Economic Development vs. Business Development
Aren’t Economic Development and Business Development the Same Thing?
You might recall your first introduction to economics where distinctions were made between “micro-economics” and “macro-economics.” A common reaction might be to question why there is any difference between the two, but the answers offered are not always clear. Fast forwarding to the world post-recession (2008), it is apparent this confusion not only relates to economics, but also to the difference between “Economic Development” (ED) and “Business Development” (BD). Although both concepts are similar and relate to one another, the differences are significant and worth mentioning.
The Town of Groton focuses on Economic Development (ED) as first priority and Business Development (BD) secondly. Basically, the rationale is if the large picture operates well or effectively, then the smaller picture within the global system often takes care of itself. This is the similar to the common expression, “A rising tide lifts all boats.” Economic Development (ED) is the larger focus interested in supporting factors that build and sustain a strong economy over a long timeframe. Business Development (BD) is a narrower focus with a sphere of influence targeting an individual company and that company’s limits and growth potential over a relatively short timeframe. Both ED and BD are important and maintain a close symbiotic relationship, co-existing at a municipal or regional level.
Some general characteristics of Economic Development (ED) include the following
- larger scale
- revenue to community
- industrial/commercial sectors
- “sense of place”
- marketing a geographic area
- business attraction to an area
- often being driven by local or regional government
Some general characteristics of Business Development (BD) including the following:
- smaller scale
- individualized business revenue/expenses
- private sector focus
- driven by investors/owners
- more emphasis on individual businesses
- targeting market capitalization, competition and strategic business growth, often through sales.
As stated, it is critical to have both Economic Development (ED) and Business Development (BD) working in tandem. Imbalances with either one will impact economic sustainability over time. Given a long term horizon with “ups and downs”, there is generally higher stability in a strong local or regional ED foundation from which BD growth can occur. Even in a strong market there is business variability with some businesses closing, others opening, and many reinventing themselves. Continuously improving upon our ED foundation will ensure the economic cultivation needed to attract and grow businesses and also serve as a magnet for future investments to sustain our economy.
Paige R. Bronk, AICP, Economic and Community Development Manager
Town of Groton, CT