Traditional and Non-Traditional Economic Development
The credibility of traditional economic development has for a long time warranted scrutiny from the urban policy scholars. Regardless, traditional strategies are still upheld by city leaders. Traditional strategies emphasize mainly on business and economic considerations rather than much reasonable community considerations. Although the concerns of traditional economic development show dominance, there are certain factors that may compel or allow relevant authorities to favor non-traditional economic development strategies. The two methods of economic development have been in existence side by side. However, those who practice these two methods have alternate views because they entail two different philosophies.
Primarily, both traditional and economic development approaches stand for policymakers who make sustained actions designed to promote the economic health and standard of living in a given area. This development of the economy normally leads to both qualitative and quantitative changes of the economy. These areas of development include critical infrastructure, human capital, environmental sustainability, regional competitiveness, social inclusion, literacy, health, safety, and other initiatives (Cypher and James 47). It is important to understand that economic development is completely different from economic growth. Economic development involves making policy interventions with various objectives. Economic growth is the achievement of one of these objectives and involves a rise in gross domestic product and market productivity. Traditional and non-traditional approaches are the two main aspects of economic development.
Traditional economic development involves applying strategies designed to attract and retain businesses. Getting companies or organizations to shift their business locations to another location normally involves having an incentive, such as an abatement of tax that comprises the elimination or reduction of property tax that lasts a certain period. Because of the considerable cost the situation offers, the relocation of the organization or the company results in creating a certain type and number of jobs. Business retention revolves around the same concept of making tax abatement offers and planning to move companies to other locations and keeping jobs rather than losing them.
The development of micro-enterprises comes with a certain design of training, technical assistance or lending to people with low incomes to enable micro-business or micro-enterprise development. The traditional approach of economic development is more of a broker approach. It is mainly applied by districts of economic development, chambers of commerce, and state local government agencies assisted partly by economic development districts. This approach bears the objective of influencing how businesses make their decisions as they relocate or expand (Todaro 37). When influencing these decisions, this approach uses tools finding or cost based. They normally promote low utility rates, low tax rates, location and transformation factors, and other community factors.
Traditional economic developing approach also rewards companies with significant deals for their decision to stay or expand in a certain location. These include a variety, but the main involve special tax beaks for investing in a location or creating jibs, grants for funding part or all costs of acquiring new equipment or training new staff, and providing subsidies construction of roads and buildings. On the other hand, the non-traditional economic development approach employs a rather consulting approach (Todaro 48). This approach targets small businesses, but large businesses are not exempted. More often than not, it is applied to businesses of indigenous nature. Agencies and departments that apply this approach include and are not limited to business development centers, manufacturing extension programs, business incubators, and centers for technical procurement.
According to Kindleberger (23), the non-traditional approach is designed to assists business mangers and owners attain much more success with the objective of creating more jobs. From another strategy, thus approach gives business access to resources. This may include assisting businesses use loan packaging to gain access to loans, secure forms of equity such as venture capital, use better marketing to increase sales, and reduce costs by apply better management measures. The traditional economic development uses an approach that almost guarantees success in the field it has been applied. On the other hand, non-traditional method is an approach that may not always guarantee success in the field it has been applied. Hence, the non-traditional approach has a main function of providing information or teaching business owners on how to make informed decisions. Both have an incentive of creating jobs.
However, there is an aspect of money wasting from both approaches. In this regard, the non-traditional approach wastes resources because its strategies presume that the business’ management already has knowledge of what it is supposed to do, hence creating jobs that were going to be created. On the other hand, the traditional economic development approach misuses resources by foregoing tax revenue because creating jobs through the broker approach is more expensive for every job created than creating jobs through the non-traditional approach. This does not suggest that the two approaches are in conflict with each other. Many economic development organizations and development agencies support both approaches simultaneously (Todaro 17).
Primarily, non-traditional economic development also works to create amenities that improve the quality of life. This approach improves the quality of life by creating amenities such as construction of roads, walking and bicycle trails. Additionally, non-traditional development f social amenities look to establish facilities such as health facilities and educational institutions. Ultimately, these contribute to the development of human welfare. The human capital model is mainly dependent on education and health. Human capital is a fundamental prerequisite for the development of any economy (Cypher and James 88). However, this cannot be achieved by a workforce that is lacking in educational knowledge and health. Hence, non-traditional economic development approaches work to improve the life quality by creating health and education amenities.
In the United States, the non-traditional method of economic development is mainly sought for competitiveness. This is the main driving factor of successful economic development in the government and industry. By meeting economic demands through technology measures, this approach fosters competitiveness in the environment thus resulting in sustained growth and greater economic performance. In the United States, non-traditional economic development is applied to improve various indicators such as poverty rates, life expectancy, and rates of literacy. The gross domestic product of the United States does not consider certain aspects such as social justice, environmental quality, and freedom. Essentially, the nation’s economic development places relation to human development. This encompasses factors such as education and health.
Conclusively, this study was able to put forward the implications associated with traditional and non-traditional economic development approaches, as well as their differences. Primarily, both economic development approaches are designed to improve the economic health and standard of living in a given area. Economic development of any community is dependent on the competitiveness of its workforce. This competitiveness is facilitated by a number of social amenities such as roads, communication, education and health facilities.
Cypher, James M, and James L. Dietz. The Process of Economic Development. London: Routledge, 2007. Web. 26 April 2013.
Kindleberger, Charles P. Economic Development. New York: McGraw-Hill, 2005. Print.
Todaro, Michael P. Traditional and Non-traditional Economic Development. New York: Longman, 2004. Print.