One of the greatest challenges to state and local economic developers is to be tasked with developing their communities in times of economic recession. As large companies lay off workers, small businesses close, and money for investment becomes tight, tax receipts dwindle as well. This causes government to tend to use its remaining resources to ensure the continuation of basic services rather than expending them on development efforts. . . . However, there are actions that can and should be taken: 

Engage in Economic Development Strategic Planning

One of the main functions of strategic planning is to help organizations achieve their goals within the limitations of the resources available to them. Thus, an economic recession is a prime time for engaging in economic development planning. It not only can help the community weather the storm but also takes advantage of the slack time created by a slowdown to prepare for times of economic boom ahead.

Find Partners and Build Networks

Each community is part of a regional economy. Each regional economy is a component of the national economy, which in turn is a player in the global economy. This suggests that communities that share boundaries and economic realities and build social capital among themselves can benefit from what Brandenburger and Nalebuff call "co-opetition," or collaborating to compete. . . .

Mutual benefit can be reached only when each party knows what it wants and why and can express that clearly to the other parties in the partnership. This becomes the basis for negotiating an agreement that is effective and will last the lifetime of the partnership.

Invest in Entrepreneurship

Entrepreneurship can be a low-cost, bottom-up strategy for fostering economic development. It is economically sustainable because it is small scale, draws largely on local resources, and produces home-grown businesses that tend to be loyal to the community in which they were spawned. These qualities help make entrepreneurship assistance, or enterprise development, an attractive economic development strategy for hard times.

Engage in Bootstrapping

Entrepreneurs not only can help build economies but also can be role models for how to do more with less. In the world of entrepreneurship, this is called bootstrapping. . . .

Bootstrapping involves a variety of techniques for attracting and utiliz­ing other people's resources to help entrepreneurs accomplish their goals.

For example, a small rural community in the Midwest wanted to start a kitchen business incubator, but the community could not afford to buy a building and outfit it with the kitchen equipment . . . Community planners negotiated with the local high school to give their clients access to the school's home economics lab when school was not in session.

Make Investments in Economic Good Times with Foresight

Rather than waiting until the economy takes a turn for the worse and reacting to that, it is far better to look forward in good times and make the kinds of investments that will cushion the blow of a recession. . . . Of course, this requires the kind of long-range anticipation that only planning can provide, which brings us full circle. Planning ahead is absolutely the best way to manage hard economic times.

From Economic Development: Strategies for State and Local Practice, Second Edition (ICMA 2010). Excerpt from Chapter 3, “Planning for Economic Development.”

Get the full picture on strategies for economic development by checking out ICMA’s Economic Development: Strategies for State and Local Practice at ICMA.org/press.