“Economic development is the expansion of capacities that contribute to the advancement of society through the realization of individual, firm and community potential. Economic development is measured by a sustained increase in prosperity and quality of life through innovation, lowered transaction costs, and the utilization of capabilities towards the responsible production and diffusion of goods and services. Economic development requires effective institutions grounded in the norms of openness, tolerance for risk, appreciation for diversity, and confidence in the realization of mutual gain for the public and private sector. Economic development is essential to creating the conditions for economic growth and ensuring our economic future.” (Maryann Feldman et al., “The logic of economic development: a definition and model for investment” article in Environment and Planning C: Government and Policy.
As typically practiced, economic development largely consists of efforts to attract businesses by persuading them to relocate into a state or community. This approach is generally a zero-sum game and often results in a net economic drain because of subsidies and/or lowered tax incentives.
Over the last couple of decades, research has brought a much better understanding of successful approaches to economic development, and it is now increasingly acknowledged to consist of a much broader set of integrated practices, as defined in the quote above. Northeast Ohio also has worked diligently to create a more integrated conceptualization of economic development and has gradually expanded the tool chest through organizations such as chambers of commerce and entities including the Fund for our Economic Future, as well as others focused on specific aspects of the economy, such as MAGNET in the manufacturing sector.