New direction in Economic Development
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- 1. A New Direction inEconomic Development Jim Claybaugh, MBA, EDFP October 24, 2012
2. OverviewWhat is Economic Development?HistoryTheoriesCommon StrategiesInfrastructure Capital ResourcesThe Knowledge Economy 3. Why Do Economic Development?Economic ReasonsRevenue from High Incomes/Biz ActivitySavings From Reduced Govt ServicesSocial ReasonsAffluence Lowers Crime, Drug Use, etc.Collective ConfidencePolitical Reasons 4. What is Economic Development?Depends who you ask As to the answer received Economists Quantifiable economic growth Businesses Barriers (taxes, regulations)Environment Keep ecology & environmentLabor Groups Wages, training, benefits Community leadersStrengthen local communities Government Officials Tax Base, Revenues 5. What is Economic Development?The enhancement of the factors ofproductive capacity Infrastructure for community well-beingEconomic Development v. GrowthMust Be A LONG-TERM Commitment 6. What is Economic Development?Should Be Consensus-drivenShould Be Market-based Work with market forces Economic development is not a salad bar.Should Be Sustainable As in Sustainable DevelopmentShould Be Bottom Up 7. What is Infrastructure?Five Types Physical Organizational Social/Political Financial/Economic Human/Intellectual 8. What is Infrastructure?Human/IntellectualFinancial/EconomicSocial/PoliticalOrganizationalPhysical 9. HistoryThree Waves First Wave: Industrial RecruitmentStarted in South, 1930s Second Wave: Retention & ExpansionLow ROI From Business Attraction Third Wave: New Economy ED 10. First Wave 1930s-1990sFocus on Attracting:ManufacturingOutside Financial InvestmentTo achieve this cities used:Tax IncentivesGrants & Subsidized LoansSubsidized Infrastructure InvestmentExpensive Marketing Techniques 11. Second Wave 80s-00sFocus Moved Towards:The Retention/Expansion Of BusinessAn Emphasis On Inward InvestmentTargeted To Specific Sectors/ClustersTo Achieve This Cities Provided:Technical Assistance To BusinessesFinancial Assistance/Loan ProgramsInfrastructure InvestmentPermit Streamlining 12. Third Wave 90s - NowFocus ShiftedFrom: Direct Financial IncentivesTo: Making Regions CompetitiveFocus is placed on:Public/Private PartnershipsSoft Infrastructure InvestmentsIncreased Competitive AdvantagesLeverage Public/Private Investments 13. Third Wave 90s - NowTo Achieve This Cities/Regions Are:Developing Holistic StrategyCreating Competitive Business ClimateNetworking And CollaborationSupporting Cluster DevelopmentHorizontal And Vertical IntegrationEducation/Workforce TrainingTargeting Investment To ClustersQuality Of Life Improvement 14. Theories of Economic DevelopmentStapleSectorGrowth PoleProduct CycleEconomic BaseEntrepreneurshipInter-Regional TradeNeo-Classical GrowthFlexible Specialization 15. Common StrategiesBusiness CreationBusiness RetentionBusiness ExpansionBusiness AttractionOther Strategies/Capacity BuildingNeighborhood/Downtown RevitalizationRedevelopment 16. Business CreationAKA Entrepreneurship Development Micro-Enterprise Development Economic Gardening Business IncubationPrograms to encourage start-ups Technical Assistance Financial Assistance2nd Highest Job Creation ROI 17. Business RetentionDesigned to Retain Existing BusinessesInformation GatheringSurveys, InterviewsTrack Trends and ID BarriersRed Team Visitsto Troubled or Recruited BusinessesEnergy Crisis, 2001CA Forced to Focus on Retention 18. Business ExpansionSimilar to Business RetentionAssists Local Businesses Expand Location Assistance Financing Assistance Permitting Assistance Job Placement AssistanceHighest Job Creation ROI ~80% of New Jobs Created 19. Business AttractionAKA Business Recruitment-MarketingFirst ThoughtPromotion of Region, Sites, AmenitiesMost Common ApproachLowest ROI of All ApproachesPlaying the LotteryAlabama ExampleInvolves Site Selection Process 20. Site Selection FactorsArea Development, Annual Survey Availability/cost of skilled labor Corporate tax rate State and Local incentives Tax exemptions Occupancy or construction costs Highway Accessibility Environmental regulations Low union profile Energy availability and costs 21. Site Selection FactorsConway Data, Inc. Work force, wages, productivity Market and demographic data Specific sites & Buildings Transportation Energy and utilities Materials, supplies, services Government programs Water and WW infrastructure Environmental impact, ecological factors Climate/Quality of Life factors 22. Site Selection FactorsLabor Availability/QualitySite AvailabilityEducation/Vocation Facilities Public SafetyLabor-Mgmt RelationsEnvironmental RestrictionsWage Levels Local Views to DevelopmentEducation Opportunities Financial IncentivesUtility Costs/AvailabilityHousing Cost/AvailabilityReal Estate Costs Shopping FacilitiesTaxes/CODBHotel/Motel AvailabilityHighway Accessibility Medical and Health ServicesMarket Location/Freight Community EnvironmentTransportation Services Recreational/Cultural Climate Source: Fantus Co. - Chicago 23. Capacity BuildingInfrastructure-Capital-ResourcesHard v. Soft InfrastructureWhy Focus on Infrastructure?Economic Climate Conducive to GrowthWe cant predict the next Big ThingAssists in All Econ Dev StrategiesEcosystem Analogy 24. Knowledge EconomyNew Strategies and ObjectivesInfrastructure InvestmentNew Definition of InfrastructureNew PartnershipsIncludes Colleges & UniversitiesNew ChallengesWidening Wealth/Income GapsWidening Education/Skills Gaps 25. Knowledge EconomyRegional and HolisticSector/Cluster-BasedHuman Capital-Based Linking Workforce DevelopmentInnovation-Based The R&D Jobs Food ChainInformation-Based Littleton, CO Example Use of Internet in Site Selection 26. Conclusions ( Mine)Econ Dev Does NOT Tackle PovertyTraditional Strategies Havent HelpedSoutheast U.S. ExampleHuman/Intellectual Capital is MVPP = Poverty-slayerBusiness Attraction = Negative ROIEconomic DevelopmentGrowth Is NOT Can Lead To Should Focus On 27. What Would I Do?Innovation And Tech CommercializationFocus Attraction to Inquiry ResponsesReview/Update Planning DocumentsTighten Relationships With PartnersLand And Infrastructure InventoryDevelop CRA-type Industrial REITDevelop Capital Index Scorecard 28. What Would I Do?Technology CommercializationExpansion of Industrial SectorsQuality WorkforceUse Balanced Scorecard ApproachInnovation CultureLand Zoned and Pre-PermittedAdvance Infrastructure 29. Appendix:Capital IndexPhysical Capital IndexIndustrial and Commercial Land RatiosRatio of Region with High BandwidthCommercial-Industrial VacancyRegional Water/Sewer CapacityRegional Traffic Capacity 30. Appendix:Capital IndexHuman/Intellectual Capital IndexHigh School Graduation Rates/Test ScoresRatio of Pre-School ParticipationCollege Degrees Per CapitaPatents Per CapitaUnemployment 31. Appendix:Capital IndexSocial/Political Capital IndexLocal Government Permit Fee StructureParticipation in School Business TeamsVirtual Enterprise, Junior AchievementLocal Efforts in Economic DevelopmentEDOs, Local Governments, Chambers, etc.