Full guide

Economic development agencies and inward investment agencies

There are several definitions of economic development. They all, however, agree on the fact that economic development is the combination of strategies, methods and tools applied to accelerate the development of a given geographic area. It is a way of strengthening and catalysing the creation of business and jobs. There are two types of development: endogenous and exogenous. Endogenous development uses the levers available within a geographic areas through sectoral and entrepreneurship strategies and strategies of support to existing businesses, training, infrastructure, etc. Exogenous economic development, on the other hand, consists in attracting economic activity previously not present in an area so as to complement existing ecosystems.

The first reason is to do with people. The people who work at economic development agencies need specific skills and qualifications. They can navigate the cultures of both the public and the private sector. They may not have the training required to work in national or local government. Development agencies formed as private law entities are able to recruit people with the right skills acquired through work in the private sector and people working in the private sector.

The second reason that explains why development agencies are not just departments of government bodies is responsiveness. A development agency can respond flexibly and is less constrained in terms of internal procedures than a government body. That flexibility gives them greater freedom of action, although of course everything that development agencies do takes place within a specific framework and is monitored.

The goal of an economic development agency is to make known the attractiveness of its territory among a very specific target audience: businesses outside its area that have investment projects.

Its role is to act as a unique point of entry and single interlocutor for an investor to save them time and to make their expansion project go well. The agency is a guide to everything about its home area, whether that’s local government, innovation hubs, banks, lawyers, all the stakeholders who need to be involved in a project. The huge added value of an economic development agency springs from its ability to connect people and organisations. That means that the business will find good partners to meet the challenges of its relocation at the right time.

Working effectively with an economic development agency springs from a relationship of trust between the investor and the teams on the ground. We can split the process into five principal stages.

1/Initial contact

The initial contact phase can take place at different times in an economic development agency. This is when the business presents the challenges it faces in growing its business to the agency and explains the motivations for the project. Clear specifications are essential to a successful project and if the business does not already have one, the agency can assist with its preparation.

2/Information gathering

Having carefully reviewed the specifications, the agency will begin to assemble responses to the questions raised. Requirements may relate to anything: conditions in an industry, the legal framework, the local workforce, pay levels, technical information, …. That information may be taken from external sources and then will be systematically confirmed before being sent to the investor. That is how Nord France Invest, the inward investment agency for the Hauts-de-France region, works with all the information that is passed to an investor provided by specialist regional organisations so as to ensure that the information is coherent, clear and reliable.

This stage may also involve introductions to the leaders of other businesses, ideally from the same country as the investor, that have already successfully relocated to the area. The conversations that take place in such meetings can often set the seal on a project.

3/Identification of expansion solutions

The agency then asks its network for site suggestions which more precisely match the specifications. Relocation solutions can be varied (land offer, existing buildings, business parks, acquisition, …..). Once the investor has been able to review the suggestions, the economic development agency will plan site visits.

4/Finance optimization and administrative procedures

Once the business has shortlisted sites, or even chosen one, the agency will work on facilitating processes associated with financing and administrative procedures. The goal is to facilitate any administrative consents and to activate any financial aids and grants that may be available.

5/Aftercare: support after expanding

Finally, once the relocation decision has been announced, the economic development agency will keep supporting the investor by helping them resolve any difficulty that arise over time. They will also help to embed the investor in the area by building relationships with key members of the ecosystem and supports it in the long term.

All in all, economic development agency work with partners of all kinds who can contribute at specific moments or throughout the process to bring the expansion project to life. That can take a considerable time. The process is also closely regulated within the framework of agreements, notably with public sector bodies. Having existed for many years, the process ensures that each organisation knows exactly what its role is and ensures an especially responsive customer experience for supported businesses. It particularly ensures that there are no issues with confidentiality or unwanted approaches from any of the participating organisations. The role of an economic development agency in the process is central, it is the sole point of contact, until the point at which the business finally decides its chosen location.

For Nord France Invest, this very well-oiled process allows the confidentiality of all the projects the agency supports.

Synergies between consultants and economic development agencies may arise given their distinct natures.

Business consultants are generally approached in the upstream phase of a project. Their knowledge of macroeconomic issues allows them to support projects that have a large geographic footprint (on the scale of France or Europe, for example). Businesses that do not have the internal resources to carry out expansion studies may call on one of the many business development firms that exist. That gives them an integrated, high-level vision and avoids the need for dealing with too many players.

Once the possibilities have been reduced to a number of specific geographic areas, business development consultants call on economic development agencies for much more detailed local information. Connection with the local ecosystem, a 360⁰ network, familiarity with local politics, are the things that an inward investment agency can bring to bear.

The two stakeholders are thus natural partners in bringing a relocation project to a successful conclusion.

Regional economic development agencies act in a systematic way, regardless of whether a project is very big or very small.

A multinational seeking to establish itself in a new country may not know at the beginning of its process which areas would be best for the development of its business. At that point, it will naturally turns to the national economic development agency. The national agency in turn liaises with the country’s regional agencies so as to present a selection of adequate proposals. In this scenario, the regional agencies produce the work but do not immediately meet the investor.

Once the business has narrowed down its options and has some specific areas in mind, that would be the appropriate time for it to approach the regional agencies directly. The advantage of dealing with them directly is that they are in direct contact with their specific areas. It is a sort of short-circuit that enables them to make more tailored proposals, to keep the number contacts down and to shorten the project timeline considerably.

When a business has a more narrowly focused project, with a chosen target area, working with a regional economic development agency is equally beneficial. Going via a uniques entry point to a region again allows the business to keep the number interlocutors down, and as a result protect the confidentiality of its project. It will also be time-saving in the management of relationships. There is no value in explaining a project to three or four different people (or teams). It is also of no value to have to thank the areas not chosen. The management of these relationships is handled directly by the regional agency which is time-saving for the investor, who can focus on taking their expansion project forward.