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How Municipalities Can Drive Local Economic Development

By Harrison Kelly

Economic development is not only vitally important in your local government because it creates more opportunity and a better way of life for constituents, but also increases funds to improve municipal service delivery and allows public sector businesses to grow in revenue as well. 

With the cultural shift from traveling into offices every weekday to a “work from anywhere” mentality, as well as the ongoing passage of Infrastructure Bill grant dollars being distributed nationwide, there are many reasons for municipal governments to be excited about local economic development in their communities. 

Americans are moving out of large expensive cities into smaller secondary cities and suburban neighborhoods, meaning that municipalities of all sizes should prepare for an increase in the registration of new businesses, new zoning, and the need for more advanced digital and physical infrastructure to accommodate population growth

Here’s your guide to why government led local economic development can help modernize your community, and how your local government can and should help businesses thrive in your municipality.

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Why Should Local Governments Care About Economic Development?

Financial success and higher property valuations means less stress and a better quality of life for constituents, which should be the ultimate goal of elected city officials and other municipal workers alike. Further, successful businesses registering in your community leads to more tax revenue for your municipality and a bigger budget to implement ambitious initiatives that will improve your city. Prospering business and happy constituents mean re-election for you and improved quality of life for constituents. 

The importance of local economic development is more obvious now than ever, with ongoing inflation only increasing nationwide. Your local government must prioritize economic growth to create jobs, keep up with rising costs, and maintain a competitive advantage over other municipalities or regions that potential constituents might also be considering a move to.  

Throughout the country, residents are fleeing expensive cities in droves, and moving to more affordable neighborhoods and smaller municipalities. A new report from the National Association of Realtors displays how major metropolitan areas such as New York, San Francisco, and Chicago saw more people leaving than moving in in 2022. 

In fact, records from 2023 indicate that nearly 70% of U.S. ZIP codes show fewer inbound moves in 2022 compared to 2021. This means your locality needs to prepare to provide services and a strong economy for potential new residents moving into your community. Is your local economy prepared to support new incoming residents?  

What is Local Economic Development?

Local Economic Development (LED) is the process of encouraging business development to boost the local economy, provide new work opportunities, and improve the quality of life and constituent engagement throughout the entire community. 

Municipalities are oftentimes judged on the local development of the economy within their community, because local governments wield the power to encourage business registration and job growth within their neighborhood. Failure to stimulate business growth and encourage new work opportunities in the area will cause constituents to lose trust in their local government and elect new government officials. Further, neglecting the responsibility of job creation in your locality will create more poverty and financial instability throughout your city, and lead to different negative side effects. 

How Does Local Economic Development Benefit Local Governments?

There are countless benefits to growing the economy within your community that are helpful to the local government and citizens alike. 

Here are some of the benefits of local economic development for municipalities:

1. Happier Constituents (and Re-Election!)

There’s no denying that financial freedom reduces stress for constituents. Poverty reduction is possible simply by bringing relevant jobs to your town and by supporting self-employed entrepreneurs. What better way to reduce stress for local community members and make your community more equitable for all? 

Happy residents will surely be inclined to keep their elected officials in office, and the rise in job availability will encourage more people to move in your area. Be sure to manage population growth in your community and encourage the new residents and visitors to patronize local businesses. 

2. More Construction Development

With infrastructure bill funds and economic development in your area, there will be a major opportunity to expand on the number of commercial, residential, and public buildings within your community. Prioritize the physical infrastructure in your community to ensure older buildings are updated and new building projects run smoothly. 

An increase in construction within your county will advance economic development and encourage constituents to check out businesses within the new buildings.

GovTip: Get construction done more quickly with these helpful municipal construction software modules: 

Through a cloud-based platform, digital permit applications can be accessed  by citizens or municipal workers and filed directly on your municipal or county website which allows businesses and residents to apply 24/7 for permits. Online permitting software eliminates PDFs, email, phone calls, checks, manual data entry, and other antiquated processes. 

With the GovInspect App, paired with GovPilot's platform, on-site inspections and real-time, cloud-based record keeping directly from mobile field devices helps save municipalities countless hours and resources. The GovInspect app is available on the App Store and Google Play for quick download on any device.

Residents can submit concerns regarding their community either via an online form or the GovAlert mobile app that comes with the module. Once submitted, the concern is routed to the correct government department

For the construction department, municipal officials can be made aware of maintenance projects that need to take place as well as new development projects your citizens would like to see in the near future. 

Learn more about How Government Permitting Software Works

3. More Tax Income & Application Fees

Economic development means more business registration, construction projects, and new constituents moving into your city. An increase in tax income and application fees from construction permits and other licenses will continually flow to your local government for years to come. 

This boost in funds can be used as needed to solve problems at the local level and improve constituent services in your community.

Moving citizen and business applications to your government website is a great way to drive revenue for your local government by including application fees. Learn more about GovPilot's tax department software, Digital Government Fee & Fine Collection and the Best Government Credit Card Processing Partners.

How Can Municipal Governments Encourage Economic Development?

Luckily for you, the Infrastructure Investment and Jobs Act as well as the American Rescue Plan funds will be putting grant money straight into your community. If used accordingly, your economy will be boosted with improvements to your digital and physical infrastructure. 

Here are the best LED (local economic development) strategies to grow your local economy with municipal support: 

1. Economic Development Strategic Plan

Form an economic development strategic plan for your community that specifies your local government’s economic mission, goals and allocated budgets for the year. The organization of this information is vital to the  strategic planning of economic growth in your community. The goal of this economic strategic plan is to help government employees, residents, and business owners understand your municipality's economic priorities. 

This plan should also outline where funds will be allocated and particular actions the government will take to improve the economic development of the community. Work in collaboration with constituents via local public meetings to learn what challenges they face in your community's economic climate and address the roadblocks with these new funds.  Having a strong economic development strategic plan will help your local government organize and take advantage of new economic opportunities. 

Consider this article on Government Strategic Planning for tips and more information about future planning in your community and economic development department. 

2. Leverage Infrastructure Bill and American Rescue Plan Funds

The infrastructure bill and American Rescue Plan include funds for local governments to allocate towards physical and digital infrastructure. Choose wisely about how your locality spends its funding, and consider how many construction and IT jobs can be created in your community by hiring outside support on your selected infrastructure projects. 

For more information on these bills, read the following GovPilot guides:

3. Digitize Business Registration and Permit Applications

There will be a lot of work for public sector employees with the rise in infrastructure projects and business growth. Automate government processes like online permit applications, business registration, and other application types via your website to save your government hundreds of hours a month. Don’t make constituents drive to city hall, allow them the convenience of filling out forms and permits fully online, at any time. 

To learn more about how automation can help with local government innovation, explore these GovPilot case studies:

If your community has a government job open that can’t be automated, read on in the Public Sector Recruiting guide to find talented individuals for the job.  

4. Urban Transformation

Taking action to improve the physical infrastructure in your town will create construction jobs and improve the lives of constituents. Consider improving public community spaces like public buildings and county and township parks to be natural disaster proof and more modern. 

Read these guides to learn more about protecting your community from natural disasters: 

You can also work towards making your community accessible for pedestrians and cyclists as a 15-Minute City. Communities that are walkable are said to improve quality of life and are appealing to people looking to move out of crowded, non-pedestrian friendly areas. 

5. Better Broadband Access

The infrastructure bill is specifically offering grant funds towards improving wireless internet access. The internet should be accessible to everyone nationwide, regardless of location or income level. 

Improving internet speeds will rapidly advance upward mobility and local economic development, as people will be inclined to work from home and even start their own remote businesses. Additionally, there will be demand for local private sector IT jobs to establish better broadband within your area, and constituents will have access to online job applications. Recruit tech workers that live in your community who are looking for work to continue to boost the revenue and economic equity in your community.  

Learn everything you need to know about Broadband Internet And Going Digital With Infrastructure Funds

6. Let Data Guide Decision Making

If you haven’t made the switch to digitizing your locality with government management software already, now’s the time. Leveraging software across your departments won’t only save time, but will allow you to collect meaningful data that can be used to improve your community.

As applications are submitted through your website, relevant data on which applications are being filed will allow you to consider what type of project your local government needs to prioritize. With technology like complaint management software, and government inspection software, constituents can contact you directly to voice their concerns, giving you meaningful data on issues within your community that you should address in a timely manner. 

Learn more about leverage Local Government Analytics for Making Informed Decisions.

Prioritize Municipality Led Local Economic Development 

You owe it to your constituents to create job opportunities and grow the local economy to the best of your ability, it's the responsibility of the local government that constituents put trust in. Take action to iron out your government workflows and streamline constituent services so you can be as supportive to local businesses as possible, and leverage federal funds to make truly meaningful improvements to your community. When your local government invests in the community, the community can flourish, creating more opportunity and financial stability for all community-members. 

To learn more about how digital infrastructure and economic development software can boost your local economy, book a consultation. 


Local Economy FAQs

  • What is Local Economic Development?

Local economic development (LED) is a micro-level view of the performance of an economy within a specific region, like a town, city, neighborhood, or county. This allows you to hone in focus to your own municipal data and analyze the economic developments in your community.

Local governments have a direct impact on the local economy by encouraging business registration and job creation, encouraging sustainable growth by providing work opportunities to private businesses like construction contractors and IT workers, and providing modern internet access. 

Utilize Local Government Economic Development Software to improve the economy in your municipality. 

  • How Can Local Governments Improve the Regional Economy?

Public-private partnership is the most meaningful way community leaders can encourage meaningful economic growth throughout the entire region while developing stronger digital and physical infrastructure. 

Better physical infrastructure for community members to access can improve quality of life and create business opportunities for construction companies, and employment opportunities for those seeking work in the community. Improvements to broadband can bring globalization at a regional-level, as remote work opportunities will allow entrepreneurs to work from (and land clients from) anywhere.

To learn more about improving access to broadband internet in your community, read our guide: BEAD Broadband Grants for Rural Communities: What Local Governments Should Know

  • What Economic Development Efforts Are Best?

Regional planning should dictate which LED endeavors are most suitable for your community. How is current broadband infrastructure? Has local development activity considered natural disaster resilience? With federal legislation putting infrastructure funds in local policy makers' hands in the near future, investment in infrastructure will likely be the most meaningful way for local stakeholders to see a boost in economic growth within your community. 

Additionally, consider public services that can lead to sustainable development overtime, like skills development courses for constituents seeking work, simple business registration to encourage entrepreneurship, and offering innovative solutions to keep constituents happy.

  • What Are The Key Features of Economic Development Software? 

There are many features of Economic Development software that assist localities in their efforts to promote new business growth, give your local economy a boost, and stay ahead of regional competition with cloud-based economic development software. Check out more economic development  solutions like these from GovPilot: 

Read on: 

Additional Economic Development Resources (Source List): 

Tags: Government Efficiency, Digital Transformation, Blog, Civic Engagement