Anyone who still equates economic development with recruitment of manufacturing investment ought to read a new report by the Brookings Institution, "Responding to Manufacturing Job Less: What Can Economic Development Policy Do?"The report takes a close-up look at eight metropolitan areas -- Charlotte, Cleveland, Grand Rapids, Hartford, Indianapolis, Louisville, Rochester and Scranton -- over the period of 1980 to 2005 to see what policies and strategies the regional leaderships adopted in the wake of manufacturing job loss. The conclusion is not terribly comforting. While some initiatives might have perked up investment in particular manufacturing sectors, few of the policies pursued appeared to change a region's economic trajectory.
Louisville's airport expansion in the 1980s and Indianapolis' strategy to boost amateur athletics did shape economic growth in those two regions but the impact of most other initiatives was too limited to affect metropolitan regional economies. What seemed to have the most impact was (a) successful business strategies of major corporations and (b) basic economic characteristics of the region, such as access to transportation, quality of the labor force, state business regulations and the like.
A logical conclusion of the Brookings report is that regional civic and political leaders are better off focusing on economic fundamentals than pursuing the economic development chimera of the day, be it semiconductors (the 1990s), biotech (the 2000s) or green energy (the 2010s). Local leaders are not very good at predicting what hot company in their region will take off, creating a new ecosystem of vendors, partners and buyers in its orbit. Rather than picking winners and losers, they should create an all-around business climate in which a wide array of industries can succeed.
That happens to be something that Virginia is good at. In the latest CNBC ranking of the Top States for Business, the Old Dominion scored No. 1, edging out Texas, which had snagged the top spot last year. CNBC bases its rankings on the basis of cost of doing business, workforce, quality of life, infrastructure, economy, education, technology and innovation, business friendliness, access to capital and cost of living. Virginia moved up this year thanks to improvements in the tax burden, education and cost of doing business. (It lost ground in quality of life, due mainly to an increase in the percentage of uninsured.)
States CNBC: "Virginia did what it does best -- and has done in each year of our study: It turned in a solid all-around performance, with top ten finishes in five categories." Virginia's metropolitan regions could benefit from the same philosophy.
Jim,
ReplyDeleteHaving some familiarity with Charlotte and Cleveland, all one can say is that no matter what civic boosters and the eco-fad chattering groups say or do, no one can predict how any aspect of the economy -- and not just manufacturing -- will fare. Charlotte got a big bump from banking -- right up until 2008. Cleveland was once one of the most important business cities in the U.S.-- maybe 100 years ago,thanks to steel and oil. But today it is too much in Detroit's unstable car parts and assembly world and never got much beyond widget making besides medicine, Cleveland Tomorrow or no.
The latest fad is "Aerotropolis" that goes far, far beyond local and state business "climate" incentives and pretty much sets up airport-centric areas with associating living and working places that are far more deeply linked to the global economy than whatever the state legislatures do. What matters in those cases would be global market movements, currency shifts and trade laws. It's sort of like a huge duty free or international zone.
Dulles is in the cluster, but that's about it as far as Virginia. Richmond might as well forget it. Its airport seems kaput and our "leadership" can't come up with anything more sophisticated than this "i.e.*" bullshit that lets shoe store owners call themselves "provocateurs" and pretend they are part of Richard Florida's (another pop economist's) "creative" class.
As far as Virginia being rated once again as a top "business" state, that is getting so stale and the incentives, corporate welfare, anti-union laws, etc. are becoming increasingly irrelevant.
Peter Galuszka
I admire most of Brookings work a lot.
ReplyDeleteOne big problem is their recent focus on ‘manufacturing’ and enhancing ‘global competition’ via export goods.
Hello!!
What they should be focusing on is Regional Import Replacement and Resiliency, not manufacturing and export competition.
The feed stock for ‘manufacturing’ and transport of ‘exports’ is getting more and more expensive.
Is Dr. Risse EVER going to finish the next draft of ENOUGH?
On this report, it report seems to be looking through the wrong end of the telescope.
1980 to 2005? That was the heart of the period when the US lost its edge and widened the wealth gap.
Just below, Mr. Bacon notes a study that finds that in NYC – 1 percent now receive have 44 percent of the earnings. That is, as some of our friends say, “UNSUSTAINABLE.”
Get real.
“What seemed to have the most impact was:
(a) successful business strategies of major corporations NO WHAT IS NEEDED IS SMALL FIRMS THAT MAY GROW IN THEIR REGIONS, ‘major corporations’ are the conduits that shipped US wealth overseas and into tax loop holes, and
(b) basic economic characteristics of the region, such as access to transportation (LIKE ALTERNATIVES TO LARGE PRIVATE VEHICLES?) , quality of the labor force (EDUCATION, YES but who is it that harps about cutting the budget rather than focusing on improving the outcomes ? Starve the beast!! What a great way to get more from the horses.) , state business regulations (WHY IS THE STATE IN THE REGULATING BUSINESS?, THAT IS A REGIONAL ISSUE, NOT A STATE ISSUE. The MegaRegions and Continental Trading Blocks should be in the InterRegional Commerce Regulation Business with participation from Regions and Communities.)
Sorry no cigar.
Observer
What would New York look like if the federal government took the profits from short-term trading - something that delivers no long-term value to the American economy? And we Virginians are still very dependent on Uncle Sam's trough. I heard that defense contracting funds have been frozen at 2010 levels. If true, a good step to get the trough shrunk in size.
ReplyDeleteTMT
If I buy a
ReplyDeleteStock and sell it later for a profit, why dies it matter whether it is six monthhs later or six seconds?
Either way, I did nothing to earn my profit, except put my money at risk. The company got its money for the shares at IPO, so what I do makes little difference.
What makes a difference is what the company makes.
Obzervir is flat wrong analysis of local vs foreign trading.
ReplyDeleteIf I make more money investing in Brazil than llocally I unwilling have more money to spend locally, supporting the farm.
Which, of course, would make more money doing anything other than being a farm.
How am I, or anybody, better off supporting two losing ops?
That is unsustainable.
Why is it the alternatives to large private vehicles are even larger public vehicles?
ReplyDeleteAs one who has taken transit in situations where I could have had free parking, I still wonder why no one is rethinking the huge cost problems that shared vehicles are having. Dulles Rail needs a grand jury investigation. Fairfax County says it cannot afford to put buses to Tysons rail stations in most suburban locations. Amtrak is a joke (and I love to take the train). Etc.
ReplyDeleteIs it because most transit is government run?
TMT
If private entuerprise ran transit, most of it would be shut down.
ReplyDeleteThe biiggest obstacle to business development is local.
ReplyDeleteMartella winery closes due to legal expenses imposed by HOA.