What Is the Connection between Industry and Economic Development?

The connection between industry and economic development is something that has been explored ever since the advent of the Industrial revolution. With industrial development often the focus when it comes to cultivating and stabilizing the economy within a given geographical location, it is not unusual for many people to see the presence of viable industry within a given area as being crucial to that ongoing economic development. Without the presence of industry in some manner, economic growth is likely to slow and possibly even begin to reverse over time.

Understanding the connection between industry and economic development calls for identifying what industry provides to a given geographical area. One of the first benefits of having companies that represent several different industries within a community is that those businesses provide jobs for people who live nearby. Those jobs in turn provide employees with a source of income that makes it possible to purchase goods and services, make higher ticket purchases such as homes and vehicles, and in general spend money at other businesses in the community. When industry is expanding, this means more jobs for more people, resulting in more money flowing through the local economy.

This connection between industry and economic development means that consumer confidence is higher, a situation that is likely to attract more people as well as developers to the area. As more companies establish a presence in the area, they in turn offer jobs for those who have moved into the community. Here, the connection between industry and economic development is manifested by the presence of these new companies spurring the economy by stimulating the housing market, enticing more retailers to establish stores in the area, and prompts the addition of more municipal services. All this activity increases the amount of money circulating within the economy which in turn means everyone enjoys a higher standard of living than would be possible if there was less industry in the area.

One of the ways that the connection between industry and economic development is best illustrated is when one or more key industries choose to pull out of a community. The resulting job losses lead to less money circulating in the economy, foreclosures on homes and possibly cutbacks on several businesses such as restaurants and local retailers. Unless more industry moves back into the area and helps to create jobs to replace those that were lost, there is a good chance no real economic development will occur and the community will eventually die.