Achieving Success in Economic Development
By Bill Schweke on 09/19/2011 @ 11:00 AM
While cleaning up my office, I ran across a lecture, authored by Professor Edward (Ned) Hill, that I embarrassingly never read. Despite being dated January 2002, it was as current as any short work published today. Entitled “The Fundamentals of Regional Economic Development,” I believe that Hill hit a home run with this piece.
This article comes from a question posed by a foundation executive, regarding Hill’s proposal for a perfect headline for a major article on economic development. He answered by saying “it’s complicated.”
The rest of this short essay will try to summarize elements of the lecture, while elaborating on others. (This is not small task, because Hills’ treatment of the issues is both deep and lucid.)
- “There is no set formula” for success, “no silver bullets when it comes to economic development.” To say that development policy’s thinking, design and implementation will be challenging and must be nuanced is no cop-out, no scholarly convolution, no reluctance to take on the vested interests and conventional wisdom.
- Hill correctly distinguishes “development” from “growth.” Development signifies economic progress – discovering and applying better ways of meeting our wants, while growth indicates just more output, more income, more jobs or more people. (“The goal of economic growth is to get bigger.”) Growth, indeed, could occur from plain, dumb luck; an unanticipated relocation of a footloose factory. Or, the stars become aligned for a long struggling entrepreneurial venture because of a change in federal policy.
- Pulling this off is a matter of dancing on a tightrope, not just walking on it. Smart economic development policymakers and practitioners must be adaptive and flexible, because the best climate for development can be characterized as one of “creative destruction.” Turmoil, closings and openings all abound, while efforts are underway to create new and better opportunities, greater family economic security, a certain amount of earning stability and increased entrepreneurial initiative. To use another metaphor, it’s like playing ball on running water.
- Places matter and places differ. One area’s source of advantage is another’s “death wish.”
- Economic development of the successful sort is grounded in three distinct elements. To start, there are theories, economic do’s and taboos, mathematical identities, and factual regularities, which can be distilled into models of “how things should work in a market economy.” Next is the world of effective or best practice – a box of programs that seem to work somewhere reliably. Then there is what Hill calls “local context.” Or, better stated – “the recognition of local context.” Successful development strategies reach critical mass when the particulars of an area, regarding human capital, social capital, financial capital, physical capital and technological knowhow are robust, as well as maintained, upgraded and catalyzed by good government. The best economic development strategy is getting the fundamentals right, such as schools, roads, amenities and overall quality of life.
- “There is an active – and good – tension between the study of and practice of economic development. It is the tension of vision versus rigor, program design versus program analysis, and the compelling story versus the skepticism of the dismal science.” Indeed, “a studied skepticism” is key to the getting the whole shebang going right. Certainly, “the not-invented-here syndrome” is best combated with it, not ‘boosterism.’
- Political and development timeframes diverge significantly. Economic crises expand policy opportunities, but their horizons may be short. (Think about the electoral cycle.) At the same time, actually completing a major development project may take 3 - 5 years. Transforming an overall economy is a matter of a decade or two (or more). Thus, patient, long-term investments in a region’s advantages are the prerequisites to development, but the leaders must obtain the populace’s buy-in, regarding the vision and the strategy.
- A good civic infrastructure for nonprofits complements actions in the private and public sector and is often better positioned to tackle certain assignments and oversee to complex alliances and collaborations. But, you must not forget that nonprofits do not walk on water and may, over time, become turf-bound.
- Economic developers are in the business of selling locations, public/private investments and accountable, cost-effective public services. They do not directly create jobs. Entrepreneurs and private investors are the main players.
- Economic development is primarily a generative strategy. It is structured to create a bigger pie and see that all benefit. But it is not a redistributionist effort, although there are important links with workforce and community development. Those experiencing dislocation and job loss should not be allowed to fall way behind. Employability is critical for all working in today’s global, information economy.
To quote Hill:
- “Fundamental change to encourage economic development is not closing deals; the core of change is building an economic environment where business wants to do deals.”
- Moreover, “it means that government must get its own house in order first by executing the basics of serving business and workers.”
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