The long-standing playbook for regional economic growth, which often involved states competing to land a single large employer with hefty incentive packages, is giving way to a more resilient and collaborative strategy. Today, successful regional development hinges not on attracting one big company, but on cultivating a thriving local ecosystem where businesses, educational institutions, and civic organizations work in concert. This modern approach recognizes that an economy’s true strength lies in the interconnected networks that foster innovation, support smaller enterprises, and create widespread opportunity.
The Evolution of Regional Economic Development
For decades, many state economic development systems operated on a model designed for a different era, one where growth was secured by attracting a major corporation. According to analysis from the Brookings Institution, this approach is no longer sufficient. The modern economy is increasingly driven by assets like technology, talent, and energy, which are cultivated and determined within regional ecosystems. While these shifts present new avenues for growth, they also carry risks of job displacement and growing economic divergence if not managed with a new strategy.
Achieving sustainable growth now requires a structural shift in how states manage their economies. Fieldwork with hundreds of economic development leaders across more than a dozen states reveals a consensus that today's economy is shaped by the combined activities of industry, higher education, and civil society. These elements are most effective when organized and coordinated through regional networks, demanding a move away from state-centric, top-down planning toward a more collaborative, ground-up system.
Comparing Economic Development Models
The strategic shift from attracting individual firms to cultivating regional networks represents a fundamental change in the philosophy and practice of economic development. The older "Attraction Model" and the modern "Ecosystem Model" differ significantly in their core actors, strategies, funding, and measures of success. This comparison, based on principles outlined by the Brookings Institution, clarifies the new playbook for regional prosperity.
| Dimension | Attraction Model | Ecosystem Model |
|---|---|---|
| Key Actors | Primarily state economic development agencies and large corporations. | State agencies in partnership with regional networks of firms, workers, universities, and civic institutions. |
| Primary Strategy | Attracting large employers through incentives and securing growth by bringing in single companies. | Coordinating industry, higher education, and civil society to build on regional strengths and assets. |
| Funding Mechanisms | Relies heavily on state-level tax breaks and financial incentives for individual large firms. | Uses coordinated public-private investments and reallocates resources to support regional networks and priorities. |
| Measures of Success | Primarily focuses on job creation numbers announced by attracted large employers. | Employs broader outcome metrics like employment rates, income growth, and reduction of economic disparities. |
