Economic Development > Lake Dallas Economic Development Corporation

Principles of Economic Development

Economic Development is often a misunderstood subject of which people know very little about. Here we aim to answer the questions most often asked about economic development.

What is economic development?

Economic Development usually takes three forms:
• Business attraction
• Business retention and expansion
• Business creation

In the City of Lake Dallas, business attraction, retention and creation is carried out by the Lake Dallas Economic Development Corporation.

All three forms of economic development aim to create new primary jobs that pay more than the prevailing wage, increase the amount of income coming into the community from outside its market area, and create greater capital investment in the community. The strategy is to achieve this in a number of diversified industries.

Why do we do economic development?

Economic development has three main purposes:

• To give a greater number of people greater access to wealth through personal economic growth
• To increase the tax base of communities in order to provide higher quality public services to citizens
• To diversify the economic base and thereby cushion the community against economic shocks

What are primary jobs?

"Primary," or as they are sometimes called "export income," jobs are defined as jobs which produce goods and services in excess of what can be consumed in the local marketplace. This is what creates the flow of new wealth into the community. An example of a business sector which does not create export income is the retail sector. This is because the shopping centers located within an area are typically spending money that has already been "created" by primary employers in that area. It is not "new money." However, the definition of "primary or export income" employment changes depending on the definition of the market.

What are the indirect impacts of new job creation?

As a result of creating new jobs, the demand for goods and services generated by the primary employer is increased and "indirect" or "spin-off" jobs are created. These jobs do not create wealth. They are the product of "wealth" created by primary employment. Generally, they are jobs like retailing, lawyers, doctors, government workers, non-profit employment, etc. These occupations provide services to primary jobs. They may also include jobs that meet the required "input" needs of primary jobs.

What is a multiplier?

Spin-off or indirect jobs are typically associated with the term "multiplier." The term "multiplier" comes from a series of economic calculations that estimates the number of jobs required to meet the needs of one primary job. The larger the multiplier, the greater the economic impact of the primary job. Two things determine the size of the multiplier: average wage paid to the primary employee and the amount and cost of "inputs" required for the primary employee to accomplish his or her work.

Retail is seldom a good primary employer, in terms of wealth creation, because of the old adage, "retail follows rooftops." In other words, retail must follow customers and those customers are created through primary employment’s wealth generating ability.

A mature regional economy that offers a wide array of goods and services for purchase by the primary job will also have a larger multiplier than a smaller market. In other words, a diverse economy "holds on" to the primary worker’s income longer. In an immature market the dollar exits more quickly, thereby reducing the multiplier lacking many of the goods and services demanded by the primary job.

Who are other organizations that market Lake Dallas and Texas for development?

How do we attract new businesses?

Attraction activities, performed in Lake Dallas by the Lake Dallas Economic Development Corporation, usually start with an analysis of targeted industries or "clusters." This process analyzes the growing industrial segments of the national economy and compares these growth sectors with the local community’s industrial base. It examines why these sectors are growing or not growing in the local community. It determines reasons why some segments are not suited for the local economy (too distant from markets, workforce shortages, etc.) and what gaps might be filled to make the local community more desirable to these companies. It looks at companies that are a "good fit" for the community and that can diversify the local economic base.

Business attraction programs then develop an advertising and marketing effort, usually a combination of the following:

• Website development
• Print advertising
• Recruitment trips
• Media or CD production
• Economic briefings
• Site selection conference attendance
• Trade show attendance
• Public and media relations

Some marketing methods are more effective than others. The combination used also depends upon the available budget. The marketing program aims to generate interest from companies in relocating to the community. The economic development organization then needs to be well positioned to provide information and assistance to those companies.

Why do companies choose one location over another?

There are a multitude of reasons ranging from reducing operating costs, gaining better access to skilled labor, establishing a presence in a particular time zone, diversifying risk, or the owner may want to enjoy a better quality of life. Every industry, company and corporate executive is different. It is the role of an economic developer to understand a company’s needs and to portray the area in a positive light. This is most effectively done by providing detailed and accurate data about the community including comparisons to competing areas. Sometimes the information speaks for itself and the company has an easy decision to make. Other times the data may be similar between areas and incentives may come in to play.

According to the Area Development Magazine’s Corporate Survey of Corporate Decision Makers, the top 10 site selection criteria are:

• Availability of skilled labor
• Labor costs
• Highway accessibility
• Energy availability and costs
• Availability of telecommunications services
• Tax exemptions
• Occupancy or construction costs
• State and local incentives
• Proximity to major markets
• Availability of land

Remember… a community is not judged by where it is today. It is judged by where the community is going. It is the community’s forward momentum that drives corporate expansion interest.

The Lake Dallas area is in an excellent position to attract qualified primary employers. Through its strong leadership, available workforce, superior quality of life, and most importantly, its strong vision, the Lake Dallas area is and will continue to be an excellent place to call home.

What are existing industry retention and expansion programs?

Over 80% of all jobs created in a local economy come from existing industry. Any good economic development program has a retention program.

For an existing industry retention and expansion program to accomplish its goals, it must have two components:

• A strategic element that focuses on public infrastructure improvements. Communities with good capital investment programs, attentive training institutions, moderate tax and regulatory environments and affordable housing are always desirable locations. These elements can be achieved with a strong vision from elected officials, government employees and the private sector working jointly. The same things that attract new employers will keep existing firms.
• Value-added services which are meaningful to the local company. This requires direct assistance from the local economic development organization. Providing such things as regulatory and training assistance, new business leads, competitor analysis, technology advances, marketing assistance, and so on, provide a needed "value added" service to local employers. A full understanding of "who" are primary employers, their strategic directions and the components of their success should dictate the types of services provided.