We know what it’s like. You’re in a meeting or you’re reading EconDev Today, and you hear a term or stumble upon an acronym that you’re unfamiliar with. On this page, you’ll find definitions for many economic development terms and concepts that you might like to know more about to succeed in the field.
If there’s a word or a term we’re missing below that you’d like us to include just let us know. We’ll continue to add relevant vocabulary to the glossary to serve the EconDev profession.
Acre refers to a measurement of land area. One acre equals 43,560 square feet. There are 640 acres in one square mile.
Assessment – is the estimate of a property’s market value. The estimate is often based on an objective, professional review of:
- comparable sales of similar properties in the vicinity
- the cost or replacement value of the property, or
- the income the property generates
Backhaul – refers to the return trip a truck makes after transporting its original cargo from point A to point B. Economic developers and logistics experts consider the backhaul to provide insight into a region’s competitive advantage as a center for manufacturing or distribution.
Base Load – The minimum load of electric power.
Basic Employment refers to jobs that are created among employers where at least 51% of the employer’s revenues are derived from the sales of goods and services outside of the service area. This is an important concept in economic development because when most of the revenue generated by basic employers is directed to pay wages or salaries to local workers, or to pay for services and supplies sourced locally, then it serves to create a mulitplier effect, generating additional spinoff employment in the area.
Basic Industry – also known as Primary Industry or Basic Manufacturing is a company or group of companies that sell or export a majority of their products or services outside a geographic area thereby “importing” new dollars into the local economy and subsequently contributing to the wealth of the community.
Blanket Mortgage – A single mortgage covering more than one piece of property.
Bond – A binding agreement or promise to pay.
Bonded Warehouse – is a facility in a secured area such as a designated Foreign Trade Zone where businesses may store, modify, assemble, repackage their products to delay payment of duties until the goods are release released from the warehouse.
Business Attraction – often refered to as Business Recruitment – is the practice of recruiting, encouraging, or persuading businesses and industries from outside a state, region, or community to make location decisions resulting in new jobs and new capital investment in their jurisdiction. See also Foreign Direct Investment (FDI).
Business Climate – is used to describe the general prevailing conditions that are impact businesses in an area over a sustained period of time. The business climate in a community is often shaped or characterized by social-political attitudes toward business, growth, incentives, permit processes and regulations, policies, taxes, work ethic, wages, and other factors.
BID – Business Improvement District (BID) is a designated geographic area where property owners have agreed to pay a supplementary tax to generate revenues to pay for costs associated with special programs or projects in the district. See also Community Improvement District (CID).
Business Incubator – a facility that is established to serve the needs of a community’s entrepreneurs and emerging small businesses by providing shared services and low cost or reduced rent for a designated period of time – usually one to three years.
Business Intelligence is about gathering, analyzing, summarizing, and communicating business, demographic, and economic information within a certain geographic service area for economic development purposes. Business Intelligence often supports business development and economic development marketing activities with relevant research and insightful analysis.
Business License – a license that grants an individual the right or priviledge to start and operate a business.
BRE – Business Retention and Expansion (BRE) – is about engaging existing business and industries in a given service area, serving and supporting those businesses, helping them solve problems, and managing expansion projects that arise from such efforts. BRE programs often involve many stakeholders including community leaders from both the public and private sectors. Hashtag #BRE
Business Retention and Expansion (BRE) Survey is a tool used in a BRE program to:
- Engage existing businesses and create an open dialoge with local, regional, state and federal officials.
- Collect information about existing businesses in a community.
- Identify business needs, challenges, problems, obstacles and concerns that impede or threaten local business growth.
- Serve as an early warning sign to identify companies that are at-risk of downsizing, relocating, or closing.
- Align programs and services to meet the needs of existing businesses that lead to their growth and development in the community.
- Develop strategies and action plans that support the continuous improvement of the business community.
Capital Costs – sometimes referred to as capital investment – are costs that a company pays when making real property improvements to land or buildings, or when purchasing and installing machinery and equipment.
Capital Gain – Profit from the sale of capital investment such as real property, stocks, bonds, etc.
CDBG – Community Development Block Grant – CDBG –
CDC – Community Development Corporation (CDC) –
CEcD – Certified Economic Developer (CEcD). A designation earned by economic development professionals who have have passed examinations and have met other qualifications required by the International Economic Development Council (IEDC).
CFR – Code of Federal Regulations (CFR) –
Clawback – is a clause or a provision in an incentive agreement that outlines required repayment of all or a portion of incentives provided to a company if the company fails to satisfy or maintain its promised performance objectives. See also Performance Agreement
Cleanroom – sometimes referred to as “clean room” – is space in manufacturing or computer hardware production, laboratory, biotechnology and research facilities that is designed to create a sterilized environment to reduce the risk of damage or reduced performance caused by nanoparticles and microorganisms.
Clusters – groups of companies in similar or complementary sectors where businesses interact in ways that foster growth and strengthen the community’s competitive advantage.
Cluster Analysis – is about identifying a group or groups of companies and institutions in a community that have strong sustained growth potential and tend to support or complement the many players in the sector network. Clusters can be linked horizontally – where companies competing in similar markets such as biotechnology – would share resources such as technology, skilled workforce, and infrastructure; or vertically – where companies have common suppliers and customers.
Collateral – Assets pledged as security for a loan.
Community Profile or Community Data Profile generally refers to a compilation of certain local or regional demographics and business characteristics such as population, employment, unemployment, income, number of businesses, major employers, new home sales, average price of homes sold, utilities, and educational institutions. A community data profile can serve to describe a community’s economic condition.
CSA – Combined Statistical Area (CSA) – Where two or more Core Based Statistical Areas have substantial employment interchange.
Community in economic development refers to an area of economic activity and is comprised of people, property, and resources that collectively include its workforce, sites and buildings, commercial and industrial parks, businesses and industries, programs and services, natural and man-made assets and materials.
Community Development Block Grant (CDBG) – is a longstanding federal program administered by the Department of Housing and Community Development (HUD) providing annual grants on a formula basis to local and state governments. The CDBG program is designed to support community development in low to moderate income communities to ensure affordable housing and job creation through business retention and expansion.
Community Profile – a collection of information that provides a detailed overview of a community as a place for business. Community profiles often include information about population, local economy, workforce, taxes, leading business and industry, utilities, educational institutions, quality of life and other factors important to helping companies make informed location decisions.
Competition – typically refers to one or more localities, regions, or states that are either perceived to offer or actually do offer equal or better products and services that are in demand among business and industry. When a company is considering multiple localities for placing their business, each jurisdiction under consideration is deemed to be competing with every other jurisdiction.
Comprehensive Plan – a land use and growth management plan that is adopted by a local or regional body. The creation of a comprehensive plan usually follows a public process of engaging members of the community for their input especially in anticipation of future growth and development. The comprehensive plan provides a vision for the future, serves as a guideline for managing growth, and is the basis for land use regulations.
Cost-Benefit Analysis – or Cost-Benefit Model – is used to estimate the change in economic activity that leads to additional tax revenues as well as costs for additional services or resources associated with a new or expanding business. A cost-benefit analysis may take into accout sales tax revenues for building materials purchased locally, while also considering the costs associated with incentives offered, or the costs associated with adding new public fire, safety, and educational facilities to support increased demand associated with direct and indirect growth in the community.
EconDev – the shortened version of the words Economic Development. EconDev Today was the first to post the hashtag #EconDev on multiple social media platforms long before it became popular. We encourage its use as it is part of our brand.
Economic Base – is the primary business activity (e.g., agriculture, logistics, manufacturing, services, tourism, etc.) that most signficantly contributes to creating wealth in the community.
Economic Base Analysis – or Economic Base Model – is the study of a locality’s economy including existing industries, employment, wages, history, trends, and growth forecasts.
Economic Development – is about creating wealth in a community through the continuous improvement, management, and promotion of a region’s human, natural, physical, intellectual, and capital resources. It is essentially about creating jobs and attracting new capital investment while raising the overall standard of living for those who live or work in the community.
Eminent Domain – the power of the government to take, or to authorize the compulsary acquisition of, private property for public use; usually with fair compensation for the owner.
Economic Impact Model – serves to provide an estimated economic impact on a community based on tax revenues, jobs created, wages, benefits, etc., if a company were to relocate or expand in a community.
Equity Financing – a “dilutive” form of financing where an enterpreneur gives up a portion of ownership in the business in exchange for an infusion of capital from an angel investor or venture capital firm to accelerate growth and development.
Fiscal Impact Analysis – an effort to assess (or estimate) the overall net financial impact due to direct and indirect costs, as well as the revenues received, by a jurisdiction resulting from a major change in land use such as housing development, a new manufacturing operation, expansion of existing business, or closure of an established business or institution.
FDI – Foreign Direct Investment (FDI) – is an investment made (usually new capital investment or an investment in the form of a controlling interest) by a company or an individual based in another country. Hashtag #FDI
Geographic Information System (GIS) –
HUD – U.S. Department of Housing and Urban Development (HUD) –
Impact Fees – fees often required by localities to offset costs associated with making improvements or extending infrastructure required to serve a new project or development.
Incentives – direct and indirect benefits offered to companies to secure a favorable location or expansion decision for a particular community, region, or state. Examples of incentives include expedited permit processing, waivers of fees, cash grants, land grants, low interest loans, loan forgiveness, favorable lease terms, road improvements, rail improvements, workforce training assistance, etc. See also Clawback.
Industrial Park – a large tract of land that is planned and developed for purposes of serving the site and infrastructure needs of manufacturers. An industrial park is usually subdivided into parcels and zoned for manufacturing. See also Shovel Ready Sites.
Infrastructure – refers to the basic but often substantial physical systems that serve to support a community such as roads, railroads, water and wastewater treatment facilities, electrical power, natural gas, and telecommunications.
Key Performance Indicator (KPI) is a metric used to measure the performance of a certain marketing activity, campaign, or event such as Cost Per Click (CPC), Click Through Rate (CTR), or Downloads.
LMI – Low and Moderate Income (LMI) – generally refers to household income that is less than 80 percent of the Median Family Income (MFI) for the area.
Manufacturing – is the process of taking raw materials and adding value through the production, assembly, or packaging of goods – by machine or by hand – that the business can sell to a customer.
Market – a group of people or an area where there are prospective or actual consumers willing to exchange something of value for a product or service.
Market Research in economic development is the process of gathering and analyzing information and data about your community as a place for business. Your community is your product. The process of conducting market research helps to identify which characteristics of your community are in demand among businesses, how signficant the market is for your community’s products or services, which types of companies are looking for those products or services, and how your community is positioned for success.
Market Segment – a sub-group of consumers who share common traits or characteristics that can be defined and where those consumers respond in the same way to marketing efforts.
Market Segmentation – is the grouping of consumers in various ways based on demographic, geographic, psychographic, or behavioral factors. Economic developers may conduct market segmentation when targeting industries by grouping companies by products manufactured, geograhic location, total employment, annual sales, etc.
Marketing – the process of identifying the tangible and intangible attributes of a product, service, or community; identifying target audiences whose needs and wants could be satisfied when aligned with the product or service attributes; and effectively communicating the value to the audience through various channels for the purpose of achieving an organization’s goals and objectives.
Median Family Income (MFI) – refers to the area median family income (issued by HUD) according to family size and by county.
Microenterprise – a type of small business that employs five or fewer people.
MSA – Metropolitan Statistical Area (MSA) – is a geographical area with high population density at its core and substantial economic and social ties among its neighboring communities. Hashtag #MSA
Niche – a market niche is a market segment, a special focus area, or unique aspect of a target market segment that can be served more readily, more efficiently, or more completely than other competitors are able or willing to serve. Communities with limited resources might decide to serve only one or two small target sector audiences that other competitor localities ignore.
NIMBY – Not-In-My-Back-Yard (NIMBY). This term is often used to reflect the attitude of citizens who are opposed to changes in zoning, land use, special use permits, or the siting of an unwanted facility especially when there are actual or perceived risks to public health, safety, or general welfare. Hashtag #NIMBY
New Markets Tax Credits (NMTC) – is a program designed to attract private capital from individuals and corporate investors who receive tax credits against their federal income tax in exchange for making equity investments in Community Development Entities (CDEs) in order to encourage business and real estate investment in low-income communities. Hashtag #NMTC
Performance Agreement – is usually an official legal agreement that describes the performance obligations between a company and a locality, region, or state. It is often prepared upon a final location decision for projects involving significant incentives. The performance agreement outlines how certain public incentives are tied to a company’s performance objectives. The performance agreement may include what, if any, clawbacks that could be required if the company fails to meet or exceed the performance objectives.
Performance Objectives are typically the number of new jobs, payroll, and capital investment a company expects to make in a community within a certain period of time. Performance objectives are often part of a formal performance agreement where incentives offered by state and local agencies are conditionally based on the company meeting or exceeding the numbers agreed upon for an expansion or location decision.
Press Release – a tool to pro-actively and concisely communicate newsworthy content such as an announcement, official statement, or timely information to targeted members of the media.
Prospect – a generic term used to refer to an individual or a company considering a community for locating or expanding a business.
Shovel Ready Sites – often refers to large commercial or industrial tracts of land that have been thoroughly and professionally reviewed as part of the due diligence necessary to satisfy a convenient and efficient sale or transfer of real property.
Site Selection – is the process companies to go through to intentionally evaluate multiple business locations to identify the best location for making an investment. The site selection process often includes evaluating both fixed costs and variable costs associated with the most viable locations under consideration. Large companies planning to make multi-million dollar investments or create hundreds of new jobs often gather input from several internal divisions – such as human resources, operations, logistics, and finance – in order to assess key factors and associated risks that impact both the short-term and long-term success of the business.
Site Selection Consultant – One who provides site selection services to companies that need help identifying the best possible location for their business. Companies planning major – highly confidential – projects will often seek the services of professional site selection consultants. Site selection consultants are often tasked with:
- Identifying the most viable locations for further consideration and assessment.
- Performing timely assessments of workforce, logistics, utilities, infrastructure, finance, and other factors among locations under consideration.
- Conducting due diligence.
- Providing a detailed report on the finalist locations assessed.
- Recommending the best location for future investment based on the assessment of the location criteria.
- Negotiating incentives on behalf of their client company that lead to a final location decision.
SBIR – Small Business Innovation Research (SBIR) Program – administered by the Small Business Administration (SBA) the Small Business Innovation Research program is designed to encourage domestic small businesses to participate in Federal Research and Development (R&D) for the purposes of commercialization.
Sector Analysis – or Sectorial Analysis – see also Target Sector Analysis – is the study of the economic impact within a community among represented business or industrial sectors. A sector analysis is often used to help shape recommendations regarding investments, policies, and initiatives a community might take to support the growth and development of target business sectors.
Sole Proprietorship – is a business owned and managed by an individual.
SSD – Special Service District (SSD) is a legally designated area where property owners of local businesses in the defined area plan and establish a sustainable funding source to pay for services to improve their area. See also Business Improvement District (BID).
Stakeholders – are people in a community who have the most to gain or lose in the community, region, or state as it pertains to the area’s economy. Stakeholders are often invited to be part of the strategic planning process to help shape the direction of an economic development effort. Stakeholders often include interested citizens, chamber of commerce executives, college / university administrators, real estate brokers / developers, local business owners, major employers, and representatives of financial institutions.
Stock Keeping Unit (SKU) – is a unique code to identify several characteristics about each product such as cost, date of purchase, color, flavor, size, vendor, supplier, etc.
SWOT Analysis – is an assessment of a community’s strengths, weaknesses, opportunities, and threats and comparing each factor against its main competitors. A SWOT analysis is usually performed in the early stages of a community’s strategic planning process. Conducting a SWOT analysis enables the community’s leadership to better understand its unique competitive advantage to creatively position the community for success.
Target Sector – refers to the type or classification of a group of services, businesses, or industries that an economic development organization strategically intends to market to.
Target Sector Analysis – see also Sector Analysis – is the study of and identification of businesses and industries that share common characteristics such as types of services, products, technology, workforce, etc. A target sector analysis is often a key part of an economic development organization’s effort to determine which sector or sectors have would have a competitive advantage by doing business in the community.
Target Sector Marketing – is about identifying one or more specific types of businesses or industries to focus on and taking steps to understand and serve their particular needs.
Unique Selling Proposition (USP) – is the one thing that differentiates your business or your community from all others and gives it a distinct competitive advantage.
Workforce Development – refers to education and training programs designed to prepare people with the knowledge, skills, talents, and abilities to effectively support the current and future human resource requirements of business and industry.