Final
Economic Development Planning
1
An Interplace Competition
Many thousands of municipalities makes serious efforts to promote their own economic development.
The exact cost of their endeavor's is unknown but its probably in the billions of dollars annually.
The present U.S. scene is characterized by a high level of intermunicipal and interstate economic competition.
Such completion is driven partly by labor market considerations.
Citizens expect local and state governments to foster job growth so as to tighten labor markets, thus pushing up wage rates and pushing down unemployment rates.
They are also driven to economic completion for tax reasons.
What Is Economic Development?
Economic development is the process by which a nation improves the economic, political, and social well-being of its people.
The term has been used frequently by economists, politicians, and others in the 20th and 21st centuries.
The concept, however, has been in existence in the West for centuries. "Modernization, "westernization", and especially
"industrialization" are other terms often used while discussing economic development.
Economic development has a direct relationship with the environment and environmental issues.
Economic development is very often confused with industrial development, even in some academic sources.
Whereas economic development is a policy intervention endeavor with aims of improving
the economic and social well-being of people, economic growth is a phenomenon of market productivity and rise in GDP.
Consequently, as economist Amartya Sen points out,
"economic growth is one aspect of the process of economic development"
President Harry Truman (in 1949) identified the development of undeveloped areas as a priority for the west:
“More than half the people of the world are living in conditions approaching misery.
Their food is inadequate, they are victims of disease. Their economic life is primitive and stagnant. Their poverty is a handicap and a threat both to them and to more prosperous areas.
For the first time in history humanity possesses the knowledge and the skill to relieve the suffering of these people ...
I believe that we should make available to peace-loving peoples the benefits of our store of technical knowledge in order to help them realize their aspirations for a better life…
What we envisage is a program of development based on the concepts of democratic fair dealing ...
Greater production is the key to prosperity and peace.
And the key to greater production is a wider and more vigorous application of modem scientific and technical knowledge.“
Historic Roots
In the 19th century many cities took steps to strengthen their completive position vis-à-vis competing cities.
Most of the push came from the merchants since they would profit from the municipal’s economic success.
Most planning efforts were directed towards the transportation infrastructure, to increase accessibility to the city.
An example is the building of the Erie Canal. Another example was the coming of the railroad technology.
In many cases municipalities purchased railroad bonds to provide capital to build a line that
would put them on the map commercially.
Once the U.S. Rail system was well established competition with other cities switched to other areas, i.e. manufacturing.
https://en.wikipedia.org/wiki/Erie_Canal
https://en.wikipedia.org/wiki/Railroads_connecting_New_York_City_and_Chicago
Perspectives on Local Economic Development
To understand local economic development it is necessary to understand
two different perspectives.
It appears that local economic development was and still is shaped by
federal funding and federal legislation.
There are local motivations to be considered:
what is good for a particular municipality (or state) may or may not be good for the nation as a whole.
A paradox in politics as well as culture
Structural Unemployment
Structural unemployment is a form of unemployment caused by a mismatch between the skills that workers in the economy can offer, and the skills demanded of workers by employers (also known as the skills gap).
Structural unemployment is often brought about by technological changes that make the job skills of many of today's workers obsolete.
Structural unemployment is one of several major categories of unemployment distinguished by economists, including
frictional unemployment, cyclical unemployment, involuntary unemployment, and classical unemployment.
Because it requires either migration or re-training, structural unemployment can be long-term and slow to fix
https://en.wikipedia.org/wiki/Structural_unemployment
Causes and Examples of Structural Unemployment
From an individual perspective, structural unemployment can be due to:
Inability to afford or decision not to pursue further education or job training
Choice of a field of study which did not produce marketable job skills
Inability to afford relocation
Inability to sell a house
Decision not to relocate, in order to stay with a spouse, family, friends, etc.
From a larger perspective, there can be a number of reasons for structural unemployment across large numbers of workers:
Technological obsolescence makes a specific expertise useless.
Productivity increases reduce the number of workers (with the same or similar skills) needed to satisfy demand.
New technology significantly increase productivity, but requires a fewer number of higher-skilled workers. For example, fewer agricultural workers are needed when the work is mechanized; those that remain must be trained to operate equipment. Another common example is the use of industrial robots to automate manufacturing.
Competition causes the same jobs to move to a different location, and workers do not or cannot follow. Examples:
Manufacturing jobs in the United States moved from what are now called Rust Belt cities to lower-cost cities in the South and rural areas.
Globalization has caused many manufacturing jobs to move from high-wage to low-wage countries.
Free trade agreements can cause jobs to move as competitive advantage changes.
Political changes, for example the collapse of the Soviet Union.
A Bridge to Nowhere….. Maybe Not?
There has been considerable debate over how much a role structural unemployment plays in the persistently high unemployment rates seen in the world today.
Structural unemployment is a slippery slope that may lead folks who are handicapped with a lack of skills, opportunities, or physical limitations into a state of homelessness.
The answer lies within the individuals and the coordinated efforts of the communities they resided in.
The most valuable resource is not the gold we have in our pockets or the land that we stand on, but our capacity to think and overcome the enormous problems that challenges us today and in the future.
Throughout history we have learned to overcome scarcity and adversity through the application of innovation.
By Building a Bridge we can:
fix our markets to property account for the value of our natural resources;
invest in long range innovation;
embrace the technologies that help improve our lives while bettering our planet;
empower each of the billions of minds on the planet, to turn them into assets that can produce new ideas that can benefit all of us.
Manpower Training
The geographic side of Structural Unemployment was attacked by various manpower programs that directed federal funds to economic development in lagging areas.
https://en.wikipedia.org/wiki/Economic_Development_Administration
https://en.wikipedia.org/wiki/United_States_Department_of_Housing_and_Urban_Development
Does Pubic Intervention Make Sense?
Small Business Administration
The U.S. Small Business Administration (SBA) is a United States government agency that provides support to
entrepreneurs and small businesses.
The mission of the Small Business Administration is "to maintain and strengthen the nation's economy by
enabling the establishment and viability of small businesses and by assisting in the economic recovery of communities after disasters".
The agency's activities are summarized as the "3 Cs"
capital, contracts and counseling.
SBA loans are made through banks, credit unions and other lenders who partner with the SBA.
The SBA provides a government-backed guarantee on part of the loan.
https://en.wikipedia.org/wiki/Small_Business_Administration#See_also
SBA an Equity Driven Business Administration
SBA helps lead the federal government's efforts to
deliver 23 percent of prime federal contracts to small businesses.
Small business contracting programs include efforts to ensure that certain federal contracts reach woman-owned and service-disabled veteran-owned small businesses as well as
businesses participating in programs such as 8(a) and HUBZone.[5]
SBA has at least one office in each U.S. state. In addition, the agency provides grants to support counseling partners,
including approximately 900 Small Business Development Centers (often located at colleges and universities),
110 Women's Business Centers,
and SCORE, a volunteer mentor corps of retired and experienced business leaders with approximately 350 chapters.
These counseling services provide services to over 1 million entrepreneurs and small business owners annually.
A Systematic Approach to Economic Development Planning
The following is a brief account of how a municipality might approach economic development planning.
Needs Assessment determines the purpose of the program.
The two most common goals are providing jobs and bringing in additional revenue.
Market Evaluation is to make a SWOT assessment the city’s competitive capabilities.
SWOT [strength, weakness, opportunities, and threats]
Assessment of consequences of economic development program
Question: how much debt can we manage?
Planning formation
Plan review and updating