• Policies that government undertakes to meet broad economic objectives includinginflation control, high employment, and sustainable growth. .

• Policies and programs to provide services including building highways, managing parks,and providing medical access to the disadvantaged.

• Policies and programs explicitly directed at improving the business climate throughspecific efforts, business finance, marketing, neighborhood development, businessretention and expansion, technology transfer, real estate development and others.

What is economic development?

Economic development is a process that influences growth and restructuring of an economy to enhance the economic well being of a community. In the broadest sense, economic development encompasses three major areas :

THE RESEARCH VALLEY

ECONOMIC DEVELOPMENT 101

The main goal of economic development is improving the economic well being of a geography through efforts that entail job creation, job retention, tax base enhancements and quality of life. As there is no single definition for economic development, there is no single strategy, policy, or program for achieving successful economic development. Communities differ in their geographic and political strengths and weaknesses. Each community, therefore, will have a unique set of challenges for economic development.

The Research Valley has geographic and political strengths and weaknesses. The Research Valley Partnership’s current economic development strategy has attempted to play to its greatest strengths; to focus on economic development infrastructure as the catalyst; and to work as a partnership to overcome its greatest challenges.

In pursuit of economic diversification

Economic Development 101

• Partnership Efforts• Regional Economic Development Planning• Texas A&M, Blinn College, TexasOne

• Communications and Marketing (regional / cross-over)• Corporate retention and expansion (traditional)• Corporate attraction (traditional)

Site Selection (Awareness and Expansion / Attraction)

Innovation

• New Ventures (TAMU Partnerships / organic) - focus on science & technology• Financial Support of Small Business Development Center• Texas Triangle Regional Center for Innovation and Commercialization• Business Services (RVIC / International Gateway)• Access to Capital (Aggie Angel Network, Research Valley Angel Fund)• Partnership with Startup Aggieland

• ImpactLife™ - Economic Diversification• Personal wealth creation for all citizens through primary job employment• To increase the tax base of the community (the rising tide effect) /public services and quality of life

infrastructure• Expanded private and public research funding

The Research Valley Partnership (RVP)

The RVP is a 501c(6) Texas Economic Development Corporation. The RVP defines its economic development strategy as a long-term process of wealth creation through focus on economic development infrastructure to catalyze economic expansion through new ventures, expansion, and attraction of primary job creators.

The RVP's main purposes of economic development are:

Economic Development 101

How does the RVP conduct economic development today?

The RVP’s economic development strategy has evolved over the past 10 years to focus on what it calls an “Innovation to Industry Model.” This model is unique to markets like Bryan-College Station where substantial knowledge, education, and innovation are present. The RVP’s strategy is in line with the concepts detailed in the book titled The New Geography of Jobs, by Enrico Moretti.

The RVP has three program areas: Engagement, Site Selection, and Innovation.

Engagement

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Economic Development 101

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Community Roles

The Research Valley Partnership (RVP) operates as a “regional” partnership. The mission of the RVP is to be a catalyst for economic growth in the Research Valley without regard to municipal jurisdiction.

Today, the RVP is focused on four key industry areas: Life Sciences, Energy, Advanced Materials/Special Chemical, and Information Technologies (all with a bent towards STEM and advanced manufacturing).

Companies create jobs. The RVP, through its “community-university-industry” approach strives to facilitate "primary" job creation. The RVP does not engage in economic development efforts to attract or grow the retail and services sectors of the regional economy.

The cities of Bryan and College Station, as well as the Convention and Visitors Bureau, conduct economic development focused on the retail, services, and tourism sectors of the area’s economy. In addition, the Cities provide valuable assistance to the RVP relative to infrastructure and development considerations. These efforts are critically important and include redevelopment initiatives, planning efforts, and strategies to grow the tax base (i.e. ad valorem, sales, and hotel/motel).

Brazos County does not have an economic development department and looks to the The Research Valley Partnership as its sole economic development service provider.

Definition of Primary Jobs

Primary or, as they are sometimes called, "export income" jobs are defined as jobs which produce goods and services in excess of what can be consumed in the local marketplace. An example of a business sector that does not create export income is the retail sector. This is because the shopping centers located within an area are typically spending money that has already been "created" by primary employers in that area. It is not "new money." However, the definition of "primary or export income" employment changes depending on the definition of the market. For example, most would not think of Texas A&M as a primary job creator. However, think about how Texas A&M derives its revenues (state and federal funding / tuition / sports / private research funding). It takes researchers to do research. These are primary jobs with a huge multiplier effect.

Definition of Secondary (Indirect) Jobs

As a result of creating new jobs, the demand for goods and services generated by the primary employer is increased and "indirect" or "spin-off" jobs are created. These jobs do not create wealth. They are the product of "wealth" created by primary employment.

Generally, these are jobs like retailing and other commercial activities. These occupations provide services to primary jobs. They may also include jobs that meet the required "input" needs of primary jobs.

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The Multiplier

Spin-off or indirect jobs are typically associated with the term "multiplier." The term "multiplier" comes from a series of economic calculations that estimates the number of jobs required to meet the needs of one primary job. The larger the multiplier, the greater the economic impact of the primary job created. Two things determine the size of the multiplier: average wage paid to the primary employee and the amount and cost of "inputs" required for the primary employee to accomplish his or her work.

Retail is seldom a good primary employer, in terms of wealth creation, because of the old adage, "retail follows rooftops." In other words, retail must follow customers and those customers are created through primary employment’s wealth generating ability.

A diverse regional economy that offers a wide array of goods and services for purchase by the primary job will also have a larger multiplier than a smaller market. In other words, a diverse economy "holds on" to the primary worker’s income longer. In addition to the primary job multiplier, there is also the impact of research funding (especially funds that lead to technology commercialization).

Economic Development IncentivesThe Research Valley competes globally. Economic development incentives are tools designed to facilitate the attraction or expansion of companies that will create jobs and add value to the tax base. Communities, regions, states, and nations that do not offer incentives to companies that create primary jobs are the absolute exceptions. Furthermore, the Research Valley’s incentives offering is far less competitive than virtually every major metro area in the State of Texas.

The RVP utilizes unified economic development incentives guidelines adopted by the cities of Bryan and College Station and by Brazos County. The development and application of standardized guidelines in a multi-jurisdictional community is critical to avoid internal competition. This approach has served to create a level playing field across the community in terms of incentive offerings, thereby eliminating head to head competition between the two cities for major economic development projects that create primary jobs.

Economic Development 101

Todd E. McDaniel, CEcD President/CEOThe Research Valley Partnership tmcdaniel@researchvalley.org Office: 979.260.1755www.researchvalley.org