Reflections on the Profession

131023-Economic-Development-ProfessionAfter a three-year hiatus, I returned to teaching Urban and Regional Economic Development at Carnegie Mellon this fall. The process of preparing for the course, and the act of engaging with twenty students who represent a new generation of economic development, has caused me to reconsider the state of the profession and where it is headed as well as what new trends are driving it.   I often joke that we are teaching them how to solve the problems of the last generation with tools and policies that will create the problems for their generation to solve.  I call it the full employment policy for economic development. Continue reading “Reflections on the Profession”

Witnessing Collaboration Across the Nation

131022-Regional-CollaborationRight now, Fourth Economy is fortunate enough to be working in two communities on private sector-led regional economic development. The first is a group of self-organized group of private sector and higher education leader in the Red River Valley of North Dakota and Minnesota (the major metropolitan areas are Fargo-Moorhead and Grand Forks-East Grand Forks).  This group known as the Valley Prosperity Partnership is looking in to identify regional economic security interests and leverage the booming energy economy in Western North Dakota. The second community involves a group of private sector stakeholders convened by the Rhode Island Economic Development Corporation and the Rhode Island Foundation to inform both the Statewide Sustainable Communities planning and the work of the sponsoring organizations. Continue reading “Witnessing Collaboration Across the Nation”

The Best of the Top of the Greatest

Photo-Rustiq-TemplateFor economic and community developers, a new “best of” and “top places” ranking season is underway.  While it may not be as popular as basketball’s March Madness, there is no doubt that economic and community performance rankings attract a lot of attention. They are of great interest to the media, elected officials, the business community and residents at-large.

But rankings are only one part of a very complex economic performance story. Compounding their use and reliability is the fact that not all adopt the most rigorous, relevant or transparent methods.  And positive or negative scores do not impact all business investment decision-making in the same way.
Continue reading “The Best of the Top of the Greatest”

Rethinking the Same Old: 4 Trends Shaping New Economic Development Models

Many traditional approaches and methods for economic development are failing to keep up with the changing nature of job creation and investment in our communities. We submit that even those traditional measures, jobs and investment totals, that have been sacrosanct for the last 50 years, are losing relevancy. Why? Here are four key observations that are creating the urgency to rethink traditional economic models, tools and measures. Continue reading “Rethinking the Same Old: 4 Trends Shaping New Economic Development Models”

The Upside of Downturns

No one will deny that the American and global economies have been in an extended slump.  The question is what will lead us out of the doldrums?  Right now the big argument seems to be between advocates of clean energy (solar, wind, biomass) and legacy energy (especially coal, oil and natural gas).  In certain parts of the country, legacy energy is having an immediate impact, while clean energy remains for the time being a potential boon for some future economy.

Continue reading “The Upside of Downturns”

Collaboration, Underutilized Assets, and Entrepreneurship in Pittsburgh

 

Last month I attended a discussion in Pittsburgh hosted by GTECH Social Capital Council around the issue of innovation in the reuse of underutilized assets. The event brought together a cross-section of interested participants, including lawyers, entrepreneurs, community and economic development professionals, and artists.

Of course when you hear ‘underutilized asset’, buildings and land automatically come to mind. However, the folks at GTECH, who are already working with assets such as waste vegetable oil and dirt, encouraged us to broaden our definition – and so our discussion turned to assets like neighborhood stories, rivers, hillsides, and people. That last one is important in two ways. Abe Taleb, of ReWork, mentioned that according to 2010 census data, when compared to the 40 largest population centers in our country, the Pittsburgh region has the highest poverty rate among working-age African-Americans. Success stories abound about how Pittsburgh is reinventing itself, but imagine how successful we could be if those efforts included everyone in our city? Second, we have existing networks of people and organizations working towards the city’s success, but many have different ideas of what success looks like and how we can get there. In and of itself, that’s not a bad thing, but it tends to mean that our efforts are often siloed. Bringing all of those organizations together to share ideas and resources could help push everyone’s agenda forward.

Sara Thompson, of Pashek Associates, brought up the concept of economic gardening, a strategy focused on building economies from the ground-up. Instead of the traditional model of economic development, where municipalities participate in the zero-sum game of recruiting large employers to relocate, economic gardening encourages entrepreneurship. This is a comprehensive approach however, which relies on data to make informed decisions; coordinates continued learning and access to educational opportunities; sees community development and place-making as key components of economic development; and facilitates connections between a wide variety of stakeholders. The questioned that summed up our discussion that evening was, “How can we utilize this model in Pittsburgh to bring together the amazing organizations already working in the city to build platforms for entrepreneurship, especially while engaging the most disenfranchised citizens?”

Enter, the Pittsburgh Central Keystone Innovation Zone, or PCKIZ. PCKIZ is a consortium of higher education institutions, businesses, government agencies and community organizations, collaborating to enable the neighborhoods in central Pittsburgh to realize their potential within the knowledge-based economy. Last year, PCKIZ reached out to several local non-profits to create a winning proposal for U.S. Economic Development Association’s coveted Jobs and Innovation Accelerator Challenge.

According to Carolina Pais-Barreto Beyers, Vice President of PCKIZ, “The complexity of this RFP made it clear that we needed to leverage the strengths and expertise of several organizations to craft a proposal that was appropriate for our region.” Furthermore, PCKIZ recognized this as an opportunity to address the needs of the region’s underserved communities. “When such a great number of people are completely disenfranchised from all the good things that happen here, our entire region is compromised,” says Beyers.

Working with the Hill House Association, Innovation Works, Duquesne University Small Business Development Center, the Community College of Allegheny County, and the University of Pittsburgh Institute for Entrepreneurial Excellence, PCKIZ created the Southwestern Pennsylvania Urban Revitalization Project (SPUR). The overall goal of SPUR is to connect residents from underserved communities—particularly the Hill District—with the local energy and health care industry clusters, in part through the creation of employee-owned and/or community based businesses.

And the key to the SPUR’s success? Collaboration, of course. In Beyers’ opinion, “Collaboration among organizations is essential to make an impact of magnitude. Inviting partners of diverse expertise can tackle issues from various angles and in a holistic manner.”

This is just one example of how Pittsburgh is coming together to leverage our existing assets for the continued prosperity of our city. There are lots of ways to get involved, including the upcoming Pop City’s social innovation eXchange (SIX), January 31st at Point State Park. If you have other ideas for how to promote this work in Pittsburgh or elsewhere, leave a comment below!

Inovation-Based Economic Development vs. State Budgets

Before we get too far into the new fiscal year, we thought we’d go back and look at how the innovation-based economic development (IBED) world fared in the last round of state budgets. Tax credits continue to be a favored tool to spur growth and investment in the IBED world. Even though budgets are tight, many states have maintained or increased funding for IBED-related tax credits, and a few, such as Nebraska and Virginia have introduced new ones. Supporting commercialization efforts was also high on the list this legislative season. Ohio’s Third Frontier, for instance, has a new Commercial Acceleration Loan Fund worth $25 million. With waning investment from traditional venture capital firms, several states are stepping in to fill the gap. Maryland’s new InvestMaryland program allocates $70 million for venture capital in the innovation economy sector. And though it was developed back in 1989, Economic Gardening has only recently started to catch hold on the regional and state level. Nebraska, Virginia, Pennsylvania, and Michigan have all introduced new initiatives this year. The trend of the year, though, seems to be the restructuring of state-level economic development efforts, with a particular emphasis on engaging the private sector. Many of these efforts are currently facing some controversy, but we wouldn’t be surprised if once the wrinkles get ironed out, this is a trend that’s here to stay.

 Download the complete White Paper:
Perspecitves – Innovation-Based Economic Development vs. State Budgets

 

And…don’t forget about our poll this month…

 

Think we missed something? We’d love to hear from you. Share your thoughts in the comments below…

 

 

Poll Results: Economic Development Drivers

The Glass is Half . . .?

We recently conducted a survey of our e-newsletter readers and LinkedIn group friends. We were looking to see what people are thinking about in terms of economic development. The responses tell us a good deal about what’s on folks minds as we all work to escape the lingering impacts of the Great Recession.

First, to understand the audience – 48% of respondents own their own, or are employed by, a private sector business. 31% work for a nonprofit and 19% are government employees. A decent representation of sectors.

Economic Drivers

We asked “what will the biggest economic drivers in your community be over the next 1-3 years.” Educated Workforce was the number one driver with 73% of people saying that it’s the high impact driver for their community. While we are certainly hearing this from our site selection and economic development clients, the level of focus on this is impressive. This data means that communities lacking an educated workforce or lacking training resources will be further impacted as the economy recovers. Our upcoming Fourth Economy Index tracks this trend as a key community rating factor.

Workforce Availability and Maintenance Infrastructure were ranked by respondents as high impact by 52% and 50%. Until recently these factors were much higher on our clients minds. One surprising statistic was that Access to Affordable Energy came in 15% higher than Tax Climate (49 and 34 respectively). In the past, a lot of people sited tax climate as being a critical economic driver, however we are finding less of a concern in this area due to the different tax/fee strategies that are neutralizing this as an issue for business growth.

Economic Development Concepts

We asked people “what economic development concept is the most critical in their community.” Innovation Based Economic Development came in with 93% of the respondents citing it as high to medium impact. Economic Gardening or Grow Your Own Strategies pulled a 79% ranking and ‘Onshoring’ a 70.5% ranking. In many communities all three of these concepts are new – less than 5 years with specific strategies. This provides an opening for a great deal of experimentation for strategy development and lesson sharing between communities. We will continue to share what we are thinking and reading about on these concepts.

Here to Serve?

As many in state capitals around the country ‘debate’ the role of government in the economy, one thing is clear. Our respondents believe the bickering is holding us back. Almost 41% of them site Political Stalemate as being our greatest economic risk. We are hearing this concern from many professionals in the communities in which we are working. The act of setting an agenda and executing on it is an incredible challenge for many due to the uncertainty caused by the rhetoric and infighting coming from many of our elected officials.

In the past we have written about public private partnerships but the environment for engaging the government side of the public sector is becoming increasingly challenging.

We will follow up on this survey sometime next year. We’d like to hear from you in the meantime. Let us know what you are thinking in the comments below.

Ignorance Is Bliss, and It Gets the Job Done for Now…

Would you cut your personal budget today by $1,000 if you knew, as a result, you would lose $3,500 five years from now?

Pennsylvania and many other states are contemplating significant reductions in their funding of programs that support economic diversity. While I recognize that government has not done well to reign in spending, the rationale for reductions must be thought through much more than what is currently being proposed. I am increasingly fearful that the actions being taken, not just in Pennsylvania but also in many other capitols across the country, are going to have mid- to long-term ramifications for U.S. competitiveness and future economic recovery.

Pennsylvania’s Acting DCED Secretary recently summed my concerns up best:

“Just as a farmer doesn’t eat the seed corn during a drought, you don’t cut economic development programs during a recession,” Walker said. “This is actually when we need new tools in our arsenal to survive and grow.”

As many in the field of economic development have begun to focus on ‘economic gardening,’ providing assistance to local firms to support growth, his statements are right on the mark.

The issue before us is that the easy path to balanced budgets is to eliminate anything that is not understood. The example formula above is being played out in Pennsylvania as the state cuts millions from its budget. The ratio of $1 in state investment equaling $3.5 in tax returns is taken from the actual impact measures shown from the Ben Franklin Technology Partners. Over the past few years over $10 million in annual investment has been taken from this program. Two years of these reductions represents over $70 million in lost future tax revenue.

Pennsylvania’s state government has been a pioneer and decades-long leader in supporting technology-based economic development. In 1983, then Governor Thornburg responded to the serious economic threats caused by the demise of the steel industry employment base by calling for the creation of the Ben Franklin Technology Partnership. In similar fashion the Governor of Ohio announced the creation of the Edison Center Network. These two efforts have led the way and today are still being replicated in state’s that are seeking to diversify their economies and create an environment that supports high growth, high wage companies. The visionary leadership has benefited us well for almost three decades.

Today we all must make hard choices but I hope that we can start doing so with informed and deliberative decision-making rather than the sound bite-filled rhetoric that has guided the current proposed cuts. The science of program evaluation is often difficult to understand, but so is the reality that we have eaten our seed corn and have nothing left for the future.