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South Dakota Rural Enterprise Opportunity Roundup - Economic development versus poverty alleviation

My organization is currently pondering the differences (and similarities) between economic development and poverty alleviation. Since I believe entrepreneurship is a critical link between the two, I thought it would be appropriate to pose the question to all of you economic gardeners. What do you think?

Cory Everett
Micro Business Development
700 Kalamath St.
Denver, CO 80204

"Traditional" economic development has focused on primary jobs for the most part, this being a strategy to bring dollars into the community. Although in some cases these jobs have been filled by low income individuals, that is not necessarily what has been intended. And as the lower skilled manufacturing jobs have left many communities the process becomes more of a disconnect. Now with ED focusing on "quality" jobs in an attempt to bring up per capita income or develop industry clusters I believe there is a further distance between economic development efforts and poverty alleviation. There are many difficulties/challenges and without building too many generalizations I understand from many of my human services colleagues that to bring the low income workers skill levels to meet the "quality" jobs requires intensive and time consuming commitments that economic development is not known to have the patience for. And in the field of Entrepreneurship, few and far between are the micro enterprise models that rival the fantastic work being done in developing countries.

According to the folks I've spoken with at Chalmers Institute ( microfinance works so well overseas because of the general lack of availability of any other credit and for other cultural reasons that we don't have due to our bias to doing thing independently, getting things instantly, etc. What seems to work here in its place are individual development accounts they tell me. That helps separate the folks with a long term perspective suitable to making progress from the ones with an instant gratification orientation and identify people more open to instruction and coaching that tends to go along with the overseas microfinance. In my experience in workforce development watching economic development from the outside (and the reason why Economic Gardening interests me) is that it seems that once a company is big enough to play with the economic development people they just try to use economic development dollars to finance their wanderlust and derive short term benefits for themselves. They promise long term benefits to the community but usually are not too concerned about delivering them if a better deal comes along in 5 years. They want free rent, free utilities, tax breaks, moving expenses, etc for jobs that aren't that good (as low as $8.50 per hour here sometimes).
Chuck Huckaby

Bringing up the bottom of the wage and income distribution can be a way to do economic development, gardening style, that is too often ignored. It is more challenging than the standard formula and requires working with schools, nonprofits, social service agencies etc. It also requires asking the business community to reconsider its frequent opposition to unions, raising the minimum wage, mandatory health benefits or provision of universal health insurance. Focusing on the poor and low wage workers is going to be covered in a book I am now working on (with Ric Holt at Southern Oregon University, cc'd here ) about quality of life, sustainability and economic development in states and communities.

In advance of the book, which won't be out until sometime in 2008 -- a few of the benefits of doing economic development from the inside and focusing on the lower income population are
  1. Avoiding the population growth that causes environmental and infrastructure challenges
  2. Increasing the number of high quality workers that attract higher paying companies and jobs
  3. Less spending (in the long run) on at-risk children in school, in the juvenile justice system and in local health care
  4. More sales taxes and property taxes paid by those who earn more 5) Fewer uninsured showing up at hospital emergency rooms and subsidized clinics A related fact: over half of the anticipated social security gap (when baby boomers retire) is due to the fact that low wage earners haven't been earning as much as they were expected to when the Greenspan Commission recommendations were applied in the early 1980's. They have paid in less in social security taxes that go to support retirees or into the surplus fund. So although studies have shown that social service spending does not increase community attractiveness in the way that other kinds of government spending on schools or infrastructure does, effective strategies to grow the incomes of the poor and near poor will be desirable in the long term.
Daphne Greenwood


629 S. Minnesota Ave.
Suite 201
P.O. Box 2282
Sioux Falls, SD

ph 605.978.2804

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