What Are the Different Types of Economic Development Programs?

Different types of economic development programs may employ zoning to spur economic development, establish revolving loan programs to assist businesses, or provide training for entrepreneurs. Buy-local initiatives are sometimes used to retain more economic activity within a specific area. At other times, local and regional governments, as well as academic institutions, may support research, or subsidize investment in innovation. Other economic development programs may be designed to reclaim polluted industrial sites.

Zoning may be used as a tool in economic development programs. In some regions, laws are passed to set aside areas as "enterprise zones," in which developers receive tax credit in exchange for infrastructure investments on vacant land. For example, a company desiring to build a factory may be offered a tax credit for a certain length of time, typically over a span of several years. The operative idea behind these programs is usually to forgo taxes for several years in exchange for enticing a developer to bring additional jobs to a community.

Launching a lending pool or revolving loan fund is another technique used by economic development programs. The idea in this case is that when a local or regional government invests a certain sum of money to start a lending program, the first beneficiaries will pay back the money. These funds may be subsequently used for other business expansion.

Sometimes a revolving loan will be offered to a business interest-free or with low rates. Lending pools may be offered through nonprofit community development organizations. These pools of money are frequently targeted to entrepreneurs, and loan amounts may vary.

Buy-local initiatives are a type of economic development program based on the concept that encouraging residents of a community to buy from one another will give a boost to local businesses, as well as increase local tax revenues. Government-subsidized research may be used, as well, to develop new ways for a community to add value to locally available commodities. For example, a research project may involve finding new uses for leftover fiber from local agricultural crops, and subsequently incorporate that material into finished goods. Since the materials used for production may be free or relatively cheap, as they are often considered agricultural waste, new products may be produced and sold profitably. This often results in new job creation in a community.

Brownfield reclamation is a specific type of program usually designed to both restore heavily polluted industrial sites and renew the use of the land for new productive purposes. These kinds of economic development programs commonly rehabilitate land polluted by less technologically advanced methods of manufacturing or mining that resulted in contamination. Shipyards, rail yards, and sites that housed manufacturing operations involving toxic materials are typically involved in brownfield redevelopment efforts.