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Entrepreneurial Development: Surviving the Growing Pains of a New Strategy-New report assesses state and local programs

State and local governments are starting to develop entrepreneurship programs, but the past decade’s progress could be threatened by the looming fiscal crisis facing the states. That’s one message from a new study released this month by the National Commission on Entrepreneurship (NCOE) http://www.ncoe.org/ and the Center for Regional Economic Competitiveness (CREC), an affiliate of ACCRA http://www.accra.org/ and George Mason University.

By Erik R. Pages

Growing levels of interest in entrepreneurial development have been one of the more interesting trends in economic development in recent years. Dozens of states and hundreds of cities and towns are looking for new ways to support local businesses. Older traditional development approaches that rely on tax breaks and industrial recruitment offer diminishing returns. Finding ways to nurture and grow home-grown companies has now become a cause célèbre for most economic developers and elected officials.

The new NCOE/CREC study, "Understanding Entrepreneurship Promotion as an Economic Development Strategy: A Three-State Survey," http://www.ncoe.org/ seeks to better understand these trends. The report is part of preliminary research that seeks to understand the growth of entrepreneurial development programs (in terms of both new programs and new money) and the ultimate bottom-line effect of these investments in terms of new economic activity.

The NCOE/CREC study surveyed economic development leaders in three states: Maine, Nevada and Pennsylvania. The findings from these initial surveys will be used to help refine a larger study of entrepreneurship investments across the United States.

The surveyed leaders were asked to detail the nature of their entrepreneurial development programs as well as efforts to measure their impact. Several interesting results emerged:

* Entrepreneurial development programs receive more than half their funds from various state government sources. The current state fiscal crisis greatly threatens program viability.

* Entrepreneurship programs are no longer stand-alone pilot projects. They have become an integral element of mainstream economic development offerings.

* Program managers must improve their ability to measure the economic effects of their investments and educate elected officials about how these programs work and succeed.

Ken Poole, President of CREC and the study’s co-author, noted: "These programs don’t just face external threats. Programs also face internal challenges. Program supporters need to do a better job of communicating their successes and building a constituency for their work. Entrepreneurship programs work, but they take time to succeed. That can be a tough sell when politicians want a quick fix."

Erik Pages is a policy director with the National Commission on Entrepreneurship, a Washington, DC, nonpartisan organization funded by the Kauffman Center for Entrepreneurial Leadership that focuses on public policy on entrepreneurship.

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