#TIL: What is Economic Gardening?
By Sreelakshmi R.
We have heard of grassroots movements; in the context of an economy it implies the awareness that entrepreneurship drives economic development. Grassroots businesses have to be consciously cultivated by providing resources and state support. This practice is known as Economic Gardening.
This concept constitutes the various aspects of planting and maintaining a garden, i.e, to develop small plots with concentrated effort to achieve sustained growth. The idea is to grow local economies by “growing from within”, and promotes innovation with a different approach to business support. The notion was popularised in the US in the 1980s and called for creating mechanisms that would provide market research and other intelligence at the local level to very small enterprises, with 20–30 employees. This was done to strengthen the business’ role in their communities as they take off from their start-up stage to expand. Steps in this direction include:
- Identifying new markets, industry trends and competitive intelligence
- Mapping geographic areas for sales leads
- Raising visibility in search engine results and increasing website traffic
- Leveraging social media to better connect with customers.
Some of the early pioneering of this concept in Littleton, Colorado, USA, has yielded very impactful results. The town-level Economic Gardening initiative was based on the fact that though only 3–5% of local companies were “high-growth”, these were creating a majority of the new jobs. Therefore, entrepreneurs were connected with necessary resources and essential infrastructure to support their growth process. It has to be borne in mind that the effects of Economic Gardening would take years to manifest, as the results from GrowFL (Florida), Louisiana Economic Development (Louisiana) or Greater Rochester Enterprise (West New York) show.
In a world economy reeling under the effects of the COVID-19 pandemic, Economic Gardening could have renewed relevance. China has been tinkering with the potential of this concept for the last 40 years, with entrepreneurship long taking deep roots. Almost 6 million enterprises are registered annually in China. Not all of these are successful, but China’s rapid growth trajectory is at least partly attributable to the initiative of private capital.
Looking at India too, one can recognise the necessity and importance of growing small-scale private enterprises. These businesses contribute to 30% of the national GDP and provide at least 11 crore jobs. A contemporary instance of economic gardening is in the role played by platform companies in grooming, vetting and onboarding small enterprises to increase their visibility and begin their online presence. These platforms have the ability to connect sellers with a variety of buyers, including other larger businesses and end-consumers, in a remarkable boost to their local economy. Oftentimes, these sellers are also online-only, thanks to these platforms and independent e-storefronts they develop on their websites. Crucially, these platforms also put more female entrepreneurs on the map (86% of sellers are women, according to one 2014 estimate!) who are typically young, at a median age of 39 years.
Therefore, an economic gardening strategy to tailor the survival and recovery of these small enterprises would be in order to pull the Indian economy through this period. The latest five-tranche stimulus package announced by the Finance Minister recognises the need to support the small-scale private sector to hasten the resurgence of the economy.
Today I learnt (TIL) is a weekly series by OMI that brings you interesting nuggets of information that you didn’t know you needed.
