New Technology Alliance in New Mexico

Public and private research institutions in New Mexico have formed an alliance to help turn science and research into commercial ventures that will produce high-paying jobs in the state. The New Mexico Technology Research Corridor Collaborative will bring together the talent and resources of research facilities, ranging from the federal government's Los Alamos and Sandia national laboratories to state universities, the military's White Sands Missile Range and the privately operated Santa Fe Institute.

Collectively, the New Mexico-based institutions in the research corridor -- from Los Alamos to Las Cruces -- have research budgets of $4.8 billion.

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North Carolina ED Strategy Under Fire

Most states are under fire for not being able to get enough economic development results at this time. That is the case in North Carolina, which has met with hostle fire from the business community and local government officials. Some think North Carolina is living off its laurels of the 1980s. State development officials claim otherwise. Regardless of who is right, this is "rethink" time for North Carolina economic development.

Three suggestions on how to improve state economic competitiveness seem to be getting the most attention right now:

* Lower Taxes: A study by N.C. State University economist Michael L. Walden said North Carolina has the second-highest tax burden in the Southeast. Twelve years ago, it had the third-lowest. Reducing taxes would lure businesses, development officials say.

* More Tax Breaks: A study by site-selection consultants at Fluor Corp. in Greenville, S.C., said North Carolina's incentives package for new businesses is the best in a 13-state region stretching to Texas and Oklahoma, but only if a business qualifies for its Job Development Investment Grant.

The grant offers businesses rebates of up to 75 percent of the state income taxes paid by workers in new jobs. Only 15 businesses can qualify annually. Without the grant, the state drops to third-worst of the 13 states, according to the study.

* More Attention to Science and Technology: Long regarded as an innovator in this field, the state has become complacent and is losing ground, some fear. Jane Smith Patterson, science and technology adviser to former Gov. Jim Hunt -- a position that doesn't exist under Easley -- points to rivals such as Georgia, which spent $300 million during the past three years to create jobs with university-driven research.

The debate is likely to go on for a while. My thought is that neither old or new strategies are going to have much impact until the national economy gets back on track and businesses have enough confidence to make new investments. In my judgment, North Carolina has done an effective job at economic development over the past couple decades. Yes, there is always room for improvement, but North Carolina leaders need to recognize and appreciate the solid economic progress they have made. That is the starting point for crafting a better future strategy.

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Philly Struggles to Hold Onto Companies

Two major Philadelphia-based companies have announced plans to expand and possibly relocate their operations out of Philadelphia. Aramark Corp., which has 300,000 square feet of office space, is being wooed by New Jersey and Delaware, City Commerce Director James J. Cuorato said. Cigna Corp., which occupies 600,000 square feet, half of one of Philadelphia's two signature skyscrapers, also is being wooed by New Jersey.

Aramark, a food services provider, and Cigna, an insurer, are on a list of 60 firms employing more than 30,000 people with leases expiring over the next five years that the city is working to keep. Both companies are seeking economic development incentives from those locations bidding for them. These types of situations have caused most cities to give increased attention to existing business retention. Unfortunately, most of the projects that we have observed over the past 18 months have chosen "greener pastures" offering greater inducements to attract them.

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Why Michigan Lost Jobs

About 72,000 jobs have disappeared from employment rolls in Michigan so far this year, according to a new state report, which helps explain why so many residents still are seeking work despite a dip in the state's unemployment rate. From April 2000 to April 2003, as the nation suffered through a recession and weak recovery, Michigan lost 5.5 percent or 274,000 of its jobs from a peak level of 5 million set in 2000. Article link.

"Almost every region of the country has lost employment over the past several years, so we're not seeing anything the rest of the nation isn't," said Charles Ballard, economics professor at Michigan State University in East Lansing. I agree. Hefty job losses are common to many of the states we are working in, detracting from the annual performance reports of most state and local EDO's. This is a common problem for most EDO's right now.

Our longstanding job development metric is pointing to universal problems in economic development industry's ability to do its job in this area. Little can be done to budge these numbers until businesses are confident enough to make new investments. While the economy may appear to be job-starved, the underlying problem here is investment-malnutrition. Jobs will grow when investment flows. Write that down. The good news is that we are beginning to see more business investment projects move forward.That should bode well for job development in the months ahead.

Southwest Virginia Moves to "High-Fiber" Diet

Virginia economic development officials understand the importance of "being connected" to compete. A $1.7 million grant awarded by the U.S. Department of Commerce's Economic Development Administration to the Cumberland Plateau Planning District and the Bristol Virginia Utilities Board will allow for the deployment of high-capacity optical fiber along the right of way of 51 miles of existing American Electric Power lines in Russell and Tazewell Counties. Tazewell and Russell counties are each contributing $355,000 toward the cost of the $2,365,000 project. In addition to strengthening the Internet connectivity of existing businesses and citizens, local officials plan to "wire" their local small business incubator.

This is a good example of how local officials can work together through a regional strategy to increase their capacity for economic development. I also like the way these officials cobbled together a funding strategy for the fiber optics project. American Electric Power (AEP) played an important role in this project. This is exactly how projects of this sort should be approached.

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Connecticut Business Association Survey Says Things Are Getting Better

I have been getting a stronger sense of optimism about the economy in the past month from several sources. A recent Connecticut survey says that the state's businesses are more convinced that the economy is headed in the right direction.

The Connecticut Business and Industry Association (CBIA) pointed to results from its quarterly survey of 1,500 businesses. Purchasing managers at 212 companies reported higher production in the quarter ending June 30 and say they believe conditions in their industry and the economy will improve next year. About half of purchasing managers surveyed say they believe the economy will be better next year, while about one-fourth say it will be worse and the remainder say it will remain unchanged. Article link.

This picture is consistent various national surveys and polls, such as those by Economy.com and the Gallup Organization. We have been tracking business investments and see more moving forward, which is good news on the economic development front. The situation is far from "party time," but things are clearly looking up. An uneventful summer is exactly what the stock market and the rest of the economy needs. Let's keep our fingers crossed and remain hopeful. This is the right time for your economic development organization to move forward with that new business outreach program.

Chamber Rivalry Across the State Line

The Greater Kansas City Chamber of Commerce just announced plans to open a branch office in Johnson County, Kansas, and Johnson County officials are not happy about it.

"It is a Missouri organization," Overland Park Mayor Ed Eilert said, although more than 700 of the chamber's 2,500 members are based in Johnson County. "The perception is and probably will be that this is an overt move to actively solicit additional memberships from the county and solicit companies to move across the state line.

As they say, we are all for regionalism until it poses a threat to our usual ways of doing business. What's my take on this situation? First, the interstate rivalry issue is a factor in this debate. Even though both Kansas and Missouri share a regional economy in this case, the truth is that a great deal of territorialism continues to exist. The second issue is the perception that Kansas City, MO is the 800-pound gorilla that is trying to use its chamber to takeover political and economic territory across the state line. Third, I suspect that the institutional rivalry is the real issue raising hackles in this case. As competition for members grows, community and regional chambers are bumping heads in many parts of the country. Finally, that says something to me that the Greater KC Chamber has 700 members in Kansas. That is significant. As I look at this situation, interests in both states have more reasons to cooperate than compete. Also, this may be a good time to "innovate" with new partnerships and other activities.

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The Arts Economy in Montana

Montana officials just completed a study of the economic impact of their arts organizations. Many other state and community economic development and arts organizations have done the same in recent years as a way to justify investments in the arts.

Montana's nonprofit arts community has an economic impact of $85 million across state, according to a study released by the Montana Arts Council. The $85 million brought in by the state's 137 organizations generated:

- 1,949 full-time jobs paying an average of $18,275.
- $35.8 million in payroll income.
- $13.5 million in taxes.
- 260,000 out-of-state visitors.

In addition, an estimated 88 percent of the dollars spent by arts organizations are spent locally. 6,600 volunteers contributed 200,000 hours of their time to the arts. An estimated 1.5 million people attended an arts event in the state, including 123,000 children. I think these numbers are far more important than the $85 million in measurable economic impact

Being an economic developer, I understand why we measure the economic impact of the arts, but that is not the REAL reason why we support the arts. We should support the arts because they are important in their own right as a way for people to understand their world and express that understanding in creative and meaningful ways. People and communities seeking meaningful lives should see the arts as a vital part of creating a human legacy. All the economic numbers in the world will never tell the real story why the arts are important to a civilized world.

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Linking Economic Development and Workforce Development

Has your area developed an effective working linkage between economic development and workforce development? It's essential to your economic and job development success. Lots of areas have been working to strengthen this linkage.

While Workforce Investment Act (WIA) activities build one useful bridge, others are usually needed to ensure that labor market resources are in harmony with future industry and business growth trends. Tulare County, CA is working to strengthen this linkage in its work with clusters and in other areas. The EDC of Tulare County is playing an important role in ensure that the Tulare County WIB programs meet future business growth needs.

Many industry clusters have forged the link between the two. Michigan has done an effective job of addressing the workforce development needs of its clusters, especially in its life sciences cluster. Pittsburgh has dealt with workforce issues as they relate to clusters as well.

In the knowledge economy, workforce issues become exponentially more important. They will demand more of your attention in the future

Honoring Those Who Served

I think it is important to take a moment today and honor those who have served our country. I give thanks for their efforts to protect our personal and economic freedom. May God bless our service men and women.

Strategic Plan Updates

Does your organization update its strategic plan at least on an annual basis?

Our experience shows that those EDO's updating their plans on at least an annual basis are not only more likely to achieve their goals, but they are also better positioned for unpredictable and unforeseen threats and opportunities. Why is that so? We think it has something to do with the "mental readiness" of leadership and staff in taking a high level of initiative, even when the economy is more of a hindrance than a help in generating investment deals. By the way, we believe that a "strategic way of thinking" is often more important than preparing a highly detailed action plan aimed at a specific strategic environment. In fact, we find that highly detailed plans often force EDO's to focus on "activity" and not "results or needs."

Don't believe me? Talk to Rick Weddle from the Greater Phoenix Economic Council, Ronnie Bryant from the Pittsburgh Regional Alliance, Don Jakeway of the Toledo Regional Growth Partnership, Andy Burke from Forward Greensboro, Jerry Mallot from the Jacksonville Regional Chamber of Commerce, Stuart Rogel from the Tampa Bay Partnership, or Paul Saldana from the EDO of Tulare County.

Arizona ED Budget Update

Arizona's state economic development situation is not looking good. The budget passed by the House of Representatives earlier this month creates a new Department of Tourism and Economic Development. This is a merger of the Department of Commerce and state Office of Tourism. The combined agencies' budget is $12 million. That is significantly down from their current budgetary levels of $21 million. The combined economic agency also is geared more toward tourism than economic development.

The budget plan keeps Commerce's staffing levels at 83 full-time positions, but Yuhas said financial cuts will result in 60 to 70 layoffs. Having a skeleton crew will not allow Arizona to compete for big economic development projects, agency officials argue.

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CRA Credits for Brownfields Redevelopment

Did you know that your local financial institutions can receive Community Reinvestment Act (CRA) credit for investing in economic and community development projects projects that include the cleanup of contaminated industrial sites (brownfields)? You may find the Federal Reserve Bank of Cleveland's report on the subject to be of interest. Click here to download it.

Also, the Fed is hosting an interesting conference on June 11th on "market-based incentives for community development." Click here to learn more.

Business and Global Governance, by Ann Florini

I would like to call your attention to an interesting and important article written by Ann Florini, a Brookings Institite scholar. The article describes how corporations are struggling to cope with demands for greater accountability in the context of the global economy.

The world's 60,000 parent multinationals and their 500,000 foreign affliates account for nearly a quarter of of global economic output. These companies play a major role in shaping the economic development prospects of local economies in all nations on all continents across the world. That is a mental picture all of us should bear in mind as we work to strengthen our local economy. Disney Corporation has 300,000 suppliers worldwide. WalMart, now the largest U.S. corporation, has a huge number of suppliers that span the spectrum of rich and poor nations around the globe. Increasingly, WalMart and its "big box" counterparts are sourcing their products from the cheapest places on the planet so they can retain their ad tag line" Always Low Prices."

Corporate codes are a reality for many of these multinationals. Two types exist: 1) aspirational, which are more general; and 2) performance-based, which are more specific and have more teeth. While many companies have adopted aspirational codes of conducts, demands are growing for more attention to the performance-based codes, which track more closely how a corporation treats its customers, stockholders, employees and the communities they do business in.

Enforcing global codes of conduct is not easy, as Florini tells us. She says we should continue to try though since it is even in the company's best interest to protect its reputation.

Florini's article appears in the May 2003 issue of the Brookings Review, which is available on the newstand. You can also read the article at the Brookings website located here.