Economic Development Administration Overview

Established under the Public Works and Economic Development Act (PWEDA) of 1965, as amended (42 U.S.C. § 3121 et seq.), the Economic Development Administration has helped communities generate jobs, retain existing jobs, and stimulate industrial and commercial growth for more than 45 years.

As the only federal government agency focused exclusively on economic development, the U.S. Department of Commerce’s Economic Development Administration (EDA) plays a critical role in fostering regional economic development efforts in communities across the nation.

EDA’s investments establish a foundation for sustainable job growth and the building of durable regional economies throughout the United States. This foundation builds upon two key economic drivers: innovation and regional collaboration. Innovation is the key to global competitiveness, new and better jobs, a resilient economy, and the attainment of national economic goals. The new global economy is built on centers of competition, and those regions that work together to leverage resources and use strengths to overcome weaknesses will fare better than those that do not.

Guided by the basic principle that communities must be empowered to develop and implement their own economic development and revitalization strategies, EDA works directly with local economic development officials through a bottom-up approach. This collaboration results in grant investments that are well defined, timely, and linked to a long-term sustainable economic development strategy. Linking EDA’s investments to a community’s strategic economic development plan enables the Federal Government to better leverage public and private sector investments.

EDA’s flexible programs and structure enable nimble operations and allow for innovation and responsiveness to changing economic needs and conditions faced by its local and state government partners. EDA’s economic footprint is wide and its tool box is extensive—including technical assistance, post-disaster recovery assistance, trade adjustment support, strategic planning and research and evaluation capacity, thereby allowing the agency to offer the most effective investment to help communities succeed in the global economy.

EDA Programs

EDA’s programs (see sidebar box) offer a complementary, balanced portfolio of tools that are designed to help rural and urban communities evolve through the economic development process to become robust regional engines for business creation and job growth.

Public Works and Economic Development Assistance

EDA’s Public Works and Economic Development investments help distressed communities revitalize, expand, and upgrade their physical infrastructure. This program enables communities to attract new industry; encourage business expansion; diversify local economies; and generate or retain long-term, private-sector jobs and investment through the acquisition or development of land and infrastructure improvements needed for the successful establishment or expansion of industrial or commercial enterprises.

Public Works investments help facilitate the transition of communities from being distressed to becoming competitive in the worldwide economy by developing key public infrastructure, such as technology-based facilities that utilize distance learning networks, smart rooms, and smart buildings; multitenant manufacturing and other facilities; business and industrial parks with fiber optic cable; and telecommunications and development facilities. In addition to these, EDA continues to invest in its traditional Public Works projects, including water and sewer systems improvements, industrial parks, business incubator facilities, expansion of port and harbor facilities, skill-training facilities, and brownfields redevelopment.

Economic Adjustment Assistance

The Economic Adjustment Assistance (EAA) program uses a flexible set of tools to respond to the wide range of economic development challenges in communities and regions across the nation, including globalization, natural resource depletion, corporate restructuring, and natural disasters.

EAA is the most effective single program in EDA’s arsenal to address areas impacted by globalization, especially manufacturing dependent communities that need to develop and implement regional strategies that will transform and diversify their economies and position them competitively in the global marketplace. EAA funds can be used to design the transition strategy, construct or upgrade public infrastructure, and capitalize locally or regionally administered Revolving Loan Funds that directly assist innovative entrepreneurs in growing 21st century businesses.

Additionally, the EAA program, with its forward-looking “imminent threat” authority, allows EDA to initiate interventions before a community’s economy bottoms out, when economic trends may clearly indicate the need for intervention but the trailing economic eligibility indicators employed in other programs may not provide adequate access to other assistance.

Revolving Loan Fund Program

As part of the Economic Adjustment Assistance Program, EDA makes grant-based co-investments with units of state and local government and nonprofits to establish lending programs through its Revolving Loan Fund (RLF) Program.   This expands capital access opportunities to small businesses in distressed regions at below-market rates or when funds are otherwise unavailable from private lenders. Grant recipients typically must contribute matching dollars to capitalize the fund. Revolving Loan Funds operate, in principle, by issuing new loans as old loans are repaid.  Eligible uses for loans include real estate, equipment, fixed assets and working capital.  As of April 2013, the RLF program encompassed 564 RLFs, with a combined capital base of $848 million

Economic Development Planning Assistance

The Economic Development Planning Assistance program provides essential investment support to district organizations, Native American organizations, states, sub-state planning regions, urban counties, cities and other eligible recipient to assist in planning. The two categories of the Planning Assistance program are: (a) planning investments for District Organizations, Indian Tribes and other eligible entities; and (b) short-term planning investments to states, sub-state planning regions and urban areas. Eligible activities under this program include developing, maintaining, and implementing a Comprehensive Economic Development Strategy (CEDS) and related short-term planning activities.

Technical Assistance

EDA administers the University Center Economic Development program, the Local Technical Assistance program, and National Technical Assistance program. These three programs help promote economic development and alleviate unemployment, underemployment, and out-migration in distressed regions.

Institutions of higher education have extensive resources, including specialized research, outreach and technology-transfer and commercialization capabilities, as well as recognized faculty expertise and sophisticated laboratories. The EDA-supported University Center (UC) program is specifically designed to marshal the resources located within colleges and universities to support regional economic development strategies in regions of chronic and acute economic distress. The UCs, which EDA considers long-term partners in economic development, are required to devote the majority of their funding to respond to technical assistance requests originating from organizations located in the economically distressed portions of their service regions.

The UCs have a long history of promoting and facilitating economic development in their service regions. They have often been among the first to recognize emerging technical assistance needs. As early as 1980, for example, EDA-funded UCs recognized and responded to the needs of small and medium-sized manufacturers and processors for technology transfer and commercialization assistance.

Most UCs focus their efforts on assisting units of local governments and nonprofit organizations in planning and implementing regional economic development strategies and projects. Typical activities provided by the UCs include targeted commercialization of research, workforce development, and business counseling services. Other UCs may focus their efforts on helping local organizations with conducting preliminary feasibility studies, analyzing data, and convening customized seminars and workshops on topics such as regional strategic planning and capital budgeting.

EDA began administering the University Center Economic Development Program on a competitive, multi-year basis in FY 2004, holding competitions each fiscal year in two of EDA’s six regional offices. In FY 2012, EDA’s regional offices in Seattle and Atlanta held their third round of competitions. During this year, EDA invested $16.2 million in 58 UCs, including second- and third-year funding awarded to centers selected in prior years.

The Local Technical Assistance program, one of EDA’s smallest programs in terms of funding, is nevertheless an extremely flexible and useful economic development tool. Projects analyze the feasibility of potential economic development projects, such as an industrial park or a high-technology business incubator. Feasibility studies are an effective tool for determining whether the market will support a particular activity or site.

While Local Technical Assistance investments are typically small in size and scope, they can prevent costly mistakes and misguided investments, such as costly infrastructure improvements to support obsolete industries. Targeted market feasibility studies can help communities overcome these hurdles and identify tomorrow’s higher-wage employers. Because of these feasibility studies, many communities have subsequently received funding under EDA’s Public Works or Economic Development Assistance programs, or other federal and state programs, to implement those projects.

The National Technical Assistance program assists in formulating and implementing new economic development tools. These tools support local governments’ efforts to partner with private industry and attract private investment to revitalize regions and local communities. Providing timely information on best practices in economic development is critical to practitioners’ efforts to alleviate economic distress and promote economic development. This program identifies and funds the collection and dissemination of new knowledge, analysis, and technical information, which helps communities assess their economic development opportunities and supports EDA’s overall strategy of enhancing regional cooperation, fostering innovation, increasing productivity and developing industry clusters.

Research and Evaluation

Through the Research and Evaluation program, EDA builds the knowledge base for sound, market-driven regional and local economic development. This work is critical to ensure that EDA’s initiatives and investments are consistent with current best practices in economic development. Program evaluations ascertain EDA’s impact on measures such as return on taxpayer investment, private capital investment leveraged, and the creation of higher-skill, higher-wage jobs. Projects under the Research and Evaluation program may be carried out through grants or cooperative agreements, as well as through studies conducted in-house, to maximize the impact of this modestly funded program.

Trade Adjustment Assistance Program

Administered by EDA, the Trade Adjustment Assistance for Firms (TAAF) program helps economically distressed U.S. businesses develop strategies to compete in the global economy. Through a partnership with a national network of 11 EDA-funded Trade Adjustment Assistance Centers (TAACs), the program provides cost-sharing technical assistance to help eligible businesses create and implement targeted business recovery plans that are aimed at boosting global competitiveness, increasing sales, and retaining and creating jobs.

The TAACs, which are either independent or university-affiliated entities, provide support to import-impacted firms in a public-private collaborative framework. The TAAF program provides a portion of the assistance, while participating firms contribute a matching share to create and implement their recovery plans called Adjustment Proposals (APs).

In FY 2012, the TAAF program certified 79 petitions for certification of eligibility, and approved 102 adjustment proposals. Through both the in-depth analysis of each firm and the execution of recovery plans, distressed firms are given the opportunity to adjust to import pressures and become more competitive.