RU R A L D E V E LO PM E N T I N S T I T U T E K N OW L E D G E B R I E F FA L L 2016

KNOWLEDGE BRIEF

Economic Development Part I:
Performance Measurement for Economic Development

INTRODUCTION
WHAT IS ECONOMIC DEVELOPMENT?
Economic development holds different meanings
for the different stakeholders.1 As a result having a
broad range of stakeholders involved in planning
and evaluating local economic development strategies and activities offers the benefits of collaboration, diverse perspectives, and buy-in. Stakeholders
collaborating in economic development can include
government (e.g., elected officials, staff), nongovernment, education, cultural, community, and
private sector organizations.
Broadly speaking, economic development is about
improving people’s quality of life and well-being
by building up the economic and social capacity
of an area.1-2 Economic development contributes to
a larger vision of building sustainable and resilient
communities by helping communities:
•

Strive to maintain healthy and thriving
economies, societies, and environments,

•

Adapt to external and internal stresses,

•

Take advantage of internal and external
opportunities,

•

Provide a high quality of life for residents, and

•

Persist through time.3

The outcomes of economic development strategies
include: job creation, retention, and diversification;
an increased tax base; and new education and
training on the promotion of community assets.4
Each community has its own vision, as well as its own
set of assets and challenges, which can influence the
types of outcomes desired. This is another reason
why using performance measurement in economic
development is useful. As Kwon & Gonzalez-Gorman
highlight, “When performance measures are tied
to economic development goals, specific efforts
for pursuing the goals are better understood, and
supporting them becomes more acceptable to local
officials and their constituents.”5

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WHAT IS PERFORMANCE MEASUREMENT?
Performance measurement is becoming
increasingly common in economic development.
For instance, in recent years the provincial
governments of Ontario and British Columbia
have released performance measurement toolkits,
offering guidance to communities in developing
and achieving their economic development goals.6-7

Common Reasons to Measure Performance
1.

Ensure that credible and reliable performance data
are being collected to effectively and efficiently
evaluate projects, programs, and initiatives.6-7, 10

2.

Ensure that time is being spent on high-value
activities6 and project costs are not outweighed by
the benefits.5, 7

3.

Make informed decisions and take appropriate,
timely action.10

4.

Monitor progress, identify areas for improvement,
and document accomplishments towards desired
goals and objectives.6, 9

5.

Measure impacts on clients and to help guide
efforts in order to better serve them.9

6.

Share information on effective practices.9

7.

Ensure a common understanding among all
partners of the intended result and how it will be
reached.9

8.

Build momentum and gain support from
the broader community (e.g., public interest,
combating naysayers, leveraging funding).6, 9

9.

Provide regular progress updates and relevant
reporting7, 10, both internally and externally.

10. Stay accountable and on target to funders and
others.6

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Performance measurement is a result-based
management tool used to collect, assess, and report
on data in order to evaluate progress towards
a desired outcome or objective.7 Its origins are
within the wider field of evaluation, which has
developed an extensive body of literature, tools,
and methodologies.8 While economic development
practitioners may see the impacts of their work on a
regular basis, using a performance measurement
toolkit allows them to effectively assess the
short and long-term impacts of their work, and
to communicate this information to businesses, the
public, elected officials, and others.9 In other words,
performance measurement allows a community
to determine whether or not the economic
development activities that they are investing
time and money into are producing the intended
benefits (see Common Reasons to Measure
Performance).

PERFORMANCE MEASUREMENT
FRAMEWORKS
“If you can’t measure it, you can’t manage it”11 is a
good guiding principle for economic development
practitioners. To measure the performance of an
economic development strategy, practitioners can
use a performance measurement framework.
A performance measurement framework details
the method, indicators (or metrics), data sources,
frequency of reporting, roles and responsibilities
of those involved, and other relevant content. The
objective of using a performance measurement
framework is to build an accurate measure of
progress on an economic development strategy.
This is done by assessing the links between the
inputs (e.g., human and financial resources),
activities (e.g., events, meetings, website
development), outputs (e.g., number of clients
met, number of website hits), and outcomes (e.g.,
number of new jobs created or retained, amount of
new investments created).

A wide variety of frameworks have been developed
to measure the performance not just of economic
development strategies, but many other areas
including the activities of government departments,
reducing homelessness, social innovation,
corporate performance, etc.
When choosing a performance framework for
economic development it is important to
recognize that there is no one-size-fits-all
model. Economic development practitioners
should select or create a framework that meets
their local or regional priorities, mandates, and
resources.12 For instance, in the forest-based
communities of Robson Valley Forest District,
British Columbia, locally developed and non-local
standardized indicators were used to measure
well-being.13 However, there are common steps
among the different frameworks (see Common
Steps in Developing a Performance Measurement
Framework).

Common Steps in Developing a
Performance Measurement Framework
1.

Assess, revisit or initiate a local/regional economic
development plan: 6-8, 11

• Assess long-term trends.
• Identify key local/regional issues to address.
• Audit current economic development
activities.
• Outline desired short-term, intermediate,
and long-term outcomes.
• Compile a master list of indicators to
measure progress.
2.

Build stakeholder consensus and engagement:

• Involve the entire region/community.
• Assemble a working group to develop
the framework.
• Map and analyze local and regional assets.
• Seek stakeholder input on outcomes
and indicators.
3.

Prepare to use data:

• Select desired outcomes that are specific,
measurable, achievable, relevant, and timely
(S.M.A.R.T.).
• Ensure the outcomes can be attributed to the
indicators selected from the master list.
• Set baselines and targets for desired
outcomes.
• Create a 1-page diagram, known as a logic
model, which summarizes the plan’s inputs,
activities, outputs, and outcomes.
• Determine how to collect and store data for
each indicator.
• Understand how to analyze the data.
• Assign who is responsible for measuring
indicators.
4.

USING INDICATORS
A key step in any performance measurement
framework is the development and selection
of indicators (or metrics) that will accurately
measure a community or region’s progress
towards its economic development goals. An
indicator is a qualitative or quantitative tool used to
measure the performance of a program or initiative
over time.7, 10, 13

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Implement and monitor progress:

• Report progress on a regular (e.g., monthly,
quarterly, semi-annual, or annual) basis,
highlighting successes and challenges.

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Criteria for Selecting Appropriate
Indicators
1.

Keep the number of indicators used small and
manageable.6, 10, 12

2.

An indicator should be a valid measure of what
it is intended to measure10, 16 and have a high
degree of direct relevance that links it to activities,
outputs, and desired outcomes.6-7,12 For example,
a valid measure of an economic development
team’s contributions to local business success
could be based on the number of new start-up
companies established after they received funding
and/or coaching support from the economic
development team. A less valid measure of the
team’s contributions would be based on the total
number of new start-ups, regardless of whether
they received any support from the team.

3.

An indicator should be free of bias16 that might
lead to inaccurate measurements of performance.
For example, the wording of questions in a survey
to local business owners should be written in a
way that generates honest answers from people,
rather than being written in a way that promotes
a particular view and/or encourages people to
respond in a way that is favorable to the economic
development team.

4.

Data for indicators should have an identified
source that is consistently available.10, 12

5.

Data for indicators can be repeatedly collected in a
reliable manner to track progress over time.6, 10, 16

6.

Data for indicators can be collected and analyzed
in a cost-effective, affordable, and timely
manner.7,10

7.

An indicator should be sensitive to changes it
is meant to indicate, and able to provide timely
information and early warnings of change.16

8.

An indicator should have a baseline against which
to measure changes.7-8, 16-18

Rossland Tourism , Dave Silver photo

Qualitative indicators are defined as “judgements
and perceptions expressed as non-numerical values,
such as behaviours, processes, and institutional
changes".7 Some examples of ways to gather
qualitative data include holding focus groups with
stakeholders, asking community members openended questions in interviews about quality of life,
and collecting testimonies from businesses served
through a local economic development website.
Some indicators are used to measure the amount
of work (i.e., output) performed by an economic
development team, while others measure the
degree to which goals and objectives are reached.15
The types of data available can influence choices,
when deciding on the outcomes and the associated
indicators that are included in an economic
development strategy (see Criteria for Selecting
Appropriate Indicators).14 Standardized indicators
can also save time and money if the data is already
made available through a secondary source such
as Statistics Canada or Canada Starts Here: BC
Jobs Plan. However, standard indicators often lack
consideration of local context.
When selecting indicators, issues and questions
frequently arise around the appropriate scale
(e.g., local, regional, national) at which to measure
performance.19 Rural communities are diverse,
meaning they can face different challenges. For
instance, one tourism-dependent community may
be struggling with youth unemployment, while
another is faced with providing enough affordable
housing for the annual influx of youth workers.20

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Ultimately, in order to develop viable options and
strategies, economic development should be
grounded in the local and regional context with
a conceptual understanding of that place.21 This
includes understanding resources, political and
power structures, cultures, social capital, and social
cohesion.21
However, it is also important to think about local
economic development within the broader national
and global contexts. For instance, collecting data
on new trends in the global economy helps inform
a community about what is needed for things like
education and training programs, both for youth
and to retrain adults so they can compete in future
labour markets.22
Therefore, it is important to strike a balance
between standardized indicators that address
common concerns across local, regional, provincial,
and national scales, and non-standardized
indicators that are specific to the local context.19
Both performance measurement toolkits from BC’s
Ministry of Jobs, Tourism and Skills Training6 and
Ontario’s Ministry of Agriculture, Food and Rural
Affairs7 provide lists of indicators for economic
development to help communities get started.

PERFORMANCE MEASUREMENT IN
RURAL COMMUNITIES
Rural communities often don’t use performance
measurements consistently. A recent study
found that less than 20% of communities studied
with population sizes smaller than 10,000 used
performance measurement for any municipal
planning activities.22 But, as described above,
there are many benefits to gain through the
use of performance measurement for economic
development. For example, by using performance
measurement stakeholders in Clallam County,
Washington were able to develop a strategy that
revitalized a struggling forestry industry and recruit
new businesses to open a mill for processing a
previously unused, but valuable type of hardwood
tree.11
A community is more likely to use performance
measures for economic development when:
•

It develops a strategic planning team.22

•

It has a formal written economic development
plan.5, 15

•

There is agreement on a mission and vision of
success.8

•

Staff time is devoted to build the performance
measurement system and oversee performance
measurement once the planning process has
ended.8

•

Its budget is linked to economic development
priorities.5

•

There are a low number of barriers to economic
development.5

•

It develops a reward/incentive system for staff
within the local government.22

•

Communities are faced with a high level of
regional, provincial/state, and international
competition for investment, 5, 15 but they also
cooperate with other communities in the region
to pool resources to enhance the region’s
competitive standings as a whole.15

•

Staff, particularly senior leadership, commit to
examining results and learning from them.8

KNOWLEDGE BRIEF

P E R FO R M A N C E M E A S U R E M E N T F O R E CO N O M I C D E V E LO PM E N T

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REFERENCES & RESOURCES
1.

Union of British Columbia Municipalities. (2010).
Evaluating the economic development role of BC
local governments. BC: Union of British Columbia
Municipalities. Retrieved from http://www.
ubcm.ca/assets/Resolutions~and~Policy/Policy/
Community~Economic~Development/UBCM%20
ED%20REPORT%204-14.pdf.

6.

BC Ministry of Jobs, Tourism and Skills Training. (2016).
Performance measurement toolkit. BC: Province of
British Columbia. Retrieved from http://www2.gov.
bc.ca/assets/gov/employment-business-and-economicdevelopment/economic-development/developingyour-community/performance-measurement/pm_
toolkit_pdf_guide.pdf.

2.

Lions Gate Consulting. (2014). East Hants economic
development plan: Baseline report. Elmsdale, Nova
Scotia: Municipality of East Hants. Retrieved from http://
www.easthants.ca/wp-content/uploads/2016/02/
rpt_baseline_EHEDP_20141215.pdf.

7.

Ontario Ministry of Agriculture, Food and Rural Affairs.
(2013). Measuring up! performance measurement
for economic development. Ontario: Government of
Ontario.

8.

3.

MacKendrick, N., & Parkins, J. (2004). Frameworks for
assessing community sustainability: A synthesis of
current research in British Columbia Northern Forestry
Centre.

Wolk, A., Dholakia, A., & Kreitz, K. (2009). Building a
performance measurement system. Using data to
accelerate social impact. A root cause how-to guide.
Root Cause.

9.

4.

Province of British Columbia. Economic development
101. Retrieved from http://www2.gov.bc.ca/
gov/content/employment-business/economicdevelopment/developing-your-community/economicdevelopment-basics.

Spellman, B., & Abbenante, M. (2008). What
gets measured, gets done. National Alliance to
End Homelessness. Retrieved from http://www.
endhomelessness.org/page/-/files/2039_file_
Performance_Measurement_Toolkit.pdf.

5.

Kwon, S., & Gonzalez-Gorman, S. (2014). Links
between performance measures and local economic
development: Examination of a two-stage model of
internal and external factors. Public Performance &
Management Review, 37(4), 658-678.

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10. Treasury Board of Canada. (2010). Supporting effective
evaluations: A guide to developing performance
measurement strategies. Retrieved from http://www.
tbs-sct.gc.ca/hgw-cgf/oversight-surveillance/ae-ve/cee/
dpms-esmr/dpms-esmrpr-eng.asp.

11.

ViTAL Economy Alliance. (2012). Performance
metrics matter. National Association of Development
Organizations Research Foundation. Retrieved from
https://www.knowyourregion.org/wp-content/
uploads/2013/01/Performance-Metrics-FINAL.pdf.

12. Matthew Fischer and Associates Inc. (2011).
Performance measurement in economic development.
EDAC. Retrieved from http://edac.ca/wp-content/
uploads/2014/03/Final-Report-Oct-20-PerformanceMeasurement-in-Economic-Development-EDACProject-Sept-version_Addition_May7_2013.pdf.
13. Parkins, J. R., Varghese, J., & Stedman, R. C. (2004).
Identifying indicators of community sustainability in the
Robson Valley, British Columbia. Journal of Ecosystems
and Management, 4(2).
14. Canadian Urban Institute. Municipal cultural
planning indicators and performance measures
guidebook. (2011). Canadian Urban Institute.
Retrieved from https://static1.squarespace.com/
static/546bbd2ae4b077803c592197/t/54b3e63be4
b027b160a1cbf9/1421076027460/CUIPublications.
MunicipalCulturalPlanning.pdfMunicipal.
15. Lindblad, M. R. (2006). Performance measurement in
local economic development. Urban Affairs Review,
41(5), 646-672.
16. Reed, M. S., Fraser, E. D., & Dougill, A. J. (2006). An
adaptive learning process for developing and applying
sustainability indicators with local communities.
Ecological Economics, 59(4), 406-418.
17. Hatry, H. P. (2002). Performance measurement: Fashions
and fallacies. Public Performance & Management

Review, 25(4), 352-358.
18. Newfoundland and Labrador. (2011). Developing an
accountability framework resource and reference guide.
Newfoundland and Labrador: Provincial Government
Programs. Retrieved from http://www.policynl.ca/
policydevelopment/documents/AF-Aug-Final-Version.
pdf.
19. Gough, A. D., Innes, J. L., & Allen, S. D. (2008).
Development of common indicators of sustainable
forest management. Ecological Indicators, 8(5), 425-430.
20. Beckley, T. M. (2000). Sustainability for whom?
Social indicators for forest-dependent communities
in Canada. (No. 2000-24). Edmonton, Alberta:
Sustainable Forest Management Network.
Retrieved from http://www.sfmn.ales.ualberta.ca/
Portals/88/Documents/Publications/PR_2000-34.
pdf?ver=2015-12-15-152026-187.
21. Markey, S., Halseth, G., & Manson, D. (2008). Closing the
implementation gap: A framework for incorporating the
context of place in economic development planning.
Local Environment, 13(4), 337-351.
22. Kwon, M., & Jang, H. s. (2011). Motivations behind using
performance measurement: City-wide vs. selective
users. Local Government Studies, 37(6), 601-620.

KNOWLEDGE BRIEF

P E R FO R M A N C E M E A S U R E M E N T F O R E CO N O M I C D E V E LO PM E N T

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The Columbia Basin Rural Development Institute, at Selkirk College, is a regional research centre with a
mandate to support informed decision-making by Columbia Basin-Boundary communities through the
provision of information, applied research and related outreach and extension support.

www.cbrdi.ca

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