What Is Economic Development?
How Government & Business Work Together to Grow the Economy
We often hear that “government should run more like a business”. Typically, this statement is meant to imply that the private sector is more innovative, creative, and efficient—that the American economy would grow more if only government would get out of the way. This is a common assumption in American business culture that limits economic growth and shows a lack of understanding about how the public sector supports economic growth through economic development. Real economic growth requires a partnership between government and business.
What is Economic Development?
Although I am now the CEO of Sunstone Management—a private equity investor in Southern California—I spent the last 20 years of my career in public service, most recently as the Director of Economic Development for the City of Long Beach, CA where we introduced many new and innovative ways to create economic growth through public-private partnerships.
Economic development is generally defined as a governmental effort to improve standards of living and quality of life through targeted investments in workforce, real estate (infrastructure), and business development. Each level of government—local, state, or federal—can play a different role in economic development for the benefit of the individual worker, business, or the economy overall. For example:
- Economic development activities can be big—such as creating jobs and growing the economy through monetary policy, tax incentives, and regulatory incentives on the state or national scale.
- Economic development can also be small and highly targeted—such as the construction of libraries to provide access to information or new roads to connect residents with jobs in a local economy.
No matter the size, however, economic development requires a partnership between government (public sector) and business (private sector) to identify the infrastructure, investments, and policies that are needed to create growth.
How Can Business and Government Partner to Growth the Economy?
In a previous week, I shared some recent statistics about the states that are leading the nation in the general standard of economic growth Gross Domestic Product (GDP) per capita (read more at Sunstone Management Expands its Investment in University Partnerships: How Universities are the Foundation of the Startup Economy). Not surprisingly, these are all state governments that have invested in top tier education, research, and development strategies that attract and develop talented students, faculty, and investors from all over the world. These national leaders in economic development provide great examples of how governments are partnering with business to drive innovation and economic growth. A true public-private partnership.
Public-Private Partnerships will Shape the Economy
At Sunstone Management, we believe in the powerful combination of government AND business to create economic growth. As demonstrated by the public-private partnerships we are building with the publicly-funded California State University (CSU) system (see CSU Demo Day Powered by Sunstone), we intends to donate $1M over 5 years to programs that support early-stage entrepreneurs, help students start new businesses, and grow job opportunities for the California economy.
Economic development is a partnership between both government and the private sectors. As demonstrated by the growth in GDP per capita, connecting public universities with private sector investment is a time-tested strategy to stimulate economic development and create a higher standard of living for the community.
More About Sunstone Management
Sunstone Management is an private equity investment firm located in Southern California with a focus on early-stage entrepreneurs, dedicated to building great companies through creative public-private partnerships. If you believe in a similar investment philosophy, we encourage you to join the Sunstone Community today. We are always seeking great Founders, Funders, and Friends to advance our vision for the economy and the world around us. You can visit our website at sunstoneinvestment.com for more information or follow us on social media for upcoming events and announcements at LinkedIn, Twitter and Facebook.