The Economic Development Administration (EDA) encourages private capital investment in the most economically distressed areas of the country, both rural and urban. Through grants and cooperative agreements, the agency helps to create and maintain jobs that require higher skills and pay higher wages. The agency also helps communities with sudden economic distress including those affected by natural disasters, the closure of military installations or other federal facilities, changing trade patterns, and the depletion of natural resources. Some have questioned whether wealthy corporations that receive grants and tax breaks are benefitting more than workers and communities. The Assistant Commerce Secretary of Economic Development is John Fernandez.
President Franklin Delano Roosevelt’s New Deal programs were the first to focus on the depressed regions of the United States and economic development was also a focus of the government after the end of World War II, out of fears that regional economies would suffer from the end of war industry production.
In the mid-1940s, Commerce Secretary Henry A. Wallace proposed developing a comprehensive federal strategy for depressed areas. On Wallace’s urging, Congress passed the Full Employment Act in 1946 and Hays-Bailey Bill that would give industrialization aid to underdeveloped areas. The Eisenhower administration also created a new Area Assistance Program to better assist communities that had experienced continual and substantial unemployment.
In 1961, President John F. Kennedy, signed the Area Redevelopment Act (ARA), which established within the Department of Commerce direct loans to rural and urban depressed areas, as well as technical and retraining assistance grants. But the ARA failed in reducing unemployment in depressed areas. In 1965, Congress replaced the ARA with the Economic Development Administration (EDA) in the Public Works and Economic Development Act (PWEDA). The EDA did much of the same work as the ARA, supplying infrastructure development to high-unemployment areas, and working with communities to generate and retain jobs.
In 1971, President Richard Nixon gave additional authority to the EDA in creating the Publics Works Impact Program (PWIP), which was aimed at areas with short-term countercyclical employment. Nixon also extended eligibility to areas whose median family incomes were 50% of the national average. Later revisions to PWEDA in 1972 included delivering aid to areas hit by economic disaster, in addition to emergency assistance.
EDA and U.S. Economic Distress1965–2000 (by Robert W. Lake, Robin Leichenko, and Amy K. Glasmeier, Rutgers Center for Urban Policy Research) (pdf)
The Economic Development Administration (EDA) provides grants to economically distressed communities to create and maintain jobs and invest in infrastructure. The agency works in key investment areas including:
Public Works and Economic Development: To support the construction, expansion or upgrade of essential public infrastructure and facilities.
Economic Adjustment Assistance: Provides a wide range of technical, planning, and public works and infrastructure assistance in regions experiencing adverse economic changes that may occur suddenly or over time. Types of aid can include strategy development, infrastructure construction, and revolving loan fund capitalization.
Planning: Employees assist local and regional organizations with their short- and long-term planning efforts.
Technical Assistance: Administers aid that help public and nonprofit leaders in economic development decision-making. Grants can be for project planning, impact analyses, and feasibility studies. The EDA also gives grants through its University Center Economic Development Program, which makes the resources of universities available to the economic development community.
Research and Evaluation: Conducts research for cutting edge economic development practices, as well as sharing information to the public.
Trade Adjustment Assistance for Firms: Eleven Trade Adjustment Assistance Centers across the country assists small and medium-sized businesses impacted by increased imports with developing business recovery and global competitiveness strategies to retain and create jobs.
Community Trade Adjustment Assistance: The EDA distributes grants for the planning and implementation of projects in communities that have experienced or are threatened by job loss resulting from international trade impacts.
Global Climate Change Mitigation Incentive Fund: Provides funding for projects that contribute to sustainable development.
From the Web Site of the Economic Development Administration
The Economic Development Administration (EDA) assistance helps communities, individuals, colleges and universities and companies that receive grants or corporate tax breaks. From 2002-2012, the EDA has distributed more than $3.7 billion in grants in more than 8,300 different transactions, according to a query of USAspending.gov. The top recipients, and their percentage of all grants, include:
1. City of Cedar Rapids $37,463,600 (1%)
2. Inland Valley Development Agency $31,982,556 (1%)
3. Iowa City $25,060,000 (1%)
4. Bayonne LDA $16,340,000 (0.4%)
5. St. Louis Development $16,248,000 (0.4%)
From 2002-2012, the EDA has also awarded more than $3.1 million to seven different contracts, according to USAspending.gov.
Disproportionate Aid Distribution
Some have argued that the agency has moved away from its original goal of helping the poor and economic distressed. Analysts at the libertarian Cato Institute have referred to the Commerce Department as the “Nerve center of the Corporate Welfare State.” The Institute estimates that in 1997, the government spent around $60 billion on more than 100 programs carried out by American businesses, arguing that the EDA is actually providing subsidies to large corporations. In another high-profile example, the EDA gave a $500,000 grant in 1995 to the National Football League to build a practice field for the Carolina Panthers.
Federal Aid to Dependent Corporations (by Stephen Moore and Dean Stansel, Cato Institute)
Sandy K. Baruah, 2005-2008
David A. Sampson, 2001-2005
As Assistant Secretary of Commerce for Economic Development, John Fernandez has led the Department of Commerce’s Economic Development Administration (EDA) since September 14, 2009. The EDA is charged with encouraging private capital investments in economically distressed areas.