Community Economic Development

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Community Economic Development


Community economic development is a term for the processes of change generated through place-based economic activities that are controlled by, or at least oriented toward, local residents for their betterment (Gordon Nembhard 1999, p. 297). Community economic development strategies encompass a variety of community empowerment and business development approaches, such as political advocacy, constituency group organizing, entrepreneurship development, education, job training, and labor development (University of Illinois at Chicago Center for Urban Economic Development 1987). Economic activities include job creation, entrepreneurship and business development, housing development, the provision of financial services, and the development of capital markets.

Local economic development practices can be categorized into five general chronological and overlapping phases: state industrial recruitment (starting in the 1930s); political critiques, advocacy planning, and community focus (1960s); export orientation, labor market research and development, and equity strategies (1970s and 1980s); environmental sustainability and social justice (1980s); and privatization and regional integration (1990s) (see Fitzgerald and Leigh 2002, pp. 926). Scholars and practitioners, particularly starting in the 1960s, have honed the term community economic development to focus on grassroots activity that is local and indigenous. Such efforts are centered on people and a variety of stakeholders (residents, workers, business owners, policymakers, civic and political organizations, etc.). Community control and economic stability, independence, and prosperity are the goals.

Economic development models range from traditional private business/corporation-centered models to alternative community-based, cooperative, and employee-owned models (see Gordon Nembhard 1999). The corporate model uses strategies to retain or attract businesses to the community, as well as strategies to make the residents good employees for those businesses. Municipalities attract the businesses with tax incentives and abatements, subsidies, below-market loans, favorable zoning changes, utility cost reductions, infrastructure improvements, the establishment of commercial districts, and the designation of industrial parks and business incubators. Using traditional strategies, municipalities will also try to ensure corporations a relatively cheap and dependable labor force, even though many of these businesses hire few local residents.

Community-based and community-initiated development, in contrast, combines public, private, and nonprofit economic activities to increase residents and workers human, social, and cultural capital; to facilitate organizational, managerial, and microenterprise experiences in establishing and maintaining small local businesses that are owned and operated by residents (and tend to hire more residents); and to maintain affordable housing. These kinds of enterprises include consumer, producer, worker, and housing cooperatives; credit unions; democratic ESOPs (employee stock ownership plans) and other employee-owned businesses; community land trusts; community development financial institutions; community development corporations; nonprofit businesses (social entrepreneurship); and municipally owned companies (Gordon Nembhard 1999; Democracy Collaborative 2005). Debates about contending strategies often revolve around false tradeoffs between pollution and jobs, education and recreation, livable wages versus sub-minimum wages, unionization and corporate growth, cooperative ownership and private property, and affordable housing and prosperous real-estate markets.

Community economic development focuses on the neighborhood and municipality level, as separate from regional, state, federal, and international economic activity. Interactions are thus more intimate and intertwined, and the range of activities are more oriented toward and affected by place. A focus on community economic development often elevates microlevel activity and small-scale community-initiated projects as strategies to reach marginal and underserved populations. However, the effectiveness can be limited. Sometimes solutions to economic problems require broader participation and enhanced or increased resources pooled at the regional, state, or federal levels. On the other hand, higher-level policies can also undermine progressive local policies, such as national or international trade rules that do not recognize, or actually invalidate, local environmental or labor standards and tax laws. Corporate globalization increasingly undermines many aspects of community economic development by removing resources and control from local communities (Blakely and Bradshaw 2002; Gordon Nembhard 1999). Local strategies, particularly asset-based strategies that help residents develop and own a variety of wealth-producing assets, have become increasingly popular in the face of persistent poverty and globalization. Community economic development strategies anchor capital and keep the benefits circulating among those who produce it, service it, and need it.


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Democracy Collaborative. 2005. Building Wealth: The New Asset-Based Approach to Solving Social and Economic Problems. Washington, DC: Aspen Institute.

Fitzgerald, Joan, and Nancey Green Leigh. 2002. Economic Revitalization: Cases and Strategies for City and Suburb. Thousand Oaks, CA: Sage.

Gordon Nembhard, Jessica. 1999. Community Economic Development: Alternative Visions for the 21st Century. In Readings in Black Political Economy, eds. John Whitehead and Cobie Kwasi Harris, 295304. Dubuque. IA: Kendall/Hunt.

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Whitehead, John, David Landes, and Jessica Gordon Nembhard. 2005. Inner-City Economic Development and Revitalization: A Community-Building Approach. In African Americans in the U.S. Economy, eds. Cecilia A. Conrad, John Whitehead, Patrick Mason, and James Stewart, 341356. Lanham, MD: Rowman & Littlefield.

Jessica Gordon Nembhard

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Community Economic Development

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Community Economic Development