The Future of America’s Economic Development: Navigating Key Trends

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Economic development used to be simple. Count the new factories. Track the job numbers. Celebrate when unemployment dropped. Those days are over.

Today’s economic development is a high-stakes game of building regional economies that can survive technological disruption, climate change, and global supply chain breakdowns while creating good jobs for everyone. It’s about quality growth, not just any growth.

Four massive forces are reshaping how America creates prosperity: artificial intelligence that’s eliminating some jobs while creating others, the urgent shift to a green economy, a workforce whose skills become outdated faster than ever, and the scramble to rebuild supply chains closer to home.

From Building Roads to Building Innovation

The Economic Development Administration (EDA) was born in 1965 through the Public Works and Economic Development Act, a Great Society program targeting federal resources to rural and urban communities left behind by industrial shifts. Back then, the solution seemed straightforward: build infrastructure, attract factories, create jobs.

For three decades, that’s exactly what the EDA did. It funded public works, roads, and industrial infrastructure designed to lure private investment to struggling areas. The approach reflected the economic thinking of its time—physical assets were the foundation of prosperity.

But the American economy changed. Global competition intensified. Technology accelerated. The knowledge economy emerged. Suddenly, simply building infrastructure wasn’t enough. Regions needed innovation ecosystems, skilled workforces, and the ability to adapt to economic shocks.

The EDA evolved accordingly. Its portfolio expanded beyond physical infrastructure to include investments in human capital, regional industry clusters, supply chain strengthening, and local innovation strategies. This evolution reflects a fundamental shift in economic development theory—away from “smokestack chasing” toward nurturing entire economic ecosystems.

The transformation became official with the Economic Development Reauthorization Act of 2024, which codified the agency’s expanded mission for the 21st-century economy.

Investment Priorities Guide Strategy

To ensure its funding achieves maximum impact, the EDA uses clear Investment Priorities to guide grant decisions. These priorities ensure the agency’s portfolio contributes to building durable, resilient, and prosperous regional economies.

The current priorities are:

Equity: Projects that advance economic development for traditionally underserved populations and communities, including women, Black, Latino, Indigenous and Native American persons, Asian Americans, and Pacific Islanders.

Recovery & Resilience: Projects that enhance a region’s ability to anticipate, withstand, and recover from economic shocks, including industry contractions, natural disasters, and other disruptions.

Workforce Development: Investments in job skills training aligned with local employer needs, leading to well-paying jobs and broader labor force participation.

Manufacturing: Projects that foster job creation, business expansion, technology upgrades, and productivity growth in manufacturing, with special emphasis on strengthening domestic suppliers.

Technology-Based Economic Development: Initiatives that foster commercialization of new technologies, support innovation infrastructure, and promote growth of technology-driven businesses creating high-skilled, high-wage jobs.

Environmentally-Sustainable Development: Projects that align with environmental sustainability principles, encouraging development that is both economically and ecologically sound.

The EDA’s Toolkit

The EDA executes its mission through a portfolio of grant programs designed to meet regions at every stage of development, from initial planning to large-scale project implementation. A critical feature is that grants go to eligible entities like governments, nonprofits, universities, and tribal governments—not directly to individuals or for-profit businesses.

The Technology Revolution

No force is reshaping the global economy more profoundly than technology. Advances in automation, artificial intelligence, and data analytics create immense opportunities for productivity and growth while presenting deep challenges related to job displacement and economic inequality.

The impact of technology is best understood as creative destruction. Automation and AI are powerful engines of economic growth, increasing productivity and allowing goods and services to be produced more efficiently. This shows up clearly in Bureau of Economic Analysis data: the digital economy accounted for $2.6 trillion, or 10.0% of U.S. GDP, in 2022. Its real value added grew by 6.3% that year, far outpacing the 1.9% growth of the overall economy.

But this technological wave fundamentally alters the labor market. Automation has steadily eliminated jobs involving routine and repetitive tasks, particularly in manufacturing and clerical fields. While new jobs are created, they often require different, higher-level skills.

The “new automation” powered by advanced AI is expected to impact an even broader swath of the workforce, including professional roles in law, accounting, and healthcare once considered safe from displacement.

This dynamic drives economic inequality. Workers with education and skills to complement new technologies often see wages and opportunities rise, while those whose tasks can be substituted by machines face displacement or declining wages. The trend also has a geographic dimension, concentrating high-wage jobs and wealth in established tech hubs, widening economic gaps between regions.

Despite disruptions, demand for skilled tech workers remains incredibly strong. The Bureau of Labor Statistics projects that employment in computer and information technology occupations will grow much faster than average through 2033, with an estimated 356,700 openings each year. The median annual wage for this group was $105,990 in May 2024, more than double the median wage for all occupations.

The EDA’s Technology Strategy

The EDA’s response to technological transformation centers on its Technology-Based Economic Development investment priority, which aims to cultivate innovation ecosystems across the country and foster commercialization of new technologies to create high-skilled, well-paying jobs.

A core element of this strategy is deliberately counteracting the geographic concentration of the tech industry. The EDA’s programs aren’t just about promoting technology—they’re a federal intervention designed to reshape the geography of American innovation, ensuring the benefits of economic growth are shared more broadly.

Tech Hubs Program

The cornerstone of the EDA’s technology strategy is the Regional Technology and Innovation Hubs Program. Authorized by the bipartisan CHIPS and Science Act of 2022 with a potential $10 billion authorization over five years, the program’s goal is making direct, strategic investments in U.S. regions that have the assets and potential to become globally competitive innovation centers within a decade.

It’s an explicit attempt to expand the innovation economy beyond traditional coastal enclaves like Silicon Valley and Boston.

The program operates through a place-based model, funding collaborative consortia that bring together partners from higher education, government, private industry, labor unions, and nonprofits. It launched in two phases: Phase 1 saw designation of 31 Tech Hubs across the country from a highly competitive pool. In Phase 2, designated hubs compete for large-scale implementation grants, typically ranging from $40 million to $70 million each.

In May 2025, the Commerce Department announced a reset of the competition for a new tranche of funding to ensure fairness, transparency, and alignment with national security priorities.

Build to Scale Program

While Tech Hubs focus on building entire regional ecosystems, the EDA’s Build to Scale program provides more targeted support to organizations that directly nurture high-growth technology startups.

The program’s goal is building regional economies by strengthening entrepreneurial ecosystems and accelerating growth of scalable, technology-driven companies. B2S provides competitive grants to intermediary organizations such as university tech transfer offices, nonprofit accelerators, and venture development organizations.

These grants fund operational and programmatic costs of initiatives that help entrepreneurs turn ideas into market-ready products and services. A key focus is increasing access to risk capital for entrepreneurs in communities where such funding is traditionally scarce, helping to democratize resources needed for innovation.

For example, a B2S grant awarded to the Center for Black Entrepreneurship in Atlanta supports an incubator specifically for Black STEM entrepreneurs, demonstrating the program’s ability to advance both technology and equity goals.

The Green Economy Transformation

The American economy faces a dual environmental challenge reshaping industries and communities. The first is the global imperative to transition to a “green economy”—one that is low-carbon, resource-efficient, and socially inclusive. The second is growing need to build resilience against unavoidable climate change impacts, such as more frequent and intense natural disasters.

These twin challenges create both profound economic disruptions and immense opportunities for growth and innovation.

The Scale of Change

The green economy is an economic framework that seeks to align growth with environmental sustainability. It’s defined by public and private investments in infrastructure and technologies that reduce carbon emissions, enhance energy and resource efficiency, and protect biodiversity.

This transition represents one of the largest economic transformations in modern history. McKinsey estimates that green business opportunities could generate between $9 trillion and $12 trillion in new annual revenue globally by 2030 in sectors like transport, power, and hydrogen.

The shift is creating a surge in demand for green jobs. Analysis of BLS data shows that green jobs are projected to grow by 8.6% over the next decade, faster than the overall workforce, and the median salary for a green job is over 30% higher than the national median.

Occupations like Wind Turbine Technicians and Solar Photovoltaic Installers are among the fastest-growing of any job category in the United States.

At the same time, communities are confronting escalating costs and disruptions of climate change. From hurricanes and floods to wildfires and droughts, extreme weather events pose direct threats to local economies, destroying infrastructure, disrupting supply chains, and displacing businesses and workers.

This has made economic resilience—the ability of a community to anticipate, withstand, and bounce back from shocks—a critical component of modern economic development.

The EDA’s Green Strategy

The EDA’s work in this domain reveals a core function of modern economic development: managing disruptive transitions while fostering new avenues of growth. The agency’s investment priorities of “Environmentally-Sustainable Development” and “Recovery & Resilience” provide the framework for a dual strategy.

On one hand, EDA channels resources to cushion the economic blow for communities historically reliant on fossil fuels. On the other, it funds innovative projects building the foundation of the new green economy. This dual mandate makes the EDA a critical federal instrument for facilitating a “just transition.”

Supporting Coal Communities

Recognizing that the shift away from fossil fuels creates significant economic hardship in specific regions, the EDA has targeted programs to help these areas diversify their economies. The Assistance to Coal Communities initiative, for example, designates a portion of EDA’s annual funding to support communities and regions negatively impacted by changes in the coal economy.

Similarly, the American Rescue Plan included a $300 million Coal Communities Commitment to accelerate economic recovery and diversification in these areas. These programs provide flexible grants for everything from infrastructure development to workforce retraining, empowering local leaders to build new economic futures.

Funding Green Growth

EDA grants are actively fueling growth of the green economy across the country:

Workforce Development: A $3.8 million EDA grant to the Electrical Industry Board in Flushing, New York, is supporting renovation of a building to create a state-of-the-art training facility for onshore and offshore wind energy industries. The project is expected to create or retain thousands of jobs and support the region’s transition to clean energy.

Infrastructure for Clean Energy: In Gonzales, Louisiana, a $2.3 million EDA grant is funding roadway improvements at a large industrial park to support growth of clean energy businesses, expected to create over 450 jobs and generate billions in private investment.

Innovation in Renewable Energy: Through its Build Back Better Regional Challenge, the EDA awarded a $50 million grant to the “H2theFuture” coalition in the Greater New Orleans region. This transformative investment is designed to establish a green hydrogen energy cluster, funding projects in technology development, workforce training, and business development to drive the nation’s energy transition.

Building Climate Resilience

The EDA serves as the lead federal agency for the Economic Recovery Support Function under the National Disaster Recovery Framework, coordinating long-term economic recovery efforts after major disasters. Through supplemental appropriations from Congress, the EDA has directed billions of dollars to disaster-impacted communities.

The FY2025 Disaster Supplemental program, for instance, makes approximately $1.45 billion available for regions impacted by recent hurricanes, wildfires, and floods.

This funding supports wide-ranging activities, from capitalizing revolving loan funds for affected businesses to financing construction of newer, more climate-resilient infrastructure like improved storm drainage and hardened water treatment facilities.

Crucially, the EDA integrates resilience into its foundational planning processes. The agency provides funding to hundreds of regional Economic Development Districts across the country to develop and maintain Comprehensive Economic Development Strategies. EDA guidance mandates that every CEDS must incorporate the concept of economic resilience.

This requirement compels regional leaders to proactively identify their vulnerabilities—including climate risks, single-industry dependence, and supply chain weaknesses—and develop concrete goals and strategies to mitigate those risks before disaster strikes.

The Workforce Challenge

In an economy increasingly defined by knowledge and technology, human capital—the skills, knowledge, and experience of the workforce—has become the most critical asset for regional competitiveness. However, the same forces driving economic change are creating unprecedented challenges for workers and employers, leading to a persistent skills gap that threatens to slow growth and exacerbate inequality.

The Skills Gap Crisis

The modern labor market is in constant flux. The World Economic Forum finds that structural transformations will impact 22% of all jobs between 2025 and 2030, and that on average, workers can expect nearly 40% of their existing skills to be disrupted or become outdated over that same period.

This rapid “skill instability” is creating a chasm between the skills employers need and the skills the workforce possesses. A majority of global employers now identify this skills gap as the single biggest barrier to their business transformation.

The nature of skill demand is also changing. As technology automates routine tasks, the value of purely technical skills can depreciate quickly. In their place, employers are seeking a blend of advanced technology skills and uniquely human, transferable skills like critical thinking, resilience, flexibility, agility, and creativity.

This new reality demands fundamental rethinking of workforce development. Traditional, degree-based education is becoming a less reliable signal of a candidate’s skills, and employment transitions are becoming more frequent.

The challenge now is creating more agile, accessible, and continuous learning systems—including apprenticeships, sectoral training, and career pathways—that are tightly aligned with real-time needs of regional employers. Recognizing this, governors across the nation are making the alignment of workforce and economic development a top strategic priority.

The EDA’s Workforce Strategy

Workforce Development is a core EDA investment priority, and its principles are woven throughout the agency’s entire portfolio. In fiscal year 2022 alone, the EDA invested $1.3 billion—fully one-third of its award funding—in projects with a workforce development component.

The agency’s approach marks a significant philosophical evolution in federal workforce policy. Rather than simply funding disparate training programs, the EDA’s strategy focuses on funding the connective tissue of a regional talent pipeline. It invests in building and strengthening collaborative systems that bring employers, educators, and workers together, recognizing that lack of coordination is often the primary point of failure in addressing skills gaps.

The Good Jobs Challenge

This innovative approach is best exemplified by the Good Jobs Challenge. Initially funded with $500 million from the American Rescue Plan, the program is designed to build and strengthen regional workforce training systems. An additional $25 million was allocated in the FY24 competition, with specific focus on key technology sectors.

The program’s central innovation is its requirement for “sectoral partnerships.” EDA provides grants to a “backbone organization” that convenes a coalition of stakeholders—including multiple employers within a single industry, labor unions, community colleges, and community-based organizations.

This industry-led partnership then co-designs training programs that are precisely tailored to place workers into specific, in-demand, high-quality jobs. This model puts the “customer”—the employer with hiring needs—at the center of the training design process, ensuring programs are relevant and lead directly to employment.

The Good Jobs Challenge has funded 40 such regional partnerships across the nation, with a goal of training and placing more than 50,000 Americans into good-paying jobs. Recently announced grantees include a partnership in Colorado focused on the aerospace industry and another in Virginia targeting advanced pharmaceutical manufacturing and biotechnology.

Integrated Workforce Development

Beyond the Good Jobs Challenge, workforce development is a critical and required component of the EDA’s other major place-based initiatives. This ensures that large-scale investments in economic growth are directly linked to creation of accessible, high-quality jobs for local residents.

In Tech Hubs: Every Tech Hubs proposal must include a robust workforce development strategy. Community colleges are proving essential partners, designing and delivering training for technician-level jobs critical to emerging industries. For example, Central New Mexico Community College, a partner in the Elevate Quantum Tech Hub, is creating a “quantum technician boot camp” to prepare workers for immediate employment in the quantum technology sector.

In Distressed Communities: The Recompete Pilot Program, which directs funds to persistently distressed communities, is fundamentally about connecting people to good jobs. Workforce development is a core eligible activity under the program, ensuring that investments in business development and infrastructure are paired with pathways to employment for local residents.

For Displaced Workers: Through its flexible Economic Adjustment Assistance program, the EDA also funds projects to reskill workers who have been displaced by automation or other economic shocks. For instance, a $2 million EAA grant helped a community college construct a new technical education center that includes a robotic automation training lab, directly addressing skills needed for modern manufacturing.

Rebuilding American Supply Chains

For decades, the prevailing economic logic favored long, complex, and highly optimized global supply chains designed to minimize costs. The disruptions of the COVID-19 pandemic and rising geopolitical tensions, however, laid bare the fragility of this system. This has triggered a fundamental shift in economic and national security policy, moving focus from pure efficiency to resilience, and sparking a renewed drive to strengthen domestic manufacturing and secure critical supply chains.

The New Focus on Resilience

The pandemic revealed critical vulnerabilities in supply chains for everything from medical supplies to semiconductors, demonstrating how disruptions in one part of the world could have cascading effects on the U.S. economy. This has elevated supply chain resilience from a niche business concern to a top-tier national priority.

This policy shift is formalized in initiatives like the White House’s 100-day supply chain review and the bipartisan “Promoting Resilient Supply Chains Act of 2025,” which directs the Department of Commerce to lead a whole-of-government effort to assess and strengthen critical supply chains.

The core goals of this new strategy are to enhance national security and economic stability by reducing reliance on foreign adversaries for essential goods, encouraging re-shoring of manufacturing to the United States, and diversifying sources of supply among trusted allies. This involves a concerted effort to rebuild domestic capacity in strategic sectors and create a more robust and resilient industrial base.

The EDA’s Manufacturing Strategy

The EDA serves as the crucial implementation arm that translates high-level national industrial strategies into tangible, on-the-ground projects. While Congress and the White House set strategic direction through legislation like the CHIPS and Science Act, the EDA provides essential “last-mile” funding for physical infrastructure and regional capacity-building that make a manufacturing resurgence possible.

It builds the stage upon which the national industrial strategy is performed, using its investment priorities in Manufacturing and Critical Infrastructure to lay groundwork for private sector investment.

Modernizing Industrial Infrastructure

A successful domestic manufacturing sector requires modern, site-ready infrastructure. The EDA’s two most flexible programs, Public Works and Economic Adjustment Assistance, are primary vehicles for these foundational investments.

The Public Works Program directly funds development of key public infrastructure needed to attract and expand industrial enterprises. This includes projects like construction of business and industrial parks, improvements to water and sewer systems, expansion of port facilities, and redevelopment of brownfield sites.

The Economic Adjustment Assistance Program provides flexible grants that can be used for wide-ranging activities, including infrastructure construction, to help regions build new industrial capacity and adapt to changing economic conditions.

Strategic Sector Investments

The EDA strategically deploys these tools to build domestic capacity in specific industries deemed critical to U.S. economic and national security:

Semiconductors: In Oswego, New York, the EDA awarded a $2.5 million grant to expand a local industrial park with critical water and roadway infrastructure. This project is explicitly designed to support the growing semiconductor industry in the region and attract suppliers for the massive new Micron manufacturing facility, creating an estimated 1,200 jobs.

Critical Minerals: The EDA’s Tech Hubs program is making a major investment in securing the domestic supply chain for critical minerals. The Critical Minerals and Materials for Advanced Energy Tech Hub in Missouri, led by the University of Missouri System, is receiving millions to build a first-of-its-kind processing test bed. This facility will develop and evaluate new methods for extracting and refining minerals essential for batteries and other advanced energy technologies, directly addressing a key vulnerability in the U.S. supply chain.

Food Supply Chains: Recognizing that resilience extends beyond high-tech industries, the EDA awarded a $1.3 million American Rescue Plan grant to Boise State University. This investment supports a new research facility and technical assistance program designed to simulate and improve the resiliency of the food sector supply chain in the Western United States, helping food manufacturers withstand future disruptions.

Advanced Manufacturing: In Loveland, Colorado, a $544,000 EDA grant to the Warehouse Business Accelerator is bolstering small manufacturing and technology companies. The project provides funding and resources to help second-stage entrepreneurs scale their operations, diversifying the regional economy and creating an estimated 120 jobs.

The Regional Approach

What makes the EDA unique in the federal government is its regional approach to economic development. While other agencies focus on specific sectors or issues, the EDA recognizes that economic development happens at the regional level—in places where people live, work, and build businesses together.

This regional focus reflects a fundamental understanding that economic development can’t be imposed from Washington. It must grow from local assets, local leadership, and local vision. The EDA’s role is to provide the resources and expertise that help regions build on their unique strengths and address their specific challenges.

The agency’s Economic Development Districts represent this philosophy in action. These multi-jurisdictional, typically multi-county organizations are officially designated by the EDA to lead regional economic development planning. They serve as the backbone of the EDA’s regional strategy, developing and maintaining the Comprehensive Economic Development Strategies that guide federal investment.

This approach has proven remarkably adaptable. When the COVID-19 pandemic hit, the EDA was able to rapidly deploy billions in economic assistance through its existing regional network. When supply chain disruptions emerged, the agency could quickly identify vulnerable regions and target support accordingly.

The same regional infrastructure now supports the transition to a green economy, helps communities adapt to technological change, and builds resilience against future shocks.

Making It Work

The EDA’s success comes from understanding that modern economic development requires patience, partnership, and a long-term view. The agency doesn’t just fund projects—it invests in the capacity of regions to solve their own problems and seize their own opportunities.

This approach recognizes that in a rapidly changing economy, the most valuable investment isn’t in any single project or industry, but in the ability to adapt, innovate, and work together. By building this capacity at the regional level, the EDA is helping America build an economy that can thrive in an uncertain world.

The challenges facing American communities—technological disruption, climate change, workforce transformation, supply chain vulnerabilities—are too complex and interconnected for any single program or agency to solve. But by working at the regional level, bringing stakeholders together, and focusing on long-term capacity building, the EDA is helping communities develop the tools they need to build their own prosperous futures.

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