Urban economic development aims to increase economic performance and stability in highly populated areas through business recruitment, tax incentives, social programs, and development projects. The goal is to attract new residents and tourists, increase per capita income, decrease unemployment, and improve the overall quality of life.
Economic development is a long-term initiative by legislators and local authorities that aims to increase the overall economic performance and stability of an area. Urban economic development is an initiative carried out in an area classified as “urban”, generally meaning a highly populated city or metropolitan center. Urban economic development usually consists of programs designed to attract businesses to the area and increase employment levels, ultimately resulting in economic growth. Common components include tax breaks for companies that offer new jobs, programs designed to attract new residents, social development programs, and tourism efforts.
The main objective behind urban economic development is to increase the economic strength of an area. Sometimes referred to as “urban renewal,” these initiatives are usually launched in areas that are in decline, that have already declined or have never been economically successful. Most economic development initiatives, urban and otherwise, involve business and social programs and combine policy making with specific development projects.
An important facet of many urban economic development programs is business recruitment. Bringing new business to a city or increasing the hiring potential of existing businesses produces jobs for local citizens. This in turn can increase per capita income; attract new residents; decrease unemployment in the area; and increase the city’s tax base, both through income and business tax collections. Also, employed people and those who earn more money generally buy more things, improving the local economy.
To attract new business, those involved in urban economic development often offer tax incentives. They can also reduce or waive the fees associated with starting a business and can help negotiate favorable property purchase or lease rates. Another option for job creation is to start city development projects like road resurfacing, bridge repairs, landscaping projects, and more. These projects have the dual benefit of creating jobs and beautifying the community.
Social programs also play a factor in urban economic development. This can include recruiting health facilities and professionals to improve the health of the area, launching school improvement projects, offering continuing education at attractive prices, and building or expanding cultural and community centers. Literacy campaigns, anti-drug campaigns and anti-violence campaigns are also common.
As the area begins to recover, additional efforts are often made to recruit residents and attract tourists. This can include improving temporary and permanent housing and developing areas of interest such as museums, parks and historic sites. Urban economic development is an ongoing process that can take years to fully realize its potential. In a successful model, the result will be a higher standard of living and quality of life for all residents, along with a thriving business community.
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