This paper, which is intended as a guide for local government managers responsible for economic development policies, begins with a discussion of typical goals and practices of local economic development programs. Examined next are examples of local government involvement in economic development efforts through policies/activities such as the following: tax subsidies for branch plants; job training to provide businesses with workers; advice/support services for potential entrepreneurs; and extension services to help business modernize and export. Fifteen guiding principles for formulating goals of local economic development programs and organizing, implementing, and evaluating those programs are presented. Concluding the paper is a brief discussion of the policy implications of the thesis that effective local management of economic development requires careful targeting of limited public funds, leveraging of private resources, and cooperation of different groups in the local labor market area. Special emphasis is placed on the following economic development policies/strategies: encouraging local education and training institutions to be more responsive to small/medium-sized businesses' training needs through customized training; providing public support for quasi-private information and training services for small/medium-sized firms; and focusing on stabilizing the local tax base and improving overall labor market opportunities for local residents. The paper contains 79 endnotes. (MN)