By Kenan Fikri, Catherine Lyons, and Kennedy O’Dell

The American Jobs Plan (AJP) includes a number of economic development initiatives aimed at spurring growth throughout the country, from rural communities to interior metros. While the AJP contains a number of strong policy ideas, the new programs face the same challenge in achieving impact as existing federal programs: they exist separately, without the benefit of a broader national development strategy guiding implementation and impact.  

At the present moment, a plethora of agencies and programs are responsible for economic development at the federal level. From the Economic Development Administration (EDA) to the Department of Agriculture, everyone is doing it—executing particular programs, offering technical support, offering financing—but no single entity stands above the rest to really lead it. There is no central coordinating entity that drives economic development strategy across the bureaucracy and focuses on setting goals and delivering clearly articulated outcomes. Instead, most existing programs are focused on disbursing narrowly prescribed funding streams. This line-item orientation limits the synergies that could exist with more coordinated, coherent supervision and administration and puts the burden of navigating the complex web of overlapping initiatives on already overburdened local officials. Overhauling this fragmented system to improve both efficiency and outcomes requires rethinking the way the federal government approaches economic development.

Short of truly empowering EDA to not just be the only federal agency dedicated to economic development but the central one with more programs brought under its purview and a clear mandate to steer economic development policy government-wide, Congress should call for the creation of a National Development Strategy as well as a suite of five other supporting policies aimed at improving the efficiency, creativity, and ultimate impact of federal economic development policy.    

  1. Require the executive branch–chaired by EDA with representation from other agencies–to develop a biennial National Development Strategy (NDS) to provide vision and strategic coordination across agencies and programs. Requiring a NDS would ensure that the federal government pays proper attention to how programs can work together to uplift struggling places and drive national growth as well as ensure economic development has staying power as a policy priority. The NDS would also allow each administration to clearly articulate its vision for economic development policy and develop a plan to deliver programming around those objectives. Statutory language could be similar to that in the Goldwater-Nichols Department of Defense Reorganization Act of 1986 that mandated the National Security Strategy.
  2. Establish permanent interagency working groups/task forces based on large development themes, with each responsible for carrying out relevant portions of the NDS (ex. Rural Interagency Group, Small and Midsized Cities, Metro, Energy Transition Communities).
  3. Commission a thorough review of the efficacy and efficiency of all existing economic development programs and provide recommendations to Congress as to whether the program is best administered by its current agency or should be consolidated under the expanded purview of another one.
  4. Establish an Economic Development Policy Incubator where agencies would detail individuals to discuss and construct new pilot programs and methods of program delivery to improve efficiency, efficacy, and impact of both new and existing programs. This dedicated group of thinkers and collaborators would be a structural complement to the broader strategy as well as the working groups serving as an internal innovation engine.
  5. Expand the development financing toolkit, potentially by establishing a domestic development finance corporation. Innovative financing tools are essential to plugging the public resource and private sector capital access gaps that stymie economic development in struggling corners of the country, from disinvested urban neighborhoods to underdeveloped rural regions. A domestic development finance corporation would provide targeted financing not available on the private market such as loan guarantees, direct equity contributions, and securitization across high-risk entrepreneurs or locations. This would help fill the space between existing federal grants, loans, and programs to incubate market activity in some of the country’s weakest-market areas.
  6. Experiment with a more regional approach to development, either by commissioning a report on the success of existing regional programs, by adjusting the purview and focus of existing regional development offices, or by forming a nation-wide network of fully-funded regional commissions and authorities similar in structure to the Appalachian Regional Commission. Not least, such regional entities could serve a vital coordinating function across programs that remain fragmented at the federal level and ease access to federal resources for localities—especially important for systemically underserved areas. 

All in all, this package of proposals would help the federal government think more holistically about the relationships among economy, place, and policy. It would also help to fill and further identify the programmatic and strategic gaps that exist in current economic development efforts. An NDS and the complementary policies would bring innovation and strategic direction to the currently fragmented and uncoordinated programmatic offerings. The size and scope of the American Jobs Plan helps to clarify the need: dozens of programs and trillions of proposed dollars need to be met with a coherent, long-term, place-based strategy for making the investments more than the sum of their individual line items.

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