Tom Fellrath 3Having to choose one definition when no commonality exists (and no peer-reviewed definitionwas identified), this literature review will follow in the spirit of the Indiana EconomicDevelopment Corporation’s 2006 strategic plan, which suggests that, “The bottom line is wealthcreation” (
, p. 2). This makes sense at an intuitive level; a fostering of wealth will take the form of job creation (both direct and indirect) and lead to corresponding taxrevenue growth for government (Downing (2004), Bartik (2005)). The focus on wealth creationdoes not include or exclude any specific industries, activities or behaviors. Thus, we will use thefollowing definition as our foundation:
is the act of using public sector tools to build wealth for the larger population of citizens and businesses, as well as thegovernment.
It is those tools, in pursuit of this goal, that this review will consider.Economic development can be conducted either through encouragement of expansion of homegrown entrepreneurial activity or retention of incumbent employers who could leave thecommunity or close their doors altogether. It also can take the form of attraction or recruitmentof new employers to the locality (Fleming and Leonard (1994) and Downing (2004)). Mostentities that focus on economic development implement a multipronged strategy that isdisproportionately weighed toward retention and recruitment activities.Regardless of the approach, it appears that the likelihood of success of economic developmentactivity depends on the fiscal health of the municipality or state, the governmental structure, theextent of professionalism in the economic development function and level of competition amongcities for economic development (Reese, 1999). To illustrate the counterpoint, rural localitieshave a host of unique challenges to achieving economic development success, including the