NCPA - National Center for Policy Analysis

Economic-Development Specialists Turn Attention to Smaller Firms

February 11, 2003

When a city or a town snags a huge new auto plant or a corporate headquarters, local politicians and the media trumpet the good news. But today, local economic-development commissions are turning their sights to smaller companies and asking how they can help.

  • Attracting employers from other locales takes up about 15 percent of economic-development officials' time, according to experts.
  • The other 85 percent is spent trying to retain local employers.

The new emphasis on smaller firms is prompted by the realization that they create most of the jobs local economies depend upon.

  • Roughly half of the private-sector work force is employed at firms with 500 or fewer employees.
  • Of the 7,610 corporate expansion projects costing more than $1 million last year, only 123 of them involved more than 500 jobs.
  • The average expansion project added 53.4 jobs.

Companies tend to move to find lower labor costs, lower electricity costs, to follow a major customer or to find lower taxes.

Source: Jeff Bailey, "Firms Get More Attention, Help From Agencies," Wall Street Journal, February 11, 2003.

For text (WSJ subscription required),,SB1044909486200020383-search,00.html


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