CED for the 21st Century

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CED for the 21st Century

• PRESENTED BY DAVID L. DARLING
• CD ECONOMIST
• DEPARTMENT OF
• AGRICULTURAL ECONOMICS
• KANSAS STATE UNIVERSITY
• MANHATTAN, KANSAS
• Spring 2004

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CED for the 21st CenturyA SYNTHESIS OF CONCEPTS

• Today we will
• Define Community Economic Development (CED) in
  the 21st century
• Establish six CED goals worth pursuing
• Identify community functions and six basic forms
  of capital used in CED
• Connect the six forms of capital to five basic
  economic development strategies
• Study how a small, open economy works
• Introduce the Total Development Paradigm
• Learn a new tool designed for use in CED
  initiatives a change model

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Community Economic Development

• Vision charged civic process
• Focuses attention on a set of key issues that
  when resolved will improve
• Short-term economic health vitality
• Medium and long-term economic health vitality
• Made possible when local assets are effectively
  used and then matched with outside resources

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Six Alternative Approaches to Community
Growth and Development

• Let the market decide
• Let big governments rule
• Let the local elite rule
• Rely on inside or outside technical assistance
• Create a capacity building process guided by
  community citizens and assisted by outside
  educators and technical assistants.

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Goals Chart
Stability
Growth
Development
Quality of Life
Building Trust
Social
Stewardship
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Six Forms of Capital

• A comprehensive approach to community
  economic development is well planned with
  adequate resources. These assets are grouped
  into six forms of capital.
• They are
• Human Capital
• Social Capital
• Political Capital
• Financial Capital
• Engineered Capital
• Natural Capital

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• Human Capital is the knowledge and skills used in
  the production process. It includes the skills of
  production workers, marketing officers, financial
  managers, and organizational leaders. It includes
  the work ethic, attitudes, and values of the work
  force.
• Social Capital is the trust and working
  relationships in a community, state and nation.
• Political Capital is the access to and influence
  over state and federal policies and resources.
• Financial Capital comes in different forms to pay
  for tasks such as starting a business, expanding
  a business, or building a school.
• Natural Capital is the endowments of nature.

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Six Forms of Capital (Cont.)

• Engineered Capital is the collection of human
  engineered things not already covered as human,
  social, or financial capital. Hard-engineered
  capital includes physical infrastructure such as
  fiber optic cable and soft- engineered capital
  includes the organizational and institutional
  infra-structure as well as the governance of
  these two.

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Five Functions of a Community

• Living
• - houses and neighborhoods
• Economic
• - retail , farming, and manufacturing activity
• Government
• - police and fire protection
• Services
• - United Way and other charitable organizations
• Social Cultural

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Forms of
Capital Community Human
Financial Engineered Natural Social
Functions

Political LivingEconomicGovernmentSe
rvice Social Cultural
HEALTHY, SUSTAINABLE AND PROGRESSIVE COMMUNITIES
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THE ECONOMIC TERMS

• Definition Economic Development is a process
  of accumulating assets to support and enhance the
  production of goods and services that improve the
  communitys quality of life.
• Strategies The five basic KSU strategies are
  ranked from top to bottom. Retention of existing
  business and industry and other employers is the
  most import one.
• Resources The six basic sources are the types
  of assets used by the private, public, and not
  for profit sectors as inputs.
• Challenges
• 1. Identify the current economic strategies. Is
  the local economic development program using all
  five strategies?
• 2. Map area assets. Then discover strengths and
  weaknesses?

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Seven Leaks in the Barrel

• Outside Investments
• Estate Settlements
• Educated Youth
• Wasted Resources
• Taxes Social Security
• Out shopping
• Imports

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Dynamic Model

• Production-Combining inputs to add value to local
  outputs
• Consumption-Buying local and imported products.
• Investment-Recycling wealth, accumulated
  locally, by reinvesting it.

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Formula of Income Multiplier (IM)

• IM 1 / (1- (PCL PSY))
• PCL The proportion of new, after tax household
  income, that is spend locally. This can range
  from 0.3 to 0.90 in Kansas communities.
• PSY The proportion of household income spent
  locally which remains in the areas economy to
  support other households. This usually ranges
  from 0.25 to 0.65 for non-metropolitan
  communities.

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Example of Income Multiplier

• When the proportion of households spent locally
  (PCL) is 80, and when the proportion of an
  earned dollars that becomes income to local
  households (PSY) is 50, then income multiplier
  (IM)
• IM 1 / (1- (0.8 0.5))
• IM 1.66

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Three Avenues of Support

• EARN IT
• CAPTURE IT
• MAKE IT

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ECONOMIC DEVELOPMENT PYRAMID
BUILD A FIRM FOUNDATION THAT WILL SUPPORT A
SUCCESSFUL ECONOMY
ATTRACTION
CAPTURE DOLLARS
LOCAL LINKAGES
FIRM CREATION
RETENTION EXPANSION
BUSINESS ENVIRONMENT
BUILDING EFFECTIVE PARTNERSHIPS
COMBINE SUPERIOR LEADERSHIP WITH EFFICIENT LOCAL
GOVERNMENT
START AT THE BOTTOM.
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Total Development Paradigm
The Layer Cake Model
Economic Base
Agriculture
Forestry


Manufacturing
Tourism Retirees


Mining
Call Centers


Industrial
Development
Physical Infrastructure
Economic Development
Major Forces and Trends

Water Sewer

Telecommunications

Roads Streets

Inter
-
Modal Facilities

Utilities

Waste Recycling Disposal

Industrial Parks
Support Systems

Health Care

Recreation and Parks
Community Development

Retail Sector

Community Foundations
Housing
Economic Dev. Org.


Education
Financial Sector


Human and Social Capital

Attitudes Values

Family Stability

Work Ethic

Knowledge Skills

Community Spirit

Social Trust Cohesion

Churches

Civic Youth Clubs
Leadership Infrastructure

Strategic Vision

Leadership Training

Empowering Others

Community Dev. Org.

Leadership Skills

Knowledge of Resources

Local Government
Major Trends
Environment and Natural Resources
SourceSource Mark Peterson, University of
Arkansas Extension Service, Little Rock, AR.k
Peterson Extension Sp
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Economic DevelopmentTen reasons why we should
develop and implement an economic development
plan.

• So our children and grandchildren have a chance
  for a future nearby.
• So our businesses can have a larger pool of
  people to serve.
• So our agricultural producers can be served
  locally.
• To make our community better. New people and new
  dollars add resources to build the community.

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Economic Development Cont

• To capitalize on our educational investments
  rather than some distant place reaping the
  benefits.
• To utilize our infrastructure investments such as
  water, sewer, streets, roads, buildings and
  homes.
• To keep our relatives and friends in the
  community.
• To take care of our own population base.
• To develop a broad-based pool of informed
  leaders.
• To create a guide for our future.
• Source Gary Warren, Aurora, NE.

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Building a Middle Class
HIGH
HIGH
Benefactor
Key Stakeholder
Contributor
Investor
Employer
Independent
Debt Free
Self Employed
Debtor
Employee
Dependent
Impoverished
Jobless
LOW
LOW
Source David L. Darling K-State Research and
Extension, February 2003
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A Good Community

• A definition of a good community is a place where
  families can easily meet their lower order
  (basic) needs and have the time and opportunity
  to pursue higher order ones such as self
  actualization.

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Abraham Maslows Hierarchy of Needs
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Sustaining Progress Model

• P A V P R B
• where
• A stands for attitudes
• V stands for a vision
• P stands for the plan
• R stands for the resources
• B stands for benefits

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Community Economic DevelopmentSummary

• Vision charged civic process
• Focuses attention on a set of key issues that
  when resolved will improve
• Short-term economic health vitality
• Medium and long-term economic health vitality
• Made possible when local assets are effectively
  used and then matched with outside resources