Time for home: lessons learned from the US
I have spent the last three weeks in Cleveland, Pittsburgh, Philadelphia and Providence exploring how those cities have responded to economic decline and indeed economic opportunity.
I have been fascinated by the levels of collaboration, the role of anchor institutions, the scale of foundation resource, and the ability to raise and redistribute taxation as means of enabling that response. While I have seen lots of good work in those localities, I have also been amazed by the scale of the remaining challenge, particularly in terms of addressing inequality.
I’ve also spent time in New York and Washington DC engaging with key economic development-focused think tanks, and leading thinkers on local economies.
Here are the key lessons learned from these discussions around economic development policy in the United States:
- Locally focused economic development is the domain of the few and removed from the business growth and inward investment approaches of the majority
- Social responsibility is on the rise with businesses moving beyond painting community buildings to real investment in place. The nuance being that it is largely for marketing and corporate purposes
- Leadership is crucial to the rejuvenation of local economies, whether that be through mayoral governance, foundations, anchor institutions, or collaborative networks of socially focused organisations
- If improvement is to continue, it cannot just be city leaders which are the drivers of change; their employees, partner organisations and communities need to buy into their approach
- Economic growth is divisive and inequality rife. Policy needs to enhance opportunity for all communities
- State and city governments in the US have far more power, resource and flexibility than their UK counterparts; with economic development seen as an industry and a key part of their remit
- Inward investment is still the core economic development vehicle with states and in many cases places within states competing for the investment buck through trying to out-do each other on tax breaks. This economic showboating is in some cases leading to the bankruptcy of city governments
- Entrepreneurship and innovation is ripe. Individuals and businesses are creating products and ideas and local partners are investing in supporting the development of those ideas; risks are being taken and local economies are benefiting
- Places have far greater opportunity to benefit from redistributive taxation policies. Redistribution is supporting major economic development projects and community grant programmes
- Philanthropic capital through foundations is a major source of economic development and in many ways stimulates collaboration
- Anchor institutions play a key role in city economies, particularly in the places I visited, and there is a real concerted effort to maximise their impact for the local economy – particularly through their procurement practices
- Cooperative ownership of business works, but there needs to be a realism as to the scale at which this can be effective and the capital required to develop cooperatives
- Maximising the benefits of procurement is viewed as a massive area of opportunity, but like most economic interventions is not effectively measured in terms of its impact upon place and people
- There is a big opportunity to convert businesses into alternative forms of delivery such as social enterprises and cooperatives, particularly as owners reach retirement, and use this as a way of addressing unemployment.
There is much the UK can learn from the United States and as I have found, vice versa, particularly around measurement and evidencing the effectiveness of a local economic approach. Local economic development is perhaps more pronounced in the US given the scale of inequality in the north east of the country; yet is dominated by vehicles and resource local authorities in the UK simply do not have access to, largely in the form of foundations.
We need a new progressive form of local economic development in the UK which balances place, economy, and people and I will outline the shape of this in a wider publication about my trip which will be published in September.
We do not practice “economic development” in the U.S., we practice business development, heavily subsidized by enormous public funds, but where are the corresponding public benefits? Most, if not all, think tanks & non-profits believe that subsidizing business enterprise is sufficient to raise all boats, & they all tout a new program, initiative or policy as promising breakthroughs, yet we remain in structural, generational poverty.
The scale of inequality is clearly in our southeastern, “redneck” quadrant of our country. We simply need a fresh paradigm around socioeconomic metrics, rather than banking on the status quo, which means accepting incremental “growth” here & “development” there. This approach is 40 yrs old, yet we are still stuck in narrow, superficial ventures.
All the best in your search, perhaps you’ll take back something of value despite the weight of the past.
Your point 13 above says “most economic interventions are not effectively measured”, and I agree. I’ve recently read the report from Localise West Midlands, “Mainstreaming Community Economic Development (Jan 2013)” and details of measurement studies are missing from its 70 plus pages. They note at least 9 ‘Gaps identified for further research’ in part 7 of the literature review.
I’d like detailed methods of study in straightforward language to be easily available.
Given your attitude of balancing “place, economy and people” Matthew, I look forward to your ‘wider publication’ in September.
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Wish we’d met while you were here in Washington, my hometown. I was dizzy from the jargon throughout your article. Did you notice the ethnic cleansing here in Washington? How does a city go from being over 70-75% Black American for at least 50 years, to around 50% in fewer than 20? Where are the demographers? We look forward to your September article.
If you gained some good from your visit, great. I would say that I didn’t see anything here re: the need for non-CED practitioners to work closely w/those of us “in the field”. Honestly speaking, whom amongst all of those you visited actually work in the CED field? We have folks in the private sector talking the talk as if they work in our field, but they do not. They do not know the difference between “urban” planning & “economic development” planning. Where is the strategic vision? Where is the urgency to get things done now?
Virtually everyone believes that “business” development is the same as “economic development”; they are NOT the same thing. One focuses upon private enterprise transactions while the other focuses upon socio-economic outcomes, with the metrics to go along with it. For all the public subsidies to support private growth & development, I repeat, where are the corresponding public benefits in real terms?
I’d like to know & learn from actual practitioners in our field, before listening to folks who are not in our business. If we don’t trust the credibility from our own colleagues, then let’s not pretend that we have a legitimate CED planning profession. If you have no legal training & experience, would the Bar Association have any interest in your point of view?
Multiple activities, initiatives, & new programs are fine & good, but unless they all add up to actually impacting the structural aspects of our community’s fabric in real terms, we are still falling short of our needs. While the private sector can indeed play a key part in real transformation, we really need an intelligent public sector leadership who know what they are doing, as they have the inherent advantage of tapping enormous public resources which they can leverage to produce meaningful public goods. Why are we lacking in this capacity?