Five Pillars of Economic Development

3 mins read

The term “Smart Cities” seems to be all the rage these days. Whether it’s a buzzword or not remains to be seen. However, there does seem to be an awful lot of new interest in technology applications to civil and social models.

I spent a lot of time in GovTech in the past, so it’s always interesting to see how bureaucracies interpret and adopt anything new. It’s usually for all the wrong reasons. That’s why I am not necessarily holding my breath when it comes to the latest wowzers in the Smart Cities world.

That being said, I did spend a period of time in economic development as the president of my regional EDC board. We successfully created a TIF district where there was none. TIF stands for “tax incremental financing”, and it’s a fancy way of creating local laws permitting the borrowing of money for funding projects based on future tax base increases resulting from the development.

It’s complicated, it’s highly political, and it usually sounds better on paper than it turns out.

So we created this TIF district so we could recruit a company from somewhere else.

That’s the standard playbook for economic development. We don’t want to risk anything new, so we’ll just play a zero sum game stealing economy from somewhere else.

Hey, it works for the winning community. Not so much for the losing community.

In our case, we recruited a manufacturing company to move into a facility that had been abandoned for several years after the 2008 economic downturn.

After spending a year of my name being M-effed in the local paper by half the population who didn’t want outside money moving in, we got things done. There’s this interesting dynamic, especially in smaller communities. As much as they pay lip service to economic development and job creation, they really don’t want it to happen.


Because that means new money moves in. This dilutes the power base of existing money in the community. They hate political competition.

The other thing it does is creates competition for limited labor resources. That raises labor costs for the existing players. At least that’s what they believe.

Hey, nobody said they were necessarily smart.

So back in the economic development commission days, I started kicking around a model of local economic development areas. I think these key pillars are even more relevant today considering the brush fire of interest in “Smart Cities”.

It is by no means complete or even accurate. It was just a starting point for a model.

Michael Hiles

CEO 10XTS, INTJ, chaotic good, PDP/11 in '79 (THAT kid), info architect, Milton Friedman, data science, semantics, epistemology, coffee snob, OG hip hop

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