Advancing Regional Economic Development
to the Next Level
This article is about the future of regional economic development efforts in the United States. It offers an assessment of some of the leading challenges and opportunities facing these efforts and what regional economic development programs need to do to survive and thrive in the future. Current funding, leadership and political problems facing many of these programs have motivated me to write this article.
Regional approaches to economic development have become commonplace across the United States. They have even deeper and longer-standing roots in Europe, which has been following regional economic development strategies for many years. Regional strategies have also taken hold and are becoming increasingly important in Canada, Mexico, Australia, New Zealand, Japan, Korea, China and many other countries.
Who has led these efforts? Most often, private business leaders are the spark plugs for regional economic development efforts. Business leaders find it easier to see the need for economic development efforts that build upon and transcend local political boundaries. In many states, state government development agencies have encouraged regional strategies. Federal economic development agencies, such as the U.S. Economic Development Administration (EDA), have also given support to regional efforts.
As background, regional economies are "real" functioning economies in the sense that they coincide with labor markets, consumer markets, media markets and major public infrastructure systems. All communities and counties exist within a regional economic context. This regional economic context shapes economic activities within communities regardless of whether a formalized regional economic development strategy exists. Regional economic development is important to both urban and rural communities alike. Communities have economic bases, which are functioning parts of regional economies. Local economic bases and regional economies have a symbiotic relationship; that is they depend upon each other for survival and growth. The one cannot survive and function successfully without the other.
Regional economic development strategies have taken hold across the U.S. and internationally to harness the resources of communities and private business and industries making up regions to increase competitiveness for future economic growth. Many of these regional strategies work at strengthening how communities work as a "network" to advance their shared economic interests.
Successful regional economic development initiatives are able to balance the needs and interests of the region and its component communities or counties. They are also able to find "economic common ground" that unifies communities. This is difficult at times given the competitive nature of economic development, especially the rivalry that occurs for new business investments, tax base and other economic resources.
To ensure that regions maximize the economic return on their public and private sector resources for the most concerned, cooperation and coordination of community economic development activities within a region are important. This coordination reduces unnecessary fragmentation and duplication of effort among regional stakeholders. Coordination and cooperation are difficult at times because of heightened resource rivalry, the desire for increased autonomy and control, and other reasons. In looking across many regional ED initiatives, the longstanding ones have succeeded in "supplementing," rather than "supplanting" local initiative. It is important that communities feel empowered by regional initiatives and not undermined by them.
A very large number of urban and rural regions across the United States have made significant progress in instituting regional economic strategies. Despite their current problems, it is important to recognize that everyone has learned a great deal about regional collaboration for economic development in the past two decades or more. Believe or not, we are getting better at these efforts.
Some of the early leaders in the late 1970s and early 1980s included the Minneapolis-St. Paul area, Indianapolis, IN, the Research Triangle Park area in North Carolina, Portland, OR, the Silicon Valley in CA, Seattle, WA, Kansas City, MO, New Orleans, LA, Louisville, KY and Denver, CO. Many of these efforts have survived and grown. Others have worked to reinvent themselves to meet new needs. Successful regional efforts took hold in the mid to late 1980s in Phoenix, AZ, Las Vegas, NV, Salt Lake City, UT, Austin, TX, Richmond, VA, San Diego, CA, St. Louis, MO, and a number of other metro areas. A large number of new and reinvented initiatives were implemented in the 1990s in regions like Pittsburgh, PA, Toledo, OH, Buffalo, NY, Nashville, TN, and many other areas. Many regions are now re-evaluating their results and strategies. For one, Northeast Ohio has begun work on a new regional ED initiative called Team NEO.
It is fair to say that long-standing regional initiatives have succeeded in reinventing themselves to respond to new challenges and opportunities. Funding these initiatives has not always been easy. At present, sustained funding is a significant challenge facing many regional ED programs, including those that have been around for a long time. Many of these organizations have also wrestled with significant leadership challenges as the political landscape of regions has changed.
If regional programs and organizations have been growing in popularity across the United States and the world in the past two decades, why are some of the United States' better-known regional ED programs under such heavy ground and air attack right now? Two words best sum up the reason for these assaults: "bad economy." The economy has been in the dumper since March 2000, which has brought the flow of business investment deals nationally and internationally down to a trickle. There are few hard results to show. That is the central problem. This problem is not restricted to the metro areas, since many rural areas face similar challenges. Nobody likes the way the economy has been treating them.
Budget pressures caused by the lagging economy are causing many local governments, which often help fund these regional programs, to think twice about their contributions. Some cities and counties have already made cuts, and many others are threatening to do the same. Is this a smart strategy? No, but it is a survival strategy, which many states and local governments have adopted, especially in the past 12 months. Overlay increased political tension and rivalry on this problem and you find many local elected officials giving in to pressures to cut regional ED contributions.
We find in some cases that cities are pulling back from regional ED strategies because they continue to worry whether they are getting their "fair share" of economic development deals facilitated by regional EDOs. Get real folks. In this economy, nobody is getting what they feel if their fair share of deals.
While we do not at all forecast the demise of the regional EDO in the future, we do see continuing problems for those that do not increase their leverage and impact in the national and global marketplaces. How can they do this? The major metro EDO's need to take their regional strategies one step further by advancing new national and global partnership initiatives. The bottom line is that to succeed in the new economy unfolding these organizations must work in concert with one another to build a much stronger national and international safety net to support businesses, industry clusters, innovation, jobs and communities in an ever-more risky global economy. With the challenges facing us at this very moment, this just might be the best time to build this coalition in everyone's self-defense.
The model of economic development needs to shift toward larger network-building. This is just the opposite of what many local governments are pressuring regional organizations to do, which is to become more local and more political. That is the 180-degree opposite of what needs to occur. I am not arguing that regional EDO's should not continue to work on producing local results; they should. I am arguing that unless the metro areas unite, we are likely to see an increased weakening of regional economic development capacity in many U.S. metro areas. No metro area alone can tackle the economic and other challenges that await it in the next couple years.
Everybody hopes that once the war with Iraq is over and the economy regains its composure that regional and local economic development efforts can simply go back to what they were doing before the war and the current economic downturn. I do not see that as a viable option. Why? Because America has everything on the line in this war with Iraq, including its economic, social and political stability. The strain on the federal budget will grow as the U.S. government works to pay off our war and Iraq rebuilding debts. This will mean fewer resources for domestic investment. Moreover, there will be growing attention to economic development internationally, which could detract from local economic development activities at home. The Iraqi War is dividing us even further socially and politically. Look at the intensity of the war protests across the country and internationally. These social and political strains could undercut future local and regional economic development efforts.
How should we respond to these challenges? The national and global network model for economic development becomes a more compelling option as we re-design ourselves for a changed world as we emerge from our current dilemmas. Future economic growth will be driven by regions worldwide. These regions will need to work together to rebuild the economic damage created by the Iraqi War and other events in recent years. We must be ready to take our regional economic development programs to the next level.
I would urge regional economic development stakeholders to stop the budget bickering and raise their sights to see the bigger picture. If ever there was a need for a global vision of local economic development, it is now.
