ust 200 ch 10
boodkvokhari
ch_10_the_city_grows.pptxThe City Grows
Economic Development
Economic development means different things to different sectors.
The private sector is in the business of creating wealth; producing tradable goods and services and engaging in the exchange of such goods. This alone is not economic development.
The public sector’s involvement in the process is economic development.
The government’s role is to facilitate and promote the creation of jobs and wealth by the private sector, and to ensure that it does so in ways that serve the short and long-term interests of the broad population.
Four Eras of U.S. Economic Development
Location Incentives (1930s-1960s). State and local governments enticed manufacturing plants to their locations (redistribute jobs). The government provided financing to public projects that would streamline the relocation of business to their area.
Equity & Redistribution (1960s-1970s). Government programs provided subsidies to individuals and regions in poverty as a way to raise income and stimulate increased economic activity by increasing consumer demand. Broadening economic opportunity through education, job training, social services, and community development.
Four Eras of U.S. Economic Development
Generate employment and jobs (1980s). Government sought to improve conditions of declining urban areas (high unemployment) through service-sector jobs (hotels, office buildings, real estate activities). Combination of location-based incentives and private sector investments.
Generative development (1980’s to present). Small businesses create more jobs. Government’s role was to incentivize entrepreneurship and assistance to small & medium sized businesses.
Industry Clusters
The Competitive Advantage of Nations (1990). Seminal work by Harvard Business School professor Michael Porter. Discussed national and regional competitiveness of industry clusters.
Clusters are groups of inter-related industries that drive wealth creation in a region, primarily through export of goods and services.
An industry cluster is different from the classic definition of industry sectors because it represents the entire value chain of a broadly defined industry from suppliers to end products, including supporting services and specialized infrastructure.
Cluster industries are geographically concentrated and inter-connected by the flow of goods and services, which is stronger than the flow linking them to the rest of the economy.
U.S.
Industry
Clusters
Current Trends in Economic Development
Regionalism, quality of place, and quality of talent are intertwined. They depend upon each other to be successful.
Regionalism has two basic forms: consolidation and cooperation.
Consolidation is when governments share or merge services to attempt to create economies of scale. Economies of scale are achieved when more units of a good or service can be produced on a larger scale, with lower input costs.
Cooperation isn’t a formal merger, but rather a unified voice of multiple neighboring jurisdictions stating a shared vision of the value of economic development. What is good for one, is good for many.
Current Trends in Economic Development
The quality of the place and quality of talent matter in economic development!
Does the place have an environment amenable to diversity of its residents, particularly those dependent upon the knowledge economy to function?
The knowledge economy is dependent on the quantity, quality, and accessibility of the information available, rather than on the means of production, to grow.
The key component of a knowledge economy is a greater reliance on intellectual capabilities than on physical inputs or natural resources.
Current Trends in Economic Development
Quality of talent also relies upon the process of preparing the workforce for the jobs in demand.
Education as preparation. K-12, post-secondary, technical, continuing education, human resources and professional development.
Hard skills (based on current market) and soft skills (will always be in demand).
Investing in human capital is economic development.
Federal Economic Development Policies
Federal policies support economic development through:
Direct assistance. Funds are supplied to firms or incubators are provided (shared costs of overhead for entrepreneurs).
Information sharing. Knowledge is power. The Census is the government’s initiative to collect and provide data to study trends in cities (population, labor, commute, industry, and more).
Indirect activities. Funding for infrastructure (mostly transportation).
State Economic Development Policies
States supplement federal funding with local funding and oversight.
States are competing in a global market. It’s not just local or national. Cleveland doesn’t compete against Pittsburgh anymore. It also competes against Korea, Brazil, and Italy.
Tax abatements are discounts on property taxes to companies for providing economic activity to the jurisdiction. Also applies to new housing.
Tax Increment Financing (TIF)
An economic development mechanism available to local governments in Ohio to finance public infrastructure improvements and, in certain circumstances, residential rehabilitation. Usually applied at a “district” level.
TIFs are implemented at the local level and may be created by a township, municipality or county. Oversight provided by the State.
Payments derived from the increased assessed value of any improvement to real property beyond that amount are directed towards a separate fund to finance the construction of public infrastructure defined within the TIF legislation.
Only those public infrastructure improvements directly serving the increased demand arising from the real property improvements to the parcel(s) or an Incentive District are eligible for TIF financing. Educational funding is not infrastructure.
County Economic Development Policies
County economic development happens at a regional level. County government covers unincorporated areas (townships).
Counties also provide specialized technical services (economic development assistance) to jurisdictions who may not have capacity (knowledge or finances).
Some major government services are handled at the County level (transportation infrastructure primarily). The location and quality of transportation infrastructure affects the location of economic development activities.
City Economic Development Policies
The two schools of economic development theories are growth and development.
Growth is recruiting and expanding the existing business base. “More is good”.
Development is when different firms and different sectors are sought. “Cutting edge and diverse portfolio of industry is good”.
Innovative business technology and services will yield longer term economic results because the industry has a longer life cycle of production.
Quality of Life and Economic Development
Economic development policies seek to attract and retain development activity that aligns with the community’s vision. They provide financing incentives to businesses for having provisions to the community such as for:
Educated workforce
Public infrastructure
Local natural and cultural amenities
If regions (scalable) are to compete globally, they must develop economic incentives that seek to address gaps in the above listed points of the economy.
Assignment for Friday, April 21
Research economic development locally, regionally or nationally. Select an economic development policy that interests you, describe what the policy is intended to do, how the policy incentivizes development, and an existing project/initiative that exemplifies the use of the economic development policy. Please include links/citations where appropriate. This should be about 300-500 words (1/2 to 1 page).
(For example, the Cincinnati (OH) Dept of Economic Development manages the city's Residential Property Tax Abatement program. An example of a project that used this economic development policy is Seventh & Broadway. This is to help you research economic development, not a complete description of what your assignment asks for).
Read public health article posted to Blackboard.
