Good Ideas on How Universities
Support Economic Development

Looking for some good examples of how universities are supporting economic development in communities and regions. Check out Innovation U: New University Roles in a Knowledge Economy by the Southern Growth Policies Board.

The report can be downloaded for free. It contains several case studies of business-higher education partnerships, science and tech parks, university tech transfer and commercialization, workforce development and much more.

Got an Interstate Off-Ramp?
Study Says You Need One to Compete

According to a recent article in Area Development Magazine, "in the past 20 years, more than 80 percent of new U.S. manufacturing operations have located in interstate-served communities, according to Ivan Baker of Pollina Corporate Real Estate in Park Ridge, Ill. Site selectors said interstates were the best way to connect their plants to cities, skilled labor, new infrastructure and educational resources."

Non-interstate-served communities may be “off the beaten path” but are not always rural, says Joel Kotkin at the Milken Institute. Some are suburban, exurban, or what the Milken Institute classifies as “leap-frog poles” — communities not adjacent to metropolitan areas but wired for the digital revolution. Over the past decade, manufacturing has grown twice as fast in exurban, rural, and leap-frog communities, compared to their urban counterparts.

As many others have said, there is no such thing as a "perfect" location for any business. Trade-offs always exist in choosing any given location. Are you out of the game if your area is not directly served by an interstate or interstate-quality highway? Not necessarily, but some projects might bypass your area if you don't have one. It all depends upon the project. You have to look at the specific requirements of the company and the resources offered by the community.

If you lack interstate access, it's probably not a good omen if you hope to build a distribution and logistics industry cluster in your area. But lots of other types of industries and companies have operated very competitively and profitably in areas lacking direct interstate access. Moreover, many companies like being off the beaten track a bit for business and lifestyle reasons.

New Study Says Not Enough Women
In European Industrial Research

Everybody is concerned about the "race for talent." European leaders have become increasingly aware of the shortage of women working in industrial research and development. That is the conclusion of a new study by the European Commission.

The EC report focuses on a very significant problem for industry in Europe. Not only is the number of students choosing science decreasing but the number of people in the science and technology pool is already too small to meet recruitment needs in industrial research for the foreseeable future.Only about 13% of researchers in European industry are women: the numbers are even smaller in individual countries such as Germany (less than 10%). Women may now constitute 41 percent of science, math and engineering graduates overall, but many, if not most, are lost from long-term careers in science and technology.

The EC recommends that an aggressive action plan be set in motion to increase the number of women in the field. Recommendations are made for encouraging more young girls to pursue studies in these fields, create greater incentive for women to seek careers in the industrial research, changing attitudes about working in this field and removing institutional or personal barriers that reduce women's involvement.

Industry, academic and other sources in the United States indicate that more women are being encouraged to work in industrial R&D jobs. Most feel there is room for improvement here as we work to meet the human capital requirements of our rapidly growing knowledge economy.

Learn How to Futurespeak

Baffled by the new terminology used to describe the "future?" You're not alone. For help, check our Faith Popcorn's Dictionary of the Future (Hyperion Press, NY, 2001). You can also learn a lot at Popcorn's website located here, including some of her forecasts for the future.

Finally, spend some time browsing the World Future Society's website, which offers a ton of good information about how to think about the future. Go here.

Natural Capitalism: Can It Offer
Economic Development Anything?

For some time, I have thought that the new leading metaphor for our economy is the biological organism. This idea has occurred to many others, including Paul Hawken and Amory and Hunter Lovins, who wrote the book Natural Capitalism three years ago.

What is natural capital? It refers to the natural resources and ecosystem services that make possible all economic activity. These services are of immense economic value; some are literally priceless, since they have no known substitutes.

According to the authors, current business practices typically fail to take into account the value of these assets—which is rising with their scarcity. As a result, natural capital is being degraded and liquidated by the wasteful use of such resources as energy, materials, water, fiber, and topsoil.

The first of natural capitalism's four interlinked principles is increased resource productivity. Implementing just this first principle can significantly improve a firm's bottom line, and can also help finance the other three, which are: redesigning industry on biological models with closed loops and zero waste; shifting from the sale of goods (for example, light bulbs) to the provision of services (illumination); and reinvesting in the natural capital that is the basis of future prosperity.

Thought-provoking ideas indeed.

Can natural capitalism offer economic development anything? My answer is it certainly can. In fact, many EDO's across the country have adopted "sustainable" economic development strategies reflecting natural capitalism's core principles. Who? Look at Chattanooga, TN for starters. Then, look at what many Oregon communities, including Portland, are doing in this area.

Click here to learn more about natural capitalism. Go here for information about what the Europeans are doing in this area. They are ahead of the U.S. in adopting these principles.

Industry Growth Forecast

Everybody wants to know how much our major industry sectors will grow this year. Overall, the answer is not much, but those expected to gain some ground, or grow, in 2003 include:

- Building materials, 0.5%
- Packaging and containers, 0.5%
- Biotechnology, 7.3%
- Cable TV, 5.3%
- Hotels and gaming, 0.7%
- Medical services, 2.7%
- Recreational goods and services, 2.7%
- Advertising, 1.9%
- Computer software and services, 2.5%
- Industrial services, 2.5%
- Legal services, 1.3%
- Real estate investment trusts, 1.7%

You may want to look at some of these industries a bit closer to determine if they represent near-term growth opportunities for your area. At least this is a starting point.

Grim Economic News Continues

According to the just-released macroeconomic forecast by Economy.com, things are not getting better for now. We may be headed back into recession.

Here are the highlights of Economy.com's latest economic update:

1. The entire global economy is struggling to keep its head above water, with economies ranging from Germany to Japan to much of Latin and South America are engulfed in recession. Even earlier strong and expanding economies, like Britain and Australia, have weakened in recent months. Only the Chinese economy continues to expand with any consistent vigor.

2. The U.S. economy is at a standstill. Real GDP is barely growing, while manufacturing production has resumed its downhill slide. What output gains are occurring have not been sufficient to ignite any net job creation. After losing 1.75 million jobs in 2001, the economy created no jobs last year, and payrolls resumed declining at year’s end. Job losses in manufacturing, commercial construction, travel, distribution, and investment banking continue to all but trump job gains in home and public construction, educational services, healthcare, defense, and mortgage banking.

3. The economy’s difficulties are evident everywhere, with few bright spots for now. Large regional economies, ranging from Boston and New York City in the Northeast to Atlanta and Dallas in the South to Chicago and Detroit in the Midwest to the Bay Area of California and Denver in the West, are engulfed in full-blown recessions. Close to one-third of the nation’s 300 metropolitan areas remain in recession. Solid growth is occurring in only a handful of economies across the country, the most notable being southern California and south Florida.

4. Overall, the economic barometers currently suggest that the U.S. economy is just barely skirting recession. Indeed, the odds that the economy is, or will soon be, back in recession remain very high at one-in-three.

If your economic development leaders want to know why your organization is not getting more results at this time, just have them read this article. Business, government and community leaders are disgruntled in many areas at this point. It is vitally important that you as an ED professional keep your leaders well-informed about how larger economic, national security and other events are holding back growth in your local or state economy. You tell them Don Iannone said "it's the economy, stupid."

Grow Your Regional Economic Development Cluster

Many economic developers are excited about the potential of industry clusters to spur growth in their communities, regions and states. Rightfully so, clusters have a great deal to offer in stimulating economic growth. I wonder how many economic developers have considered the application of the "cluster concept" to their own work. In this sense, an "Economic Development Cluster" exists in most regions.

The strategic focus, size, complexity and resource strength of economic development clusters are likely to vary across geographic regions. What am I really saying? Simply that over time geographic areas evolve networks of organizations that work either separately or together in furthering the economic interests of an area. Going back to my organizational behavior training, ED clusters are "inter-organizational networks," comprised of a multitude of relationships that EDO's form to accomplish their work.

What are some functional networks that already exist in economic development?

- Capital networks: provide access to local and external financial resources to support economic development.
- Marketing networks: provide information and knowledge within and outside the region about economic opportunities.
- Technological innovation networks: provide support to researchers, businesses and others working to advance new technology or provide commercial applications of technology.
- Target industry and industry cluster networks: provide information and services to foster the growth of specific growth industries or clusters.
- Real estate networks: provide access to sites and buildings as locations for new business activities.
- Business assistance networks: provide access to technical assistance, information and training to firms that want to grow and develop.
- Human resource networks: provide access to people and workforce development resources important for business growth.
- International trade networks: provide access to trade development resources helping firms to grow international markets.

These are just some of the many networks that exist in many regions.

In most cases, there are many EDO's--both local and non-local--working in these networks. In some cases, lead organizations exist. In others, they are guided by leadership teams. Typically, when we prepare economic development strategies for organizations, we prepare an inventory of all EDO's serving the area. Strategic planning provides an effective context to define how organizations work together. Increasingly, the emphasis is placed on improving the coordination and collaboration between and among EDO's within an area's ED cluster. Most regions seek to increase their "collaborative advantage."

Last August, I wrote an article in the Cleveland Plain Dealer that suggested EDO's in Northeast Ohio expand their organizational and interorganizational reach to form national and international partnerships. Why do this? Because in many cases, geographic areas in different parts of the U.S. or even worldwide, are interdependent. To increase effectiveness in overcoming major common threats and in developing common opportunities, EDO's should form national and international partnerships.

Can this be done? Yes. In fact, many industry cluster organizations, research universities and other groups are already doing this. The Israeli bioscience entrepreneurs visiting Greater Cleveland last month were jointly supported by local EDO's in Greater Cleveland and various Israeli resources, including the BIRD Foundation. Clusters in different countries in Europe have already forged new collaborative ties. More are in the works, as I listen in on what the OECD is doing.

All this boils down to your ability to collaborate in a strategic fashion with others locally and globally that share your values, vision, mission and goals.

It's worth a try. Think about your Economic Development Cluster and how to grow it nationally and globally.

I would like to acknowledge the recent contributions to my thinking on this topic by George Nemeth and Valdis Krebs. We have been thinking together about how to sharpen and tighten up NE Ohio's ED system.

Space Commercialization: Subject of New
European Community Study

How timely in light of the recent Columbia space shuttle disaster. European officials are about to launch a new study on the commercialization of space and the development of space infrastructure.

Broadly defined, "the space sector includes all public and private actors involved in the provision of space-enabled products and services. They are part of a long value-adding chain that starts upstream with the manufacturers of space hardware (e.g. launch vehicles, satellites, earth stations) and ranges downstream to the providers of space-enabled products (e.g. GPS-based car navigation systems) and services (e.g. satellite-based meteo services or direct to home video services) to final users."

The project's steering committee is scheduled to hold its first meeting in early April. In light of the space shuttle disaster, how will their agenda change? No doubt this same question in going through their minds as well. One possibility from my standpoint is that greater attention will be given to safety and security issues related to space commercialization. This is purely conjecture on my part.

For more information, go here.

The Changing European Food Industry

Food is big business. Economic development competition for food industry opportunities is keen and it is also very global. The Europeans recognize the importance of this sector. In light of its importance, the OECD is hosting a conference over the next two days to explore key issues related to this sector.

According to the OECD: "Food manufacturing and retailing in many OECD countries is becoming increasingly concentrated among a few big firms." The concentration issue is important as the industry globalizes. European officials want to know whether current corporate and industry trends will affect European national and regional economies in a positive or negative manner.

How this trend effects producers, smaller retailers and the consumer - and how governments should respond - will be among the issues explored in Changing Dimensions of the Food Economy: Exploring the Policy Issues, an OECD conference in The Hague, Netherlands on 6-7 February, 2003

You may wish to check back with OECD officials about the outcomes of this interesting set of discussions. For more information about the conference, go here.

TIF's: Do They Really Promote Growth?

Economic development incentives are a source of considerable controversy in economic development circles. Do they work in stimulating economic development? What unintended consequences do they have? Do they create more costs than benefits? Are they efficient tools for communities, regions and states to use in jumpstarting local growth? These and other questions continue to echo in city halls and state houses nationwide. As I reported yesterday, incentives are also the subject of international concern. (See February 5, 2003 story on OECD incentive study findigs.)

So what do we really know about incentives? This article reviews a 1999 study of tax increment financing (TIF) districts, which have been considered by many ED professionals to be one of the "safer" tools to use.

Tax increment financing districts (TIF's) are a popular incentive used by local government to encourage economic development. While some consider TIF's to be less costly and more efficient than outright tax abatements, some researchers find fault with TIF's from the standpoint of their actual impact on growth.

What is a TIF? It is an economic development incentive that is often used to help finance public improvements related to an economic development project. A TIF district's expenditures are financed out of “incremental” local property tax revenues generated by the project. To qualify for TIF designation, an area usually must meet a state statutory definition of “blighted” status.

Richard Dye, Lake Forest University, and David Merriman, Loyola University, Chicago, say: "in contrast to the conventional wisdom, we find evidence that cities that adopt TIF grow more slowly than those that do not. We test for and reject sample selection bias as an explanation of this finding. We argue that our empirical finding is plausible and present a theoretical argument explaining why TIF might reduce municipal growth." Dye and Meriman did a study in 1999 examining growth impacts and trade-offs within municipalities using TIF's. They examined the issue of whether TIF's promote new growth or simply shift growth within the community from one possible location to another.

Their findings surprisingly find that TIF's may trade off higher growth in the TIF district for lower growth elsewhere in the community. This is called growth-shifting. The researchers claim that their empirical evidence, used in an econometric model, suggests that TIF adoption has a real cost for municipal growth rates. Municipalities that elect to adopt TIF stimulate the growth of blighted areas at the expense of the larger town. The researchers doubt that most municipal decision-makers are aware of this tradeoff or that they would willingly sacrifice significant municipal growth to create TIF districts.

The researchers conclude: "Our results present an opportunity to ponder the issue of whether, and how much, overall municipal growth should be sacrificed to encourage the development of blighted areas."

Want to read more? Go here.

More on the Economic Effects of
the Space Shuttle Disaster

What are people saying about the economic effects of the space shuttle disaster at this point?

According to South Florida's Sun-Sentinel: "Despite President Bush's pledge that "our journey into space will go on," residents of the Space Coast are worried that their economy stands to suffer from the space shuttle Columbia disaster." The NASA space center is Florida's fourth-largest tourist attraction -- attracting 1.8 million visitors a year, which makes it an integral part of Florida's economy. Florida's space sector is a $4.2 billion industry that employs 25,000 workers.

From the Atlanta Journal Constitution: "The impact on aerospace-related businesses and on local economies that depend on them will be determined by how long the investigation lasts, said A. Thomas Hollingsworth, dean of the School of Management at Florida Institute of Technology in Melbourne."

Finally, from the New York Times: "Analysts who follow the business of building and launching rockets and satellites anticipate that the loss of the space shuttle could eventually help rather than hurt the industry."

One thing for is for sure. The major private contractors to NASA's space shuttle program will be watching closely in light of the fact that 92 percent of NASA's budget for the shuttle program flows to them.

Regionalism & Public-Private Partnerships
Guest Author
By Terry Cusack, President
STELLAR Fundraising Executives, Inc.

You’d be hard pressed to find someone who doesn’t support the idea of a regional approach to economic development. Most would agree that such an approach moves an area forward better than any one individual effort. Why then do we still have such a proliferation of independent organizations struggling to make an impact at a time when everyone seems to embrace the concept of “Regionalism” and “Public / Private Partnerships?”

Unfortunately, it still boils down to attitudes of parochialism, selfishness, political agendas, empire building …and the list goes on. As foolish as it sounds, the trend of going-it-alone in the economic development arena continues. By some estimates, there are more than 35,000 economic development groups in the US alone. Are there 35,000 regions, markets or even communities that truly require their own economic development effort?

When communities begin to think in terms of economic boundaries, rather than political or geographic ones, regions can be substantially more effective in attracting new investment. Let’s look at two Illinois regional economic development partnerships that seem to be working better than most.

In 1997, the Chicago Southland area suffered from a lack of regional thinking. New jobs, retained jobs, capital investment and the tax base all needed a boost. Growth in other Illinois regions was outpacing that of Chicago Southland significantly. Forward thinking area leaders knew things needed to change and fast. Three organizations, not known for working particularly well together, the Chicago Southland Chamber of Commerce, Chicago Southland Development, Inc. and South Suburban Mayors and Managers Association emerged as necessary partners and agents of change.

A new regional five-year umbrella economic development initiative was developed called the Chicago Southland Alliance. The Alliance would address area image enhancement, marketing, recruitment, workforce preparedness, small business assistance, business retention and government relations. At a special press conference hosted by the three new “partner” organizations, their respective leaders ceremoniously signed a letter of cooperation. This launched a new, successful public / private fundraising campaign that raised nearly $4 million to support the new regional development initiative. The umbrella Alliance, lead by initiative investors, then charged each organization with implementation of specific program strategies – all for the economic betterment of the region and to eliminate any duplication of efforts. Today these three separate organizations are joined together and now communicate, work cooperatively and share a common vision to grow the region.

More recently in 1999, the Aurora Economic Development Commission, the City of Aurora and the Aurora Chamber of Commerce Foundation joined forces to develop a Public/Private partnership initiative. The five-year initiative for economic and community growth was titled “Seize the Future” and included a fundraising goal of $5 million, which was exceeded by the more than 150 new public and private sector investors who realized the value of a cooperative effort. They raised $5.1 million with a resulting impact of 2,100 new jobs and $180 million in new commercial / industrial development for 2000, the first year of the five-year initiative.

These two examples demonstrate that while regional Public/Private partnerships aren’t a new concept, they are unfortunately too often not the norm. Forward thinking leaders who take the time, effort and money to develop such regional initiatives will continue to outperform those unwilling to set aside their parochial views. The economic development battlefields are cluttered with nearly 35,000 others seeking jobs and capital investment for their respective communities. Can your community afford not to perform regionally at some level?

STELLAR Fundraising is based in Atlanta, GA. Phone: 770-476-3049. Mr. Cusack can also be reached by email at: tcusack@stellarfundraising.com

Creative Cluster e-Portal: Good Example from United Kingdom

The creative sector is getting more attention as a focus for economic development worldwide. Here is an example of a very good e-Portal for the creative sector in the West Midlands, North Staffordshire region in the UK. If you are looking for study examples, check this one out. Click here. The contact is David Hayden.

OECD Study Looks at National and
International Effects of Incentives

Are national and international "welfare" helped or hurt by economic development incentives? This was the focus of a newly released OECD study. The study looked at incentive use in both developing and developed nations.

The study concludes that competition among governments to attract foreign direct investment (FDI) has grown significantly, and that the intensity of this rivalry is a significant factor increasing the size of incentive packages given to businesses. The study finds that over-bidding; that is giving larger incentive packages than is need is particularly a problem in developing countries. The risk of “overbidding” is exacerbated by institutional weaknesses, poor cost-benefit analysis and in some cases, corruption. Moreover, the potential consequences of excessively generous incentives might be increased in those developing nations whose fiscal positions are already weak.

What solutions are proposed by the study principals? They say that the focus of international policy action should be to reduce the negative effects of incentive bidding wars, without prohibiting governments from pursuing legitimate industry, technology or regional-development policy objectives.

Efforts to increase the transparency of incentive deals offer promising results. At a national level, proper accounting could discourage firms from seeking greater incentives than they really need. Better accounting procedures could also assist governments to ensure that incentive expenditure is proportionate to the benefits of projects attracted by it. Where incentives are involved in international competition for business investments, greater information-sharing across national borders could increase the bargaining power of governments in incentive negotiations.

Go here to read more about the OECD study results.

University of California System Articulates
How It Helps the State's Economy

The UC system has created a useful website that examines how UC supports and contributes to California's economy. As a start, it has identified the various areas in which it provides help. That is a good first step in building greater awareness and hopefully creating a comprehensive university-based ED strategy for the future.

In addition to the system's economic impact on the state and California regions through its budget spending, UC provides support to industry cluster development. This is important because many cluster initiatives in the U.S. and abroad that we have examined need more help to get economic results. Human capital strategies for clusters are very important.

Other UC economic development priorities include: world-class graduate education initiatives for business, engineering and science, innovative technology commercialization, workforce development and assistance to the state's large agricultural sector.

My take is that state funding for higher education has taken a big hit in California, as it has in many states. Hopefully this increased attention to economic development will help to attract more government, corporate and foundation dollars to the UC system.

This is not an easy time for most state-assisted universities. The UC move is a good one if it can increase collaboration with the private sector and local communities and it can grow the state's return on its higher education investments. It's not a perfect world and many Californians are still looking for more for their colleges and universities, but I like the UC "integrated" look at economic development that cuts across all UC campuses. More states should look at this example.

Want to know more. Go here.

Does More Spending Necessarily
Result in Improved Educational Outcomes?

Standard and Poors just released a new study of Michigan's public K-12 schools that says:

1. In terms of return on financial resources, higher spending doesn't always translate into student success. Of the 181 school districts that spent more per student than the state average, 92 had below-average passing rates on the Michigan Educational Assessment Program (MEAP) standardized tests. Of the 343 school districts with below-average spending, only 171 had above-average MEAP passing rates.

2. On the academic performance side, there is some good news. Passing rates on the MEAP tests improved in reading, math, and science in most grade levels tested from 1997 to 2001. Statewide passing rates in 2001 ranged from 74% for fourth-grade math tests to 19% for fifth-grade social studies. Although participation in Advanced Placement (AP) exams increased to 13.8% in 2001 from 9.8% in 1997, the percentage of AP exams receiving scores of three or above decreased to 58.4% in 2001 from 63.3% in 1997. The graduation rate increased to 86.3% of students in 2001 from 80.7% in 1997, while the dropout rate decreased to 3.7% from 5.1% during the same period. The last set of numbers show good improvement.

3. How does Michigan compare to the nation? About 29% of Michigan students who took the 2000 4th grade National Assessment of Educational Progress (NAEP) math test scored at the proficient level, compared with the national average of 25%. About 33% of Michigan students who took the 2000 fourth-grade NAEP science test scored at the proficient level, compared with 28% of students nationwide. Michigan ranked fourth highest in the nation in average teacher salaries in 2001. Only 7 states in 2001 had more students per teacher than Michigan. Michigan’s state revenue per student was among the highest in the nation in 2000, while only five states reported a higher proportion of revenue from state sources.

Again, in the race for human capital talent, education matters.

Go here to get the report.

Tougher Competition Ahead for the U.S.
in the International Education Market

British undergraduate programs accepted nearly 20 percent more international students last year than in 2001, according to figures released yesterday by the British Council. 17 percent more American students signed up for studies at British universities last year. Total enrollment of foreign students in Britain was 232,760 for the 2001-2002 academic year. That number is smaller than the 582,996 foreign students studying in the United States.

The latest increase in British acceptances may lend some support to Americans who worry about foreign competition eating into the United States' share of the international education market.

Relaxed work regulations and more scholarships are two of the inducements used by the British. In addition, international students feel welcome in the U.K. In this time of international conflict, these things mean a lot.

Increased security concerns and stiffer immigrations rules could work against U.S. colleges and universities as they compete for world talent. That is a concern echoing across the United States, from Cleveland to Tucson to San Jose. Talent is the heart of the new economy and our ability to get our share of the new economic pie.

Go here for more information.

Latest Buzz About Team NEO

Two weeks ago, regional officials announced the formation of Team NEO, a new strategic development organization serving NE Ohio. Since then, Team NEO has been the buzz in local economic development circles.

What are people buzzing about? Here are some of the questions that keep coming up. What is the role of the organization and how does this relate to the role of other area EDO's? What are the best opportunities for Team NEO to pursue? Can Team NEO get everyone in the region pulling in the same direction for economic development?

To catch the latest buzz, click here to go to the latest Crain's Cleveland Business article about Team NEO.

What's my take? Team NEO can do its job, if it:

1. Is guided by the right vision and performance-based plan.
2. Has the right leadership and staff.
3. Builds the region's development team to create collaborative advantage.
4. Focuses on the right mix of opportunities.
5. Is given the financial resources to do the job right.
6. Is willing to experiment with new ideas.
7. Is given sufficient time and help to prove itself.

Innovation By What Standards?

We continue the hunt for good ideas on fostering innovation in economic development. A logical question is how do we decide whether something is innovative.

Here are the yardsticks that the Council of State Governments (CSG) uses to select innovative state policies, organizations and programs in various areas, including economic development:

- Newness: Will the program be between 9 months and 5 years old?
- Creativity: Does the program represent a new and creative approach to problems or issues?
- Effectiveness: Has the program or policy been effective in achieving its goals and purposes to this point?
- Applicability: Is the program applicable to other states?
- Transferability: Could the program or policy be easily transferred to other states?
- Significance: Does the program or policy address significant regional issues or problems that are regional in scope?

This is a pretty good list in my judgement. Are there others we should look at? We will share what we learn in this regard.

Statewide Public-Private Organizations
for Economic Development

The National Association of State Development Agencies (NASDA) has been tracking public-private partnerships (PPP's). Go here to see what they are doing. My impression is that the NASDA list will need updating shortly.

With new Governors taking office this year in many states, it may be timely to see how state governments are partnering with the private sector to accomplish economic development goals. Will PPP's grow in popularity in the future? Could current state budget shortfalls push the states to do more partnering? We see more PPP's on the horizon, not just for budget reasons, but also because they are effective strategies in many areas.

Looking one step beyond, will states work with one another more in the future? For everybody's sake, I hope they do. How can your state work collaboratively with other states--neighboring and otherwise--to stimulate industry cluster growth, technological innovation, pooling venture and seed capital investments and various other areas? This may be the time to explore your interstate cooperation opportunities.

Education Finance is a Big Issue:
Are You Informed?

Thanks to the National Conference of State Legislatures (NCSL) you can quickly get a leg up on education finance information. How your state spends on K-12 and higher education affects your state and local economic competitiveness. What is your state investing in that will give you the human capital advantage that you will need in the future. Click here to access NCSL's database.

U.S. Conference of Mayors Releases
New Metro Economic Report

A recently released report by the U.S. Conference of Mayors paints a not so bright picture of economic growth across the nation's cities and metropolitan areas. While hardly unexpected news, the shock effect takes hold when you actually see the numbers.

The Conference report says "the new report that finds that metropolitan areas lost 646,000 jobs in 2002. Two-thirds of metro areas lost jobs in 2002, including more than 20,000 jobs lost in each of 10 metro areas. The report predicts continued slow job growth in 2003."

It goes on to say that "213 of the nation’s 319 metro areas, two-thirds, lost jobs in 2002. Six metro areas – New York, Chicago, Atlanta, San Jose, Boston, and Seattle – lost more than 40,000 jobs each. Four additional metro areas – San Francisco, Detroit, Denver, and Los Angeles – lost more than 20,000 jobs each."

Were there any bright spots? Yes, the following metros saw favorable job gains (over 5 percent) in 2002: Riverside, CA; Las Vegas, NV; San Diego, CA; Kansas City, MO/KS; Miami, FL, Raleigh-Durham-Chapel Hill, NC; Jacksonville, FL; Washington, DC; Reno, NV; West Palm Beach, FL.

The job growth outlook for almost all U.S. metro areas is expected to be slower growth over the next 2-3 years.

One final tidbit from the study: the gross metropolitan economic output of the nation's ten largest metro areas is expected be larger than the combined economic output of 31 of the states. Once again, this reinforces the view that U.S. economic might is still heavily concentrated in our metro economies.

Regional Economic Effects of Troop
Deployment for Middle East

Unless you live in a area with a high military personnel presence, the issue of how troop deployment impacts your regional economy may not be a great concern. It is a concern to those highly military-dependent communities.

How are local economies impacted by troop deployment? In large part, the major impact relates to lost personal income and spending to the local economy that results from movement of troops and their families.

A recent study by Economy.com says that "early estimates of the number of troops needed for an Iraqi invasion suggest that this impending military action is likely to have less severe economic effects as did the Gulf War. Still, regional economies exposed to troop movements will suffer nonetheless, delaying their recovery from the latest recession."

The South and West will feel more of the pain of this loss because that is where most military personnel are stationed. More specifically, the following military base communities are likely to feel the brunt of this impact:

- Jacksonville, NC.
- Kileen, TX.
- Fayetteville, NC.
- Clarksville, TN.
- Lawton, OK.
- Bremerton, WA.
- Fort Walton Beach, FL.
- Great Falls, MT.
- Norfolk, VA.
-Colorado Springs, CO.

West and Southwest Lag Nation
in Educational Attainment

Educational attainment is one of our leading indicators of area economic competitiveness. According to a recent study by the Federal Reserve Bank of Dallas, the West and Southwest are lagging the nation in their key educational attainment measures.

The report finds that "the average education of the adult population increased in every state and the District of Columbia. Some states improved much more than others. Gains in average educational attainment were systematically lower in the West and Southwest. In particular, Alaska, California and Nevada posted less than half the national gain. California, which ranked 14th in the nation in terms of average educational attainment in 1990, slipped to 29th by 2000. Texas dropped seven places to 42nd."

What are the possible explanations for this lag? Here are two:

1. States with high dropout rates probably experienced more growth in the dropout population. With the exception of Utah, the dropout rate was above the national median for all states where the dropout population grew.

2. Proximity to Mexico is also a likely explanation for the growth in adults without a diploma. According to the 2000 census, two-thirds of adults living in the United States who were born in Mexico had less than a high school diploma. Therefore, states with a growing population of Mexican immigrants would also tend to have had a growing number of adults without a high school diploma.

Educational attainment is a challenge in all states and communities, even those that are leading the pack right now.

Downtown Development Benchmarks

Many communities are struggling to bring new life back to their downtowns. A recent article in South Business & Development gives its ideas on Southern downtowns that are making some headway.

Who is making progress among large, medium and small-sized Southern cities?

1. St. Petersburg, FL.
2. Richmond, VA.
3. Oklahoma City, OK.
4. Little Rock, AR.
5. Roanoke, VA.
6. Clarksville, TN.
7. Shreveport, LA.
8. Hattiesburg, MS.
9. Kingsport, TN.
10. Lafayette, LA.
11. Chattanooga, TN.
12. Brunswick, GA.
13. New Albany, MS.
14. Conway, SC.
15. Aiken, SC.
16. Morgantown, WV.
17. Hendersonville, NC.
18. Columbus, MS.
19. New Bern, NC.
20. Harrison, AR.

Nanotechnology and Biotechnology Unite

Can you believe it? Nanotechnology and biotechnology are conspiring to work together. That's what the ETC Group in Winnipeg is telling us. Most everyone knows what biotechnology is. How about nanotechnology? Nanotechnology is the application of materials, devices,and systems on a scale of nanometers--very, very tiny devices. Go here if you want to read about nanometer-scale metrology.

What does the ETC Group report say? Here are a couple clips from the new report.

"The first and greatest impact of nano-scale technologies may come with the merger of nanotech and biotech – a newly recognized discipline called nanobiotechnology. While Gray Goo has grabbed the headlines, self-replicating nanobots are not yet possible. The more likely future scenario is that the merger of living and nonliving matter will result in hybrid organisms and products that end up behaving in unpredictable and uncontrollable ways – get ready for “Green Goo!”

"Roughly one-fifth (21%) of nanotech businesses in the USA are currently focusing on nanobiotechnology for the development of pharmaceutical products, drug delivery systems and other healthcare-related products. The US National Science Foundation predicts that the market for nano-scale products will reach $1 trillion per annum by 2015. As with biotech before it, nanotech is also expected to have a major impact on food and agriculture."

What is the venture capital community saying at this point about nano-anything? Nano, nano...we have a long way to go before commercial products will be ready. Yes, some are investing in nanotechology research companies, but most are sitting on the sidelines for now. Read what Venture Economics has to say.

Shuttle Disaster's Effects on Economy

Will the space shuttle Columbia disaster have a measurable effect on consumer confidence or financial markets? Analysts are saying at this point that the tragedy will not have a significant impact. If terrorism was involved, the reaction would be quite different, according to a New York Times article this morning.

What are Americans' immediate reactions to the tragedy? A Sunday poll by CNN/USA Today/Gallup says that despite the second space shuttle catastrophe in 17 years, Americans want the program to continue and most remain convinced that the nation should not abandon its emphasis on a manned approach to space exploration.

The poll also shows that the public's reactions to Saturday's tragic loss of the space shuttle Columbia are in many ways quite close to those measured after the January 1986 explosion of the Challenger shuttle. Americans wanted the space shuttle program to continue in 1986, and they want it to continue now.

The poll shows no signs that Americans' overall confidence in NASA has dropped after Saturday's events. Most believe that NASA's funding should either continue at its current level or be increased in the future.

Very few Americans think the breakup and loss of the Columbia was the result of terrorism.

Many Americans, while upset over the tragedy, felt that something like it was bound to happen, and only about 4 out of 10 have a great deal of confidence that NASA will be able to prevent future shuttle accidents.

Where Can You Find the Best Venture Capital
Information and Statistics?

You may want to check out Venture Economics, a long-standing leader in venture economic research. Just click here.

What might you learn from Venture Economics? You might learn that venture capital investments have seen a steady decline since 2000, but life sciences (biotechnology and medical devices) was the bright spot for the fourth quarter and the full year 2002. Life sciences totaled $4.7 billion, accounting for 22% of all venture capital investing, up from 13% in 2001, and the highest proportion of total venture capital in seven years. Separately, the biotechnology industry attracted $2.8 billion in 2002 and the medical devices industry accounted for $1.9 billion in 2002.

Perhaps this explains why cities and states worldwide are clamoring to get their share of the growing life sciences pie.

How Good Are Your Networking Skills?

Economic developers are by nature "networkers." Your contact network is perhaps one of your most important tools. So, how effective are your networking skills? Need to brush up your networking skills? Check out this very useful and practical presentation by Ken Morse at the MIT Entrepreneurship Center. Get it here.

You might want to read this Wall Street Journal article, which provides some useful advice on networking.

Did the 1990's Boom Help
Everyone to Prosper Equally?

I know it's a silly question, but I had to ask it anyway. No, everyone did not benefit equally from the 90's growth boom. Duh. The biggest share of the benefits was reaped by those already with the greatest wealth across the nation. Got something to back up this claim? Yes indeed I do. I should say the Federal Reserve Board has the proof.

The Federal Reserve Bank just released a new survey report showing that economic inequality increased markedly as the boom of the 1990's fizzled. While incomes increased in most income groups, the survey results suggest that the benefits of economic boom were widespread but extremely uneven. The wealth of the nation's top 10 percent of incomes surged much more than wealth of those in any other group. The net worth of families in the top 10 percent jumped 69 percent, to $833,600 in 2001 from $492,400 in 1998. Meanwhile, the net worth of families in lowest fifth of income earners rose 24 percent, to $7,900. The median accumulated wealth for families at the top was about 12 times that of lower-middle-income families through much of 1990's. The median net worth of the top earners group was about 22 times as great in 2001.

The survey also showed that more than half of all families own stocks, either directly or through their mutual funds and pension plans. It also indicates that Americans borrowed more in 2001 than in 1998.

The Federal Reserve survey was conducted at the end of 2001, when the economy was in a recession and compares income and other financial indicators during the 1998-2001 period.

Get the full report here.

California Has Its Hungry Eye
on Indian Gaming Revenues

Got a budget deficit? Every state does. Got Indian gaming facilities? California and many states do. Can California and other states tap Indian gaming profits as a source of revenue to fix your state budget problem? Not directly, but maybe indirectly they can. It seems that California is thinking about re-opening an old can of worms relating to the taxation of Indian gaming facilities. Currently, states cannot tax Indian tribes, however they can arrange for payments in lieu of taxes and other financial arrangements with tribes.

What might it take to play let's make a deal with tribes in California. According to a recent New York Times article, "in bargaining with the Indians, the state's only leverage is its ability to grant licenses for additional slot machines and other gambling devices. Gambling experts say that to get the $1.5 billion Mr. Davis seeks, the state would have to allow tribal gambling to at least double."

Obviously, other states will be watching the California situation carefully to decide whether they should make similar moves. Once again, California becomes a "test ground" for policy innovation.

What's my take on the situation? I think it makes sense to broach the subject with the California tribes. Hopefully during this "horse trading" there is some discussion of how tribes and the state can work and invest their resources together to stimulate economic development where it's most needed in the state. Maybe this is the time to form a California-Native Nations Development Fund to provide financial support to needy economic development projects in the state. If Governor Gray is intent upon capturing a piece of casino profits, it seems that a reasonable portion of that money should be directed to economic development uses and not simply treated as general revenue funds. How's that for an innovative idea. Are you listening California?