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What Is Community Development? Economic Development? Community Economic Development?

In shifting from asset building to community and economic development,[1] we begin with a few definitions. Community is “an organization of people in a physical setting with geographic, political, and social boundaries and discemable communication linkages” (Shaffer, Deller, and Marcouiller 2004, 317). Community development is less consistently used than assets or economic development. Sometimes it is used as a synonym for all economic development that is not business attraction. Other times it emphasizes housing, amenities, social services, literacy programs, leadership development, and so forth. Community development is also associated with social capital – the dynamic process of community capacity building that underpins economic development.

Economic development is the process by which a society increases its level of material and social well-being over time. In a developing economy, employment increases, incomes go up, the rate of productivity rises, and innovation occurs. Yet economic development is more than just growth: it also implies changes in technology, management strategies, products, and market-supportive institutions and rules. Economic development includes entrepreneurship, development of skilled labor power, building of modem infrastructure, creation of new financial intermediaries, and accumulation and channeling of savings.

The concept of community economic development adds another dimension: the creation and strengthening of economic organizations and capital controlled or owned by the residents of the area where these institutions are located. Community economic development broadly encompasses owner-occupied homes, savings, IDAs, housing development corporations, personal retirement accounts, community land trusts, industrial parks, incubators, banks, credit unions, businesses, cooperatives, and community development corporations (CDCs) and community development financial institutions (CDFIs).

According to Michael Kieschnick, a leading authority in the field, community economic development has four goals:

1. Stimulating self-sustaining processes of economic development.

2. Creating jobs at acceptable wages and with appropriate benefits for area residents.

3. Producing goods and services that meet social criteria (e.g., more affordable housing, farmers' markets, public goods, investments, and public services).

4. Establishing community influence over basic economic decisions such as hiring, investment, and location.[2]

The first goal is shared by other more conventional development strategies. The last three distinguish community economic development from tradition and are especially important for low-income and blue-collar communities.[3] This is where we see synergies between community-based development strategies and asset-building programs.

  • [1] A succinct definition by economist Kenneth Boulding is “the discovery and implementation of better ways to meet our wants.” A more normative. High Road Economic Development goal statement that has guided CFED since 1986 is that economic development should promote more widely shared and sustainable increases in our standard of living. See for metrics that track the goal, “The Development Report Card for the States.”
  • [2] From a conversation with Michael Kieschnick over two decades ago.
  • [3] Here are a few synoptic definitions of community economic development that summarize what has been said: “Those strategies in which local development organizations initiate and generate their own solutions to the community's economic problems and thereby encourage long-term community capacity-building and foster the integration of economic, social, and environmental objectives” (The Dictionary of Community Economic Development). “Community economic development is sustained progressive change to attain individual and group interests through expanding, intensifying, and adjusting the use of resources; identifying new or expanding markets; altering the rules of economic activity to facilitate adjustment to changing conditions or altering the distribution of rewards; and improving the insights into the choices available” and “Community economic development decision-making capacity is the ability of a community to initiate and sustain activities that promote local economic and social welfare. The overall purpose of community development policy is to reduce and/or abolish the barriers in product and factor markets that prevent the positive culmination of economic development processes” (Shaffer, Defier, and Marcouiller 2004).
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