Political Branding of Economic Development

Every elected official does it; that is politically brands economic development. Why? Because that's what they think they must do to get elected and stay in office. You might find this article by Michigan's conservative-thinking Mackinac Center to provoke some thought on this issue.

One point that the Center has raised consistently over the years is that "targeted policies for economic development" (picking winners and fixing losers) do not work, and yet economic developers and their political bosses continue to seek out and deploy these strategies.

What does Don Iannone think? I see a lot of wasted and misplaced energy in this area nationwide and even worldwide. Most of the waste comes from not doing the job right. Many areas simply develop a list of industries they like and charge after them like it's a big buffalo hunt. That is a mistake.

I think it makes sense to know your economy, the industries that comprise it, which are growing, and which are declining. It is also important to understand the factors that drive change in these industries. It also makes sense to anticipate and take action to mitigate the negative effects of business and economic decline, and to anticipate and act to promote the growth of industries that fit with an area's values and resources.

Let me put it this way. If it is ok for industries to pick places, then it's ok for places to pick the industries they want to keep company with.

The Center's researchers use Michigan as an example of where the state's governors over the past several decades have tried to diversify the Michigan's economy through targeted development policies with little success. Although, in my assessment the state has a more diverse economy than it did let's say in the 1970s. I would add that many factors have contributed to this diversification. For one, the auto sector has become smaller and therefore other industries have risen in importance.

On the one hand, the Mackinac researchers might be correct. Automotive, even though smaller, is still the state's biggest economic driver. I would add that automotive has been driving the state's economy downward over the past several years.

Should Michigan work at diversifying its economy? Crazy question. Yes, the state's leaders should be working at improving its global industry mix to contain more growth. The real issue is how those state leaders go about this job. Michigan, like many other states, has shifted its economic strategies as new political regimes come into power. While regime changes can be useful "cleansing exercises," they can also create mixed expectations over time about where the state's economy should head.

Change is the only constant, which suggests that agility and flexibility are important ingredients to state and local economic development success. That means state leaders should not be afraid to change the program if the business investment market is headed in a different direction, or if businesses are not responding to the program you have in place.

Many conservatives say we (the economic development community) shouldn't mess with the private economy. Hands off they say. Let it run itself. Don't favor industries. Sounds like a noble idea, but guess what? Even the conservatives mess with the economy. And yes, even the conservatives have industry favorites, like nuclear energy, defense, and agriculture). So, maybe the real issue is whose messing do you like.

Your thoughts?