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Economic Development #2: The Answer
 

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

Last updated: Feb 1, 1994




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