January 23, 2017

What’s the Difference Between Growth and Local Development?

TigonzalesBy Teresa Irene Gonzales

In my Community (Economic) Development course, students are often confused by the differences between economic growth, local economic development, and community economic development. Because these terms help to explain similar process of development, they can seem like the same thing. As with most things, these terms are in flux and scholars often disagree about the definitions, adding to the confusion. Understanding the differences between these terms helps us analyze the impact of various economic development plans on residents and the environment.

Early definitions of economic development focus on growth as the standard. According to Malizia & Feser, and Wolman & Spitzley, we can understand growth as an increase to outputs (per capita income, jobs, a country’s gross domestic product, et cetera). This form of economic development focuses on increasing national wealth through improvements to the local business climate. Some examples of this approach include tax subsidies to keep or attract businesses to a certain locale. The idea is that a friendly business climate will lead to more jobs, increase competition, attract more businesses, and in turn yield greater wealth for the area. Some examples include the Boeing deal in Chicago, and the more recent Carrier deal in Indiana.

While some politicians and economic development planners are focused on development as growth, others use a local economic development (LED) approach. LED is a place-based process that oftentimes focuses on land or physical (re)development projects. Unlike growth, it is not only focused on increasing outputs, but also in transforming or changing local conditions. Projects might include developing affordable housing units, creating a local park on a brown field site, or working with residents to purchase empty and abandoned lots in their neighborhoods at a discounted rate.

Both economic growth and LED can lead to increases in overall income and jobs. However, critics of this approach argue that these approaches may also increase pollution (soil, air, noise, water, traffic congestion), do not guarantee higher wages for residents (more jobs does not always equal higher incomes), can decrease residents’ overall quality of life, and may overly benefit elites.

Critics of LED further claim that politicians often pursue projects that are good for re-election, rather than what is most beneficial, long-term, for their constituents.

In Justice and the American Metropolis, Susan S. Fainstein highlights the ways that local economic development strategies have historically excluded and further marginalized communities of color and poor residents from economic gains. We see this most astutely with neighborhood demolition campaigns (otherwise known as slum clearance or urban renewal). In these cases, marginalized populations may lose access to affordable housing, good schools, social networks, and may experience increased social and economic isolation. According to Fainstein and others, a strong civil society and grassroots sector are necessary to ensure that development projects benefit all residents equitably.

For those concerned with economic development as a redistributive process, the growth and LED models are often lacking. Recent scholarship argues for a more comprehensive and holistic approach to local economic development that privileges residents (see my previous post here) and is sustainable.

This has come to be known as community economic development/community development (CED). Rather than focusing on increases to outputs, or transformation to physical landscapes and structures, CED benefits the community as a whole. It is about development to land, physical structures, the local economy(ies), and the people who reside in the area. Furthermore, CED is focused on sustainable development that reduces negative environmental impacts. This model views residents as the owners of the developmental potential of the area and as benefactors of any net benefits. The Community Development Society (a group of academics and practitioners) uses several “Principles of Good Practice” that promote the inclusion, empowerment, and leadership development of all residents in their approaches to CED.

According to William H. Simon, CED provides:

  1. Resident Benefits

This may be in the form of affordable housing, increased services and amenities, jobs and other business opportunities, and public goods such as parks or increased tax revenue.

  1. Linkages to other local activities

Simon argues that this form of development will foster a mix of commercial enterprises where each one can rely on other local businesses for resources. One example includes a small restaurant that employs local residents, trains youth from the local school in culinary arts, acquires its produce from a neighborhood-based farmer’s market, banks at a local community bank, and has its menus printed from a local printer.

Under CED local networking for resources is seen as a form of local self-sufficiency. Most businesses are locally owned and/or locally staffed. When residents and/or businesses shop outside of the community they are leaking dollars to other areas.

  1. Minimizes negative environmental effects

Simon mentions that it is not enough to only look at the economic gains when attempting to entice a corporation to open in your community. As a community, we also have to think about the environmental effects of these decisions.

  1. Reinforces a stable independent community structure

Simon argues that CED increases local ownership of housing, public space, and business. This also extends to renters who may not own land in the neighborhood but definitely own a stake in shaping any community outcomes.

Critics of CED argue that residents are generally not trained in planning processes, and can be easily swayed by charismatic politicians and technocrats to vote against their best interests. Others acknowledge the benefits of CED, but claim that it is difficult to implement due to political and economic constraints, particularly in poor areas (both urban and rural).

In DIÁLOGOS: Placemaking in Latino Communities, a chapter called, “Planning Against Displacement,” highlights how the Mission Anti-displacement Coalition (MAC), a coalition of local nonprofits in the Mission District of San Francisco were able to implement some of the methods of CED to resist displacement. This included educating residents on zoning and land-use practices, leadership development of locals, the creation of evaluation metrics, the focus on resident ownership of land, and the creation of local land trusts.

All of these approaches to development provide benefits and challenges. It is not about deciding which method is good or bad, but rather thinking about the specific needs and assets of a particular community, and then thinking through the outcomes and impact of each method. Most places require a combination of economic growth and economic development. And, particularly in urban planning, practitioners are working on ways to more comprehensively address all aspects of development in future plans. It is important to keep in mind that no one method will fix everything.


I know that I have trouble on economic growth and economic development because I never heard those terms before and I don't know what my future plans are going to be.

Very good article.

good work

nice work

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