When it comes to economic development, we would be lying if we said that it was fair and equitable across the nation. In fact, Brookings made this fact public in 2020 with its roadmap to inclusive development report. This report distills down into one poignant, unmistakable thought—economic growth in and of itself is not enough to change communities, and we need to explore why that is. This month we are departing from our standard how-to style blog to bring awareness to inclusive economic growth principles, to share why we believe this is a cause all businesspeople should learn more about, and to share ways that Certified Development Companies (CDCs)—like Growth Capital—can play a role in being positive agents of change in this area.
What Is Inclusive Economic Development?
According to Jobs for the Future (JFF) inclusive economic development—in the simplest of terms— is an unwavering commitment to proactively finding ways to disrupt cycles of underemployment, inequitable access to business development resources, and financial insecurity in communities. You might be thinking that these are very obvious needs and that the logical solution is to create more businesses so that there are more jobs and the problem can be solved. While that is indeed a logical answer, it has not proven to be a fruitful one. The United States spends about $80 billion every year in tax incentives that are designed to promote business growth, yet there has been almost no positive impact on job creation. Aside from being costly—often more costly than their worth—these tax incentives merely serve as a starting point. Beyond the incentives, there often is not a plan in place to make sure that business growth actually leads to economic development and community change—it’s like using a bandaid when you really need stitches.
Inclusive Economic Development at the Micro-Level
By prioritizing inclusive economic development you’re really prioritizing a long-term commitment to community change. Rather than focusing on one-time incentives or moment-in-time revitalization projects, we are encouraging you to be part of a highly relational, forward-thinking, way of doing business. Along with educating themselves on inclusionary business building practices, businesspeople of all kinds—owners, financers, etc.—should investigate ways in which economic inequality and inequity exist in their own industries and geographic regions. Using this information, they should seek out opportunities to work toward addressing and changing these deficits—the Organization for Economic Cooperation and Development is a great place for business owners to start!
The Role of CDCs in Inclusive Economic Development
Inclusive economic development is not solely the responsibility of business owners or the government agencies to whom they report. It is also the responsibility of business finance professionals—especially CDCs—who work with those businesses and agencies to get businesses off the ground and keep them running.
- CDCs should have a vision of what inclusive economic development in their region looks like, along with a framework for how their partnership and funding acquisition practices show a commitment to inclusive business development.
- CDCs should promote and advocate for collaboration among businesses in their region—rather than pitting business interests against one another, there should be a relationship-based drive to collaborate for the greater good.
- CDCs should view themselves as developers of communities and not just developers of individual businesses. A growth mindset is necessary for this kind of radical progress.
While these are not particularly groundbreaking practices, they are clearly not common practice—otherwise, the current inequalities in economic development practices would not exist.
Work with Growth Capital
If our approach to inclusive economic development is one that resonates with you and your entrepreneurial or business growth thoughts, we’d love to talk with you! Let’s discuss how we can help you and your small business help create change!