Alternative Approaches to Thinking about Economic Development

Abstract

Much of past thinking about economic development started with a traditional low-income rural agricultural economy losing its workforce to higher-paying jobs in the new, modern industrial sector. Hirschman and others proposed an alternative strategy for economic development in his unbalanced growth theory that focused on an industry rather than an entire sector or two of a developing nation's economy. Hirschman not only highlighted, but emphasized in significant ways, the role and importance of the private sector in economic development. Putnam and others take the social capital approach to economic development. We offer still another way of thinking about economic development strategy that builds on the activities within a local labor market area and its institutions for constructively engaging an active, public-spirited local citizenry. The local labor market approach contrasts with the earlier ways of thinking about economic development by its attention to local institutions in building a civic workforce. This functional community serves as a building block for defining an economic region composed of several labor market areas, of which one or more form its core area, while the more distant ones form its periphery. This approach provides the conceptual environment for building a model for local economic development.