What Should Cleveland Do For Economic Development?

The City of Cleveland is simply too important to the Northeast Ohio economy to let fall by the wayside, just because we cannot muster the "will" to make it work again.

Clevelanders need a constructive approach to reviving the City's economic base. The path that we are on right now will not take us where we need to go. This article offers a new way to think about the city economic development value proposition we might consider in the future.

A recent Crains Cleveland Business article talked about the speech given by Werner Minshall, co-owner of the Tower at Erieview and Galleria downtown, at a recent City Club forum. He expressed a sentiment some other developers are muttering privately but few will say publicly: "Mayor Jane Campbell isn't doing enough to foster economic development, nor is the local political climate conducive to it." Other developers interviewed for the Crains article quietly expressed the same reservations that Cleveland City Hall is not putting up a sufficient fight for the city's ailing economic base.

This provides a good jumping off point for my views on this issue.

First, I agree that Cleveland City Hall has not been on the aggressive when it comes to economic development, and I think there are several reasons why. For one, the economy has absolutely sucked in the past three years. There have not been many development opportunities for any city anywhere. Why expend a lot of money and effort at a time when the wind is blowing in the other direction? Look at businesses. They have held back on new investments in facilities and other purchases until very recently. In national perspective, economic development efforts have been in a maintenance mode everywhere--not just in Cleveland.

Second, Mayor Campbell was handed an economic development agenda from the business community to support that frankly was not doable, given the prevailing economic and fiscal conditions. The hardest task politically and economically was the proposed new convention center. Duh, $500 million is a lot of money, especially when voters have to embrace the investment at a time when they are feeling considerable personal economic pain. My guess is that City Hall has been on the defensive in significant part because it felt muscled.

Third, economic development in Cleveland has been private sector-driven forever, and it should be. The business community will always know better how to satisfy the needs of business than government. At best, City Hall can provide strategic support to economic development, which is no small thing by the way. The word "partnership" has fallen by the wayside in Cleveland's approach to economic development. A city as socially, culturally, politically and economically divided as Cleveland has to work all the time at "working together." Doing your own thing is in Cleveland's genes. Clevelanders would rather bump heads then dance. Partnerships are based upon common goals, shared approach and trust. Take any one of these elements away and you no longer have a workable partnership.

Fourth, the city's tax base has been shriveling for sometime, and it got even worse in the past three years. The upshot of these public financial troubles is that there is no money to spend on development projects. That again is a national reality for America's cities. Visit the National League of Cities or National Conference of Mayors websites and you will get an ear full on these issues.

Fifth, Cleveland City Hall's link in the regional economic development chain has grown weaker over the past dozen years or so. Former-Mayor Voinovich got with the economic development program and was able to work effectively with the City's business leaders, and as a result things got done. Several important development projects moved forward under former-Mayor White, but City Hall's link to the economic development world became severely strained during White's last term. Enter Jane Campbell, the people-oriented neighborhood developer, and things continued to weaken. Run-ins with Cuyahoga County commissioners did not help.

Sixth, it's going to take a whole lot of public and private sector investment to move Cleveland up on the development competitiveness ladder. The truth is we don't even know how much investment would be needed to spark a real turnaround. My estimate is that the number is probably in the range of $10-$15 billion, and only a portion of which should be spent on downtown megadeals.

What do I suggest as the action plan to get economic development working in Cleveland again?

The key ingredient to success is strategic investment. An investment agenda for the City of Cleveland should be developed that includes these seven core components, which should be approached with the surrounding region in mind: 1) downtown revitalization as a place to work, play and live; 2) manufacturing regeneration and modernization; 3) economic diversification toward a globally competitive mix of both established and emerging industries; 5) strategic community-building with a keen focus on quality of life; 6) new national and global market-building for Cleveland businesses; and 7) human capital development with an eye to converting the City's educational resources (all levels) into a development powerhouse for both established and emerging industries.

We have to figure out where the $10-$15 billion is going to come from. The public and private sectors must work together closely to accomplish that task. I would offer a hint in this regard. Look for the money nationally and globally. Create a 60-40 funding formula where 60 percent of the investment strategy comes from local and state sources and the other 40 percent is raised nationally and globally. Think of the problem as competitive sourcing of financial capital and not fund-raising as we have known it in the past.

Finally, to put this investment strategy into play we must work on next-generation economic partnerships that are based upon trust, common goals and a shared approach. Build teams of "turnaround artists" that can make silk purses out of a sow's ear.

We may stand a fighting chance of turning around Cleveland if we approach the city's future economic development on this scale.

Philadelphia Industrial Development Corporation

When Philadelphia began to lose manufacturing jobs in the late 1950s, the city's business and government leaders decided to do something about it through innovative financing and real estate programs. They created the Philadelphia Industrial Development Corporation (PIDC).

PIDC is a private, not-for-profit Pennsylvania corporation, founded in 1958 by the City of Philadelphia and the Greater Philadelphia Chamber of Commerce to promote economic development throughout the city. PIDC’s central strategy is to leverage financing and real estate resources to retain and to grow employment in Philadelphia.

Among the ranks of industrial development agencies and boards, PIDC is a surviver. It has evolved considerably over its history, but has managed to survive while many similar efforts in other cities have fallen by the wayside. Why is that? In large part it has to do with Walt D'Alessio, who ran the organization for many years and remains the Chairman of PIDC's Board today. PIDC has also retain focus on making deals and getting things done in the central city.

There is much to learn from PIDC. If you're shopping around for ideas on how to hold keep industry in the city, take a look at PIDC's programs. This is no easy challenge today, as most cities are finding.

Go here to learn more about PIDC.

Talent Recruitment Promising Practice

Looking for a role model to sharpen your talent retention and recruitment efforts?

Look at Philadelphia's Knowledge Industry Partnership (KIP), which is a broad-based coalition of Greater Philadelphia's civic, business, government, and higher education leaders working together to maximize the impact of the region’s “knowledge industry” of colleges and universities on Philadelphia’s competitive position.

The goal of the One Big Campus initiative is to create positive first-hand experiences throughout the student life cycle (prospect>student>graduate), which in turn lead to a stronger emotional attachment with the area and ultimately a personal desire to remain after graduation.

KIP is a well-grounded effort that zeroes in on the key issues and factors affecting talent development.

What Would You Do With an Extra $1 Billion?

That's the question the Pennsylvania Economy League asked Philadelphia leaders. You should read the responses. They include funding for: a new high school scholarship program, downtown housing, incentives for new business development in the city, new research institutes and many other things. Some of the projects have been in the thinking and planning stage in Philly for sometime and others are quite new and unique.

So, what would you do if you had an extra billion dollars?

Go here to read more.

Downtowns Should Offer Unforgettable Experiences

That is the message David Feehan, president of the Washington, D.C.-based International Downtown Association, gave to downtown business and eocnomic development leaders in Jacksonville, Florida earlier this week. He told them to evolve the city's downtown into the "experience economy." He's right.

For guidance on how to do that, read the book, Experience Economy, by Joe Pine and Jim Gilmore. I read the book when it first came out four years ago. Downtowns are a perfect place to apply this thinking. According to Pine and Gilmore, experiences are a growing share of our nation's economic output, along with goods and services. The book talks about how comes are using "experiences" to help sell goods and services.

Go here to read more about Experience Economy.

Go here to read more about Jacksonville's downtown plans.

ARC Works to Head Off Funding Loss

The Appalachian Regional Commission (ARC) is trying to head off a 50 percent reduction in its funding next year. ARC gets about $66 million annually in non-highway funds, the House is looking at a $33 million set aside for the coming year.

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ARC Service Area

Go here to read more.

Wisconsin Gets With Clusters

Wisconsin development efforts will focus on seven established and three emerging clusters that represent the strengths of our state economy. The established clusters are dairy, food products and processing, paper, plastics, printing, small engine manufacturing and tourism.

The emerging clusters are biotechnology, information technology, and medical devices. Members of Commerce staff will be assigned to each cluster. The department will use existing funding programs to support these 10 recognized clusters where appropriate.

Go here to read more.

Wichita Raising ED Funds

The Greater Wichita Economic Development Coalition, the private-public group charged with spearheading the effort to beef up economic development efforts in Wichita, has launched a campaign to raise $500,000 in private money for the initiative.

A portion of that money, combined with $250,000 pledged annually for five years by both the city of Wichita and Sedgwick County, will be used to contract with the Wichita Area Chamber of Commerce to perform economic development functions on behalf of the coalition.

Go here to read more.

Manufacturing Perspective

A recent Economy.com article about manufacturing kind of rubs me the wrong way. The article says in a nutshell that the decline in manufacturing employment that has occurred in the past three years is really "no big deal" as long as manufacturing output remains strong. This the typical argument that any and all productivity growth is good for us.

The figure below charts industrial production versus manufactuirng employment over the past five years. Employment, as we know, has fallen through the floor, while production has declined from its peak but held up much better than employment.

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My reply to this issue is a question: "If human capital is supposedly driving our overall economic growth, then shouldn't we be looking at how to strengthen and expand human capital in manufacturing?" I think we should. I am not arguing that we should prop up (subsidize) low-skilled manufacturing jobs that do not have a chance in hell in surviving, but I am arguing that it is a bit naive to assume that China and other developing nations will be content to occupy the low-skilled rung on the labor ladder for long. They are also after our higher skilled and knowledge-intensive jobs. We shouldn't forget that for a moment. Moreover, local economies should be looking at manufacturing from the standpoint of the big picture--that is the shifting international division of labor perspective.

I do agree with the following point made by the Economy.com author: "The need to align the currencies in which revenues and costs are incurred is another factor that will support the continued presence of manufacturing within the U.S. If a company’s revenues are earned primarily in one currency, while its costs are incurred in another, it opens itself up to considerable exchange rate risk. Adverse movements in currencies can quickly eliminate profit margins, particularly for capital-intensive industries, which generally have high fixed cost structures. This is a major reason why foreign automakers started to build plants in the U.S. when they began to acquire significant market share here."

Manufacturing matters to our economy for a wide variety of reasons. The current period of restructuring is a major one and not just a temporary blip on the radar screen. Political handwringing about the issue does no good. Nor does it make sense to create huge subsidies to keep those parts of the manufacturing sector that are destined to go elsewhere no matter what we do. Level-headed thinking with a keen eye focused on changing economic realities around the globe is needed.

Go here to read more if you subscribe to Economy.com.

Job Prospects Looking Up, Says Business Economists

A quarterly measure of sales at U.S. companies rose to its highest level in almost four years as profits also improved, increasing job prospects, the National Association for Business Economics said earlier this week.

Fifty-three percent of the economists in a third-quarter survey responded that demand increased, compared with 11 percent saying it fell. The 42-point gap, the so-called net rising index, was the greatest since the last three months of 1999.

The gains helped profits, with an index reading of 15 that was the highest since the first quarter of 2002. Although companies firing workers exceeded those hiring workers by 9 percentage points, the gap was the smallest in 21/2 years. The percentage planning to add workers in the next six months rose.

"The good news for employment is that expectations for future hiring are slightly brighter," said Duncan Meldrum, the group's president and chief economist at Air Products & Chemicals in Allentown, Pa. "This clearly supports the stronger" economic outlook the group issued last month.

The Washington-based association also projected that the world's largest economy will expand 4 percent in 2004. It was the biggest rise since 4.1 percent in 1999 and much higher than the forecast of 2.6 percent for this year.

The share of companies that hired more workers in the third quarter, which ended Sept. 30, rose from 11 percent to 13 percent in the previous three months.

Twenty-one percent said they were planning to hire in the next six months, up from 20 percent last quarter. Companies in finance and services were the most optimistic about future hiring, the report said.

Source: National Business Economists.

Oklahoma Becoming More Business Friendly

As efforts continue on his economic development plan called EDGE, Gov. Brad Henry may be heartened to know that at least one group gives the Legislature better marks for its support of economic growth and jobs.

The Research Institute for Economic Development (RIED), based in Edmond, says our Legislature has significantly increased its degree of support for business, jobs and economic growth.

RIED has been tracking legislators' efforts in this regard for the past six years. During that time, the organization headed by business leaders has parsed more than 81,000 votes. Legislators gain points by voting for issues that promote job growth and economic development, and lose points when they back bills that are considered harmful to business or vote for bills that hurt jobs and business growth.

RIED says that since 1999, the Senate's economic growth "advocacy rating" has grown to 56 percent from 45 percent. In the House, it has grown to 71 percent from 31 percent. What it means, says organization president Vince Robison, is that the Legislature as a whole is starting to respond more positively to the needs of jobs and economic growth than it did several years ago.

The EDGE initiative, which stands for Economic Development Generating Excellence, is headed by officials within higher education and the state Commerce Department. Twenty-three panels have been working more than three months to generate a blueprint for economic development. The goal is to have the blueprint in place by December so any legislative proposals can be written by the time the Legislature convenes two months later.

One noteworthy development in Oklahoma's state business climate in the past couple years is passage of Right-to-Work (RTW) legislature, which was attempted three times before and failed. Oklahoma is the first state in a very long time to join the ranks of RTW states.

You can find the RIED website here.

Go here to read more. (Registration required)

Competing for Talent

Looking for a creative way to keep and grow your emerging talent pool? New Mexico has a new website called Generation Next, which is by and for teens in New Mexico. It's really a VERY cool site. Drop by and take a look. Go here.

North Carolina Must Pay Big Price for Merger Tobacco Jobs

The State of North Carolina will have to pony up millions in incentives to get R.J. Reynolds Holdings to bring 800 to 1,000 manufacturing and administrative jobs to Winston-Salem after the completion of RJR's merger with British American Tobacco.

During a news conference Wednesday, North Carolina Gov. Mike Easley said he has been working with state officials and RJR executives to get the legislative backing needed to make the deal possible. "This is doable," said Easley. "I want people to know we are going to get this done."

Easley described the jobs as high-skill positions with an average salary of $56,000 and total benefits package of $100,000. He said the deal could generate a $40 million to $50 million investment to the state.

Easley was less exact about what it would cost taxpayers to get those new jobs. "I can't give the total value at this point," Easley said. RJR would be eligible for a number of tax credits, including the William S. Lee Tax Credits and the tobacco-export tax credits.

Go here to read more.

Economy Heats Up...

Here is an encouraging sign that the economy is headed in the right direction.

The economy grew at a scorching 7.2 percent annual rate in the third quarter in the strongest pace in nearly two decades. Consumers spent with abandon and businesses ramped up investment, compelling new evidence of an economic resurgence.

The increase in gross domestic product, the broadest measure of the economy's performance, in the July-September quarter was more than double the 3.3 percent rate registered in the second quarter, the Commerce Department reported today.

The 7.2 percent pace marked the best showing since the first quarter of 1984. It exceeded analysts' forecasts for a 6 percent growth rate for third-quarter GDP, which measures the value of all goods and services produced within the United States.

In other encouraging economic news from the Labor Department, new claims for unemployment benefits last week dropped by 5,000 to 386,000, a sign that layoffs are slowing. U.S. workers' wages and benefits went up by 1 percent in the third quarter, up slightly from a 0.9 percent increase in the previous quarter.

Amid signs that the recovery is regaining traction, the Federal Reserve on Tuesday decided to hold a key short-term interest rate at a 45-year low of 1 percent. Super-low short-term rates may give consumers and businesses an incentive to spend and invest more, boosting economic growth.

Economists believe the economy will grow at a slower--but still healthy--4 percent rate in the final quarter.

Source: WEFA and Economy.com

As Wal-Mart Grows, So Grows Bentonville

Bentonville, Arkansas is growing rapidly and not everybody is happy about the and type of growth occuring. Go here to read more.

My question is: "What do you expect?" If you house a $254 billion corporation that is cluttering every community across America with those "gray boxes," it seems only reasonable that Wal-Mart's hometown should be thrown into a growth frenzy.

End of the Oil Economy?

In a recent issue, The Economist boldly announced on the front cover the end of the oil age. This would certainly be welcome news to the oil dependent U.S. economy. Hydrogen powered fuel cells are here and we can thumb our noses at OPEC for once and for all. We could breath a collective sigh of relief if this were true. Given OPEC’s recent attempt to cut production and increase prices, the timing of the end of the oil age could not be much better.

According to economists at Economy.com, the only problem is that it isn't going to happen. Real prices for oil have indeed swung wildly in response to short-term perturbations in supply and demand. These short term fluctuations have hurt the economies of both oil consuming nations and oil producing nations. It would be good news for everyone if oil prices exhibited more stability. For the past 30 years the real price has tended to converge around $30 barrel. Price movements above this mark, however engineered or market driven, have been followed by periods of lower prices

In the long-run, tightening by OPEC is counterproductive by three mechanisms. Positive price movements encourage the reduction of oil demand through simple gains in efficiency, conservation and curtailment. A barrel saved is a barrel earned. As oil prices climb towards the production costs of alternative energy sources new ideas are developed and brought online. We are now seeing the emergence fuel cells and hybrid automobiles into the real world. As oil prices climb, areas of higher production costs become profitable to explore and enhance.

What is likely to happen? Oil prices will maintin their long-term trend at about $30 per barrel real. Alternative sources of energy will continue to emerge and diffuse into the market. Siberian oil will come online. U.S. energy consumption per dollar of GDP will continue to fall, soon reaching half the 1973 mark. Books will continue to be made of paper.

With the cost of extraction of Middle Eastern oil at about $1 per barrel there is plenty of room for the price to fall before anyone loses money producing it. The importance of oil will gradually diminish but not disappear for a long long time.

Go here to read more.

Will LA Lose Its Air Base?

The El Segundo Air Base in Los Angeles is a stealth monitoring station and not a base with runways and aircraft hangers.

The base is "a hidden but huge component of the region's economy," said Lee Harrington, president of the Los Angeles County Economic Development Corp. "Other than some of our key infrastructures like LAX, it's one of the biggest economic engines we have." It's on the DOD hit list, along with nearly 100 other military installations across the country.

Go here to get the full story.

Colorado Investment Program Gets Bad Review

A state audit concluded Tuesday that a $200 million state-sponsored investment program is badly flawed and needs to be overhauled. Lawmakers on the Legislative Audit Committee said they will push for statutory changes that could radically change the Certified Capital Company program, known as the CAPCO program, which is backed by tax credits.

The state legislature created the CAPCO program in 2001 to spur economic growth by giving $200 million in tax credits to insurance companies that, in turn, lend money to CAPCOs to invest in small Colorado businesses.

The 29-page audit report found that, since their inception, the CAPCOs have invested $14.1 million in 13 companies and collected $15 million in startup, management and other fees. While Colorado CAPCOs reported a net increase of 157 jobs, one company experienced a net decrease and two companies had no net change in jobs.

The one observation I would make at this point is that it is early to assess the program's effectiveness and impact. Yes, state officials should be monitoring program efforts, but more time is needed to assess the full costs and benefits. Moreover, it is important to keep in mind the dismal state of the economy during the last few years, which is when the program was launched.

Go here to read more.

Privatization of Chinese Companies Coming

According to a new analysis by PriceWaterhouseCooper, China's state-owned enterprises (SOEs) are facing the most dramatic shake-up in a decade. The establishment of the powerful State-owned Assets Supervision and Administration Commission of the State Council (SASAC) in March 2003 marks a historical step in government attempts to ameliorate the protracted problems of the debt-ridden SOEs, which are officially worth some 10 trillion yuan (US$1.2 trillion) and total 181,000 companies. This is also likely to trigger a new round of privatization in the country and to provide new business opportunities for foreign and domestic investors.

In the years to come, China's SOE restructuring will need to be set on track, no matter how difficult the process. With WTO concessions kicking in and China's central finances weakening with rising demand for subsidies and pension funding, time is not on the government's side.

In the process, SOE restructuring will create enormous business opportunities for foreign multinationals and the domestic private sector, as they have recently been allowed to purchase controlling stakes in SOEs which were previously off-limit.

Of particular interest to foreign investors could be those industries with monopolistic positions in the market or with wide distribution networks. The reduction of state shareholding in the listed companies and the disposal of SOEs by local governments could be a good starting point.

Go here to read more.

Shanghai and Hong Kong Plot Cooperative Plan

Two of China's leading economic centers are planning to work together more cooperatively in the future to advance each other's economic development.

According to the leaders of the two metro areas, the cooperation between the two cities covers many areas including airport and port construction and management, logistics, Shanghai World Exposition, tourism, exhibitions, investment, trade, education, health care, sports, financial services and exchange of talents.

In the field of airport and port cooperation, Hong Kong investors are invited to take part in the construction and management of Shanghai's airport and sea port. Hong Kong companies are allowed to participate in Shanghai's international shipping management and container business.

Shanghai will be the host city of the 2010 World Exposition. Hong Kong companies are encouraged to take part in the planning, construction and management of the sites and venues of the World Exposition. Hong Kong's financial institutions are also allowed to participate in the financial services of the World Exposition.

In the area of tourism and exhibition cooperation, Shanghai and Hong Kong will establish channels of communication. Meetings between officials of the two cities will be held regularly to strengthen the popularization and promotion in this field. Drawing the support of Hong Kong, Shanghai will further explore the market of international travel.

The two sides have also agreed to enlarge the room of investment and trade cooperation. Shanghai supports Hong Kong investors to establish retail companies in Shanghai either in the form of solely owned enterprises or joint ventures.

Shanghai will also lift the access restriction for Hong Kong companies in the field of wholesale market. World first-class brands which have already had business operation in Hong Kong are encouraged to enter Shanghai.

In the field of education, universities of the two cities will strengthen exchange of students and cooperation of education and scientific research. A batch of Hong Kong teachers will be introduced to Shanghai to promote bi-lingual education in the middle and primary schools.

The two cities will also strengthen exchange of medical information and cooperation of infectious disease control.

In the area of financial cooperation, Shanghai will introduce financial talents from Hong Kong to the city. The financial institutions in Shanghai will give high-ranking posts to senior Hong Kong financial talents.

Go here to read more.

Venture Investing Report

PriceWaterhouseCoopers and Venture Economics just released venture capital investment data for the 3rd quarter of this year. Here is how the metro areas stacked up.

1 San Jose: $1129.6 million
2 Other US
3 Boston
4 New York Metro
5 San Fran/Berkeley
6 Washington Metroplex
7 San Diego Metro
8 Los Angeles
9 Great Lakes
10 Seattle
11 Austin
12 Twin Cities
13 Denver
14 Philadelphia
15 Dallas
16 Orange County
17 Atlanta
18 Research Triangle
19 Houston
20 Chicago
21 Pittsburgh/Tristate: $46 million
22 Portland
23 Nashville
24 San Antonio/S.Texas
25 South NJ/West Pa: $5 million

Source: 2003 PricewaterhouseCooper/Venture Economics/NVCA MoneyTree Survey

Mexican Migrant Workers Send Their Earnings Home

For a long time, it has been common for Mexican migrant workers here in the U.S. to send a considerable amount of their earnings home to their relatives in Mexico.

According to a recent study, Mexicans will receive an estimated $14.5 billion this year from countrymen working in the United States, a figure that rivals the nation's most important sources of foreign income, according to a study released Monday.

The amount is also about 20 percent more than projections by Mexico's central bank, which said such remittances will hit about $12 billion by the end of the year.

The study by the Inter-American Development Bank and Pew Hispanic Center found that official estimates overlook money shipped home by mail or carried home in cash by migrants and messengers. Study authors said they were able to determine these funds as well by surveying thousands of Mexicans.

Go here to read more.

Chinese Economic Problems Ahead?

Everybody is talking about how China is eating their lunch. Have you noticed some very serious economic problems are potentially brewing for China as it struggles with a host of problems associated with becoming a developed nation? For one currency issues could undermine China's current economic plan.

A recent Economy.com articles says that the Chinese economy is barreling toward a potentially damaging investment bubble. The government may need to take corrective action soon or it will face the unenviable task of mopping up additional nonperforming assets. Such an event could also jeopardize a smooth liberalization of the financial sector, which is mandated by China’s agreement with the WTO.

Here is an important point. The rapid expansion of manufacturing and the huge amount of FDI inflow are creating difficulties for China. One consequence of the huge inflow of foreign currency into China is that the money supply in China has expanded rapidly. By law, exporters in China must convert their foreign earnings into yuans. In a free capital market, this would have resulted in an appreciation of the yuan. However, since the Chinese government is committed to a yuan pegged at a fixed rate to the U.S. dollar, the government must print more yuans to buy the excess foreign exchange.

Broad money grew by well over 20.7% in September on a year-on-year basis, the ninth consecutive month M2 has risen above the central bank’s target of 18%. Speculators who are converting their foreign currency holdings into yuans in the belief that the government will revalue the yuan sooner rather than later are also fueling the money supply growth.

As a reflection of the rapid expansion in money, outstanding loans by all financial institutions reached over $2 trillion in September, an increase of 23.7% over the same month a year ago. Concerned by the rapid expansion of credit, the People’s Bank of China increased the reserve requirements ratio of all financial institutions except rural and urban credit cooperatives to 7% from 6% beginning in late September, taking an estimated $18 billion out of circulation. To further soak up excess liquidity, the state-owned China Development Bank announced that it will issue $500 million in dollar-denominated bonds. These measures may, however, be too little too late to cool down an economy that is showing clear signs of overheating.

On the currency side it is becoming increasingly evident that the economic costs to China of not adjusting their exchange rate are rising and are already overwhelming the benefits of China's current position. A large one-time appreciation of the yuan and the subsequent adoption of a more flexible exchange rate policy will ultimately occur. This is one to watch for.

Go here to read more if you subscribe to Economy.com.

Not Enough Young ED Leaders

This is an issue that is near and dear to my heart. We're working on this issue here in Cleveland. While we are doing more to grow the stock of young leaders in NE Ohio through the Cleveland Bridge Builders, Leadership Cleveland and other local initiatives, we need a stronger effort to inject new blood into civic leadership postions.

Take a note from Pittsburgh...

Listen to this. People under the age of 40 are still a minority on nonprofit boards throughout Allegheny County, but a group is trying to connect 100 young adults with organizations within the next year.

A study of 403 nonprofit organizations in the county — ranging from volunteer fire departments to economic development groups — found that young adults make up 13 percent of boards' members. Some notable volunteer boards, such as those of the University of Pittsburgh and its medical center, the Allegheny Regional Asset District and the Allegheny County Airport Authority, have no members under the age of 40.

In the county, the larger an organization's budget, the fewer younger people it is likely to have on its board, said Ralph Bangs, a research associate at the University of Pittsburgh Center for Social and Urban Research and one of the authors of the study.

Nationwide, young adults make up 18 percent of nonprofit boards' membership, according to BoardSource, a Washington, D.C.-based group specializing in nonprofit organizations.

"This city is going through a dramatic transformation, and we need to think about this city as it's going to be 20 years from now. And we need the people who will be in leadership then to have an active role in planning it (now)," said Gregg Behr, 31, president of Forbes Funds, a Pittsburgh foundation that supports nonprofit organizations, which funded the study.

Forbes Funds is financially supporting a project called New Trustees for a New Pittsburgh, an effort to train 200 young adults to work on volunteer boards. The project aims to place 100 of the participants on boards within the next year.

The project works with Leadership Pittsburgh, a group that has placed young adults in leadership positions for about a decade. New Trustees for a New Pittsburgh organizers are also working with the Bayer Center for Nonprofit Management at Robert Morris University.

FreeMarkets Inc. founder and chairman Glen Meakem, 39, is the only person under the age of 40 on the Allegheny Conference on Community Development and Carnegie Mellon University boards. He is also the chairman of the Heinz History Center board.

I say...way to go Pittsburgh!

Go here to read more.

State Continues Push for Ohio Third Frontier Initiative

This November Ohio voters will have the opportunity to cast their ballots for an important economic development initiative called the Ohio Third Frontier Initiative, which is aimed at modernizing Ohio's aging economic infrastucture.

The state has approved $1.1 billion in financing for the initiative, Johnson said. Issue 1, a constitutional amendment that would allow the state to issue $500 million in general obligation bonds during 10 years to pay for the rest of the initiative, is on the Nov. 4 ballot.

The Third Frontier, State Development Director Bruce Johnson said, will focus on six areas that should help the state nurture technology companies. Those areas include strengthening the research and development done in the state, helping small businesses and entrepreneurs find financing, building the infrastructure high-tech companies need, providing an educated work force, creating a favorable tax environment for high-tech businesses and actively pursuing high-tech companies. Johnson emphasized the constitutional amendment on the ballot would not raise taxes, but rather allow the state to borrow the money.

Go here to read more.

Phoenix Arena Gets Facelift

Invest in creating value. That is the essence of economic development. It sounds like Phoenix business and government leaders understand this point.

A $50 million facelift of America West Arena, home of the National Basketball Association's Phoenix Suns and concerts, is nearing completion. Operators hope the renovation will keep the 11-year-old facility a downtown destination.

Improvements include a 15,000-square-foot glass pavilion with ticket counters; a Paseo walkway with a projection-surface canopy, food outlets and a bar; a new Italian restaurant, a Starbucks and a team shop. Also: an outside TV studio for pre- and post-game shows, an elaborate water fountain, five escalators and air-conditioned ticket booths.

Patrick Grady, economic development director for Phoenix, said the city's contribution is a good investment and will help the city-owned America West Arena remain competitive with other entertainment venues.

Brian Kearney, executive director of the Downtown Phoenix Partnership, said the renovations will continue to enhance the Copper Square area downtown.

Go here to read more.

Progressive Corporation: Employee Care Best Practice

Companies everywhere are competing feverishly for talented workers. Progressive Corporation, based in my hometown of Mayfield Village, Ohio, is tops in my book in taking care of its employees. With 23,000 employees worldwide, the company is a fast-growing giant in the auto insurance industry.

Progressive was recently featured in a Cleveland Plain Dealer article talking about how it has humanized its call center work environment and gone to great lengths to gain employee satisfaction. There is no perfection in the world of work. A large percentage of people work, not because of a passion for what they do, but because they must work to eat and otherwise survive. You have to admire a company that can help their employees take an interest in the work they do. Knowing Progressive, I see the company as an excellent role model for other companies aiming to do a better job of taking care of their people.

The world of work has been unkind to people worldwide, especially in the past three years. Progressive is a real gem in Greater Cleveland's economic development crown. This is exactly the kind of company we should be working to homegrow or recruit in the future.

Peter B. Lewis is the man behind Progressive. While recently stepping down as the company's President, he remains chairman of the board. Lewis has a rare passion for art, and as a result he has converted the company's offices into a living art gallery. I think this helps Progressive use its "creative advantage" to compete.

On a personal note, I workout everyday at Progressive's corporate fitness center, which is open to Village residents, if you can pass their physical. I can think of no other fitness center that has better equipment or professional trainers to help you reach your fitness goal.

Click here to read more about Progressive and other NE Ohio companies that excel in caring for their workers.

Click here to learn more about Progressive Corporation.

Springville City, Utah: The Art City

Springville, Utah is a city that really takes its art seriously. Springville, known as the Art City, is home of the Springville Museum of Art, Springville Playhouse, Villa Playhouse Theatre, and Springville World Folkfest. Close to 40 sculptures have been placed around the city.

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Springville City, incorporated in 1853, is located 49 miles south of Salt Lake City. Springville is situated east of Utah Lake and at the foot of the Wasatch Range at approximately 4,500 feet in elevation. The municipality of Springville covers 15.56 square miles. With a population of 20,400, the community has a median age of 25 years old and a median famuily income of $48,800.

Citizens and visitors alike like the city's art and cultural events. Springville is ahead of the curve as a small community that learned to use its "creative advantage" well in advance of Richard Florida's Creative Class book.

The city actively encourages economic development through its Economic Development Dept.

City website.

City arts website.

New Open Air "Lifestyle" Center Debuts in Greater Cleveland

Legacy Village, a new open air 'lifestyle" retail center opened this weekend in suburban Lyndhurst, Ohio, an eastside suburban of Cleveland. By all indications, the center's first two days were a huge success. The center is located just across the street from Beachwood Place, the region's largest fashion shopping mall. See map below.



Open air centers are the rage across the country as shoppers and those seeking entertainment seek more of a "community look" to their shopping and entertainment experiences.

Here is an architectural rendering of the center. As its name reflects, Legacy Village will strive to provide a "village-like environment" for shopping.



Developer First Interstate Properties Ltd. courted upscale retailers and restaurants, giving them prime locations on the 67-acre Lyndhurst property that was once home to TRW Inc., and offering them proximity to affluent suburbanites with an average household income of $82,000.

Legacy Village is an upscale first-class "life style" retail center located on 67 acres of land at the corner of Cedar and Richmond Roads in Lyndhurst, Ohio. The project consists of approximately 610,000 square feet of space, including 25,000 square feet of third-story office space. Of the 585,000 square feet of shopping center space within the Legacy Village project, more than 50% of retail space is devoted to first-class retailers and restaurants that do not currently have locations in the Cleveland, Ohio area.

Architect Dorsky Hodgson & Partners designed the center to look like a 1940s midwestern small town, but shoppers said it reminded them of Boca Raton, Fla.; Palm Springs, Calif.; or the Easton Town Center in Columbus.

The economic development message in all this is "community is back." People want to feel connected to something that is alive, connected and familiar. Futurist Joh Nisbet used the expression "high tech, high touch" in his early 1980's bestseller Megatrends to describe how people seek the "humane" amidst all the spiraling high tech gadgetry around us. I think the same can be said for retail development.

Click here to go to the Legacy Village website.