financial support, but it needs to be more than “good things happened, we helped.”

The larger question, for the state as a whole, is this: “Would economic development occur without economic developers?”


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  1. Ray Hyde Avatar

    I know of four cases where people wnted to start a business in Marshall ( A Fauquier county “service district” with unpalatable water, insufficient growth area, and inadequate sewer.)

    In each case after surveying the political climate, the vendors went elsewhere.

  2. Jim Bacon Avatar
    Jim Bacon

    Will raises excellent questions that go to the heart of the debate over economic development. What do economic development organizations actually accomplish? Would economic development occur without them?

    Yes, economic development would occur without them — but often it would occur somewhere else. Site selection consultants typically generate a short list of likely locales, and then hone in on them for detailed examination. Economic development organizations perform several key functions: They (a) gather and disseminate data that site selection consultants require to make location decisions; (b) build awareness of their community as a desirable location, so the community will make the short list of a wider array of prospects; (c) introduce prospects to the community; and (d) mobilize community resources to help make the investment happen.

    I think those are legitimate functions. (Full disclosure: The Greater Richmond Partnership is one of my newsletter clients.)

    I also think the nature of economic development is changing, and that economic developers need to focus more on recruiting human capital and stimulating home-grown entrepreneurship. The Partnership, incidentally, is miles ahead of other economic development organizations, particularly those in the Southeastern U.S., in focusing on human capital issues. Witness the Partnership’s investment in WORK magazine, aimed as much at individuals thinking of relocating to the Richmond region as at businesses.

  3. The Richmond report is coming out Friday.

    Wilder surely knows to what degree they helped with the PM project b/c they were both involved.

    That does not mean Wilder will accept what the GRP says in its report, but he knows to some degree their helpfulness.

    Chesterfield may follow up with questions like yours, but there is support for it on the Board, while practically every item in Richmond’s budget is getting a look regardless.

  4. I think the GRP is at an interesting crossroads for a couple of reasons.

    I think they do understand that “human capitol”, aka the makeup and happiness of the citizenry, does matter.
    But at the same time, it finds itself being forced to back white elephant, corporate welfare schemes like the Convention Center, the VaPAF, and the Broad St. CDA that ultimately hurt small businesses and citizens.

    The citizens are noticing and Wilder is thankfully picking up on that.

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