Economic Development #2: The Answer

Economic-development agencies spend too much time luring business from outside their area.

Tweet

The answer may be that they're so preoccupied with luring business from outside the city, state, or country, they're oblivious to what's happening under their noses.

That's a shame because company chasing clearly doesn't work. Recent research in Dallas, Los Angeles, and Denver shows that fewer than 5% of new jobs come from businesses migrating into an area. The other 95% are created by businesses already there, mainly start-ups and small companies. So, in effect, economic-development agencies are spending most of their time and money chasing a market segment that accounts for less than 5% of any given area's business. What would you do if your marketing department did that? I'd replace it.