Transcript CED for the 21st Century PRESENTED BY DAVID L. DARLING CD ECONOMIST DEPARTMENT OF AGRICULTURAL ECONOMICS KANSAS STATE UNIVERSITY MANHATTAN, KANSAS Spring 2004

CED for the 21st Century
PRESENTED BY DAVID L. DARLING
CD ECONOMIST
DEPARTMENT OF
AGRICULTURAL ECONOMICS
KANSAS STATE UNIVERSITY
MANHATTAN, KANSAS
Spring 2004
CED for the
st
21
Century
A SYNTHESIS OF CONCEPTS
Today we will:
 Define Community Economic
Development (CED) in the 21st century
 Establish six CED goals worth pursuing
 Identify community functions and six
basic forms of capital used in CED
 Connect the six forms of capital to five
basic economic development strategies
 Study how a small, open economy works
 Introduce the Total Development
Paradigm
 Learn a new tool designed for use in CED
initiatives – a change model
Community Economic Development
Vision charged civic process
Focuses attention on a set of key issues
that when resolved will improve:
 Short-term economic health & vitality
 Medium and long-term economic health &
vitality
Made possible when local assets are
effectively used and then matched with
outside resources
Six Alternative Approaches to
Community Growth and Development
Let the market decide
Let big governments rule
Let the local elite rule
Rely on inside or outside technical
assistance
 Create a capacity building process
guided by community citizens and
assisted by outside educators and
technical assistants.




Goals Chart
Stability
Growth
Development
Quality
of Life
Building Trust
Social
Stewardship
Six Forms of Capital
A comprehensive approach to community economic
development is well planned with adequate
resources. These assets are grouped into six forms
of capital.
They are:
 Human Capital
 Social Capital
 Political Capital
 Financial Capital
 Engineered Capital
 Natural Capital

Human Capital is the knowledge and skills

Social Capital is the trust and working

Political Capital is the access to and

Financial Capital comes in different forms

Natural Capital is the endowments of
used in the production process. It includes the skills of
production workers, marketing officers, financial
managers, and organizational leaders. It includes the
work ethic, attitudes, and values of the work force.
relationships in a community, state and nation.
influence over state and federal policies and resources.
to pay for tasks such as starting a business, expanding
a business, or building a school.
nature.
Six Forms of Capital (Cont.)
Engineered Capital is the collection of human
engineered things not already covered as human, social, or
financial capital. Hard-engineered capital includes physical
infrastructure such as fiber optic cable and soft- engineered
capital includes the organizational and institutional infrastructure as well as the governance of these two.
Five Functions of a Community
 Living
- houses and neighborhoods
 Economic
- retail , farming, and manufacturing
activity
 Government
- police and fire protection
 Services
- United Way and other charitable
organizations
 Social & Cultural
HEALTHY, SUSTAINABLE AND
PROGRESSIVE COMMUNITIES
Forms of Capital
Community
Functions
Living
Economic
Government
Service
Social & Cultural
Human
Financial
Engineered
Natural Social &
Political
THE ECONOMIC TERMS
 Definition: Economic Development is a process of
accumulating assets to support and enhance the production of
goods and services that improve the community’s quality of life.
Strategies:
The five basic KSU strategies are ranked from
top to bottom. Retention of existing business and industry and
other employers is the most import one.
Resources:
The six basic sources are the types of assets
used by the private, public, and not for profit sectors as inputs.
Challenges:
1.
Identify the current economic strategies. Is the local
economic development program using all five strategies?
2. Map area assets. Then discover strengths and
weaknesses?
Seven Leaks in the Barrel
1)
2)
3)
4)
5)
6)
7)
Outside Investments
Estate Settlements
Educated Youth
Wasted Resources
Taxes & Social Security
Out shopping
Imports
Dynamic Model
a)
b)
c)
Production-Combining inputs to
add value to local outputs
Consumption-Buying local and
imported products.
Investment-Recycling wealth,
accumulated locally, by
reinvesting it.
Formula of Income Multiplier (IM)
IM = 1 / (1- (PCL * PSY))
 PCL: The proportion of new, after tax
household income, that is spend locally.
This can range from 0.3 to 0.90 in Kansas
communities.
 PSY: The proportion of household income
spent locally which remains in the area’s
economy to support other households.
This usually ranges from 0.25 to 0.65 for
non-metropolitan communities.

Example of Income Multiplier
 When
the proportion of households
spent locally (PCL) is 80%, and when
the proportion of an earned dollars
that becomes income to local
households (PSY) is 50%, then
income multiplier (IM):
IM = 1 / (1- (0.8 * 0.5))
IM = 1.66
Three Avenues of Support

EARN IT

CAPTURE IT

MAKE IT
ECONOMIC DEVELOPMENT PYRAMID
BUILD A FIRM FOUNDATION THAT WILL SUPPORT A SUCCESSFUL ECONOMY
ATTRACTION
CAPTURE DOLLARS
LOCAL LINKAGES
FIRM CREATION
RETENTION & EXPANSION
BUSINESS ENVIRONMENT
BUILDING EFFECTIVE PARTNERSHIPS
COMBINE SUPERIOR LEADERSHIP WITH EFFICIENT LOCAL GOVERNMENT
START AT THE BOTTOM.
Total Development Paradigm
The Layer Cake Model
• Forestry
• Tourism & Retirees
• Call Centers
Physical Infrastructure
Major
Forces
and
Trends
•Water & Sewer
•Roads & Streets
•Utilities
•Industrial Parks
•Telecommunications
•Inter -Modal Facilities
•Waste Recycling & Disposal
Support Systems
•Health Care
•Retail Sector
•Housing
•Education
Economic Development
Economic Base
• Agriculture
• Manufacturing
• Mining
•Recreation and Parks
•Community Foundations
•Economic Dev. Org.
•Financial Sector
Human and Social Capital
•Attitudes & Values
•Work Ethic
•Community Spirit
•Churches
•Family Stability
•Knowledge & Skills
•Social Trust & Cohesion
•Civic & Youth Clubs
Leadership Infrastructure
•Strategic Vision
•Empowering Others
•Leadership Skills
•Local Government
•Leadership Training
•Community Dev. Org.
•Knowledge of Resources &
Major Trends
Environment and Natural Resources
Source:Source: Mark Peterson, University of Arkansas Extension Service, Little Rock, AR.k Peterson
Extension Sp
Economic Development
Ten reasons why we should develop and
implement an economic development plan.
1. So our children and grandchildren have a
chance for a future nearby.
2. So our businesses can have a larger pool of
people to serve.
3. So our agricultural producers can be served
locally.
4. To make our community better. New people
and new dollars add resources to build the
community.
Economic Development Cont…
5. To capitalize on our educational investments
rather than some distant place reaping the
benefits.
6. To utilize our infrastructure investments such
as water, sewer, streets, roads, buildings and
homes.
7. To keep our relatives and friends in the
community.
8. To take care of our own population base.
9. To develop a broad-based pool of informed
leaders.
10. To create a guide for our future.
Source: Gary Warren, Aurora, NE.
Building a Middle Class
HIGH
Contributor
HIGH
Key Stakeholder
Benefactor
Employer
Investor
Self Employed
Debt Free
Employee
Debtor
Independent
Dependent
Jobless
LOW
Source: David L. Darling: K-State Research and Extension, February 2003
Impoverished
LOW
A Good Community
A
definition of a good community is a
place where families can easily meet
their lower order (basic) needs and
have the time and opportunity to
pursue higher order ones such as self
actualization.
Abraham Maslow’s Hierarchy of Needs
Self
Actualization
Self-Esteem and
Esteem of Others
Love, Affection, Belonging
Safety and Security
Physiological Needs
Sustaining Progress Model
P
=A*V*P*R*B
where:
 A stands for attitudes
 V stands for a vision
 P stands for the plan
 R stands for the resources
 B stands for benefits
Community Economic Development
Summary
Vision charged civic process
Focuses attention on a set of key issues
that when resolved will improve:
 Short-term economic health & vitality
 Medium and long-term economic health &
vitality
Made possible when local assets are
effectively used and then matched with
outside resources