Functions of an Economic Development Corporation

An economic development corporation is an organization whose mission is to promote economic

development within a specific geographical area. The function of these entities is to assist businesses
within their respective geographical area to get started, and also to succeed and grow, helping to
develop economic growth.

More often than not, any individual economic development corporation will operate within one
individual city as their respective region. Economic development corporations and agencies are a part of
every state government and many local-level governments as well. Economic development corporations
work very similarly to Chambers of Commerce, often working in a complementary capacity. These
corporations are quite common in the United States, and are typically structured as a 501(c)(3) non-
profit. Occasionally, economic development corporations may also be a branch of a government division
that acts in the same way, instead of being an official 501(c)(3).

Many of the services that economic development corporations develop include but aren’t limited to:

Providing advice, guidance and resources for people starting up new businesses within the corporation’s
territory

Offering financial assistance to businesses with grants, loans and tax-exempt bonds

Assistance with site selection and determining business locations within a community

Recruitment of new employees for businesses and providing assistance with job training

These services provide invaluable resources for business owners, many of whom would not have
executed in starting up their business without such guidance. Many of the services can provide a “safety
net” for business owners to ensure that their businesses are operating in ways that can lead to
additional profits, which will allow for growth in output and employment.

Part of the function of an economic development corporation is to establish an economic base for their
respective region. By establishing an economic base, an economic development corporation is able to
analyze the data collected and determine which areas need particular focus in order to bring more
money into a particular region. The focus is to increase exports and employment. In this case, exports
are not viewed as necessarily international, but simply products or services which can be consumed by
customers outside of a local region, which even at the level of small communities, is important for
bringing new money into an economy. Without exports, an economy may only recycle the same money
over and over again, which causes no growth. Once an economic base is established and certain
industries become a focus for economic development, working to attract related businesses is one smart
way to increase a community’s employment, which also increases a company’s output, leading to higher
exports. Many industries, such as manufacturing, tourism, technology and artisanship, lead to exports
more easily than others. Playing to a community’s strengths is what is important. It is also important to
decide whether to seek to attract existing businesses looking to expand into new locations or foster
entrepreneurship in local industry professionals who may end up forming new companies. With these
tools and with a helpful array of services, economic development corporations work to keep the
economy of their region growing year after year.

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