Last week, I spent some time in Pinehurst, NC (it’s a tough job sometimes!) with the North Carolina Economic Developers Association. It was a good event with lots of great presentations. I was particularly impressed with North Carolina’s new Secretary of Commerce, Sharon Allred Decker, who brings great energy and expertise to the position. My remarks focused on how the state can “up its game” in terms of supporting entrepreneurs. While places like the Research Triangle have great reputation as entrepreneurial hotspots, North Carolina’s success in creating new firms and world class firms has lagged in recent years. Embracing some new approaches, such as aggressive deployment of business accelerators and targeted use of economic gardening tools, might help reverse these trends. You can access my remarks and other presentations here.
North Carolina’s economic development environment is on the verge of big changes under new Governor Pat McCrory. The state is now assessing the potential for converting the Department of Commerce into a new public-private partnership, similar to the systems now in place in Florida, Ohio, South Carolina, and elsewhere. These partnerships often sound great in theory, but their actual track records are somewhat mixed. Some have worked; some have floundered. A special task force to assess options is kicking off soon, and I expect (and hope) that they take a very close look at how other states are faring. If you’re interested in learning more about the experience of other states, this report from the National Governors Association would be a good place to start. What’s my take on the current state of play? Public-private partnerships can succeed if they’re done right, but it’s tough to do them right!
With the rise of the internet, google, and now the I-pad, Kindle, and other e-book readers, you would think that the future of public libraries would be pretty bleak. On the contrary, there seems to be something of a boomlet in the world of libraries as they reposition themselves as community centers, public meeting spaces, and new media centers. A recent article in The New Republic asssesses the trends, arguing that there is an ongoing “revolution at your community library.” The article, by architecture critic Sarah Williams Goldhagen, looks at libraries from both a design and a functional perspective. It assesses, and includes wonderful photos, of beautiful new library facilities in Norway, San Francisco, and here in Washington, DC. It also lauds the new Seattle Public Library, designed by Rem Koolhaas, which I’ve had the pleasure of visiting and can attest is a very impressive facility.
Goldhagen focuses primarily on the role of libraries as new media centers and as public space. But, libraries are also getting in the game in terms of supporting workforce and economic development. Many communities, such as Lancaster, PA, have anchored economic gardening programs in their library systems. While this is a relatively new movement, the possiblities of the “new public library” are huge. In the future, we can expect our friendly local librarian to not only recommend a good book, but to be a key community partner as well. (NOTE: You can access an excellent background article on libraries and commuity development, by Christine Hamilton-Pennell, here.)
The development of coworking spaces is a relatively new phenomenon–the first “official” cowork space is less than a decade old. Yet, the field is booming, according to a new survey from DeskWanted.com. The Global Coworking Census shows that the industry is booming. Today, there are now 2,498 coworking spaces around the world–a 89% jump since February 2012. The census also estimates that there are now roughly 1 billion independent workers, i.e. those engaged in mobile work, are self-employed or who work in a new start-up. Independent working is clearly on the rise.
In my continuing quest to promote economic development programs that work, I give you the Delta Regional Authority (DRA). Started in 2000 and modeled on the long-standing Appalachian Regional Commission, DRA is a regional development authority that focuses its investments in infrastructure and other specialized economic development projects in distressed counties of the Mississippi Delta region.
Headquarted in Clarksdale, MS, DRA serves 252 distressed counties in 8 states. And, the good news is that DRA seems to be doing a good job. A recent study from researchers at the USDA’s Economic Research Service examined the impact of DRA investments by comparing the economic performance of DRA-assisted counties with similar non-DRA counties between 2002 and 2007. They found that small investments (only $75 million in total) seem to have big impacts. DRA supported counties saw higher increases in per capita income than other counties. In addition, each $1 of DRA investment triggered an additional $15 growth in personal income, mainly due to increased earnings in the health and social service sectors.
While this study is not the last word, it does suggest that a targeted and relentless focus on highly distressed regions can make a difference in the every day lives of local residents. It has worked in the parts of the Delta and Appalachia as well. It also suggests that proposals for other focused regional development commissions, such as the Northern Border Regional Commission or the Southeast Crescent Authority, deserve closer attention and support from policymakers.
If US small businesses want to achieve rapid growth, they need to look overseas. After all, 95% of the world’s consumers live someplace else. Yet, the track record for American business is not good. At present, only 1% of US firms export.
There are lots of reasons for this poor performance. A new study from the Maine International Trade Center, one the US’ best export promotion agencies, looks at barriers to export success for Maine-based companies. While MITC’s focus is on Maine, the report conclusions could apply to small firms anywhere in the US.
MITC surveyed 115 Maine companies, which included a mix of non-exporters (44% of sample) and successful exporters (46%). Survey respondents were asked to identify top barriers to export, and they highlighted (in rank order) high transportation and shipping costs, foreign market barriers, and challenges in finding overseas partners. High transportation costs have a variety of causes, but the US’s crumbling infrastructure certainly doesn’t help. Issues related to foreign market barriers and overseas partners can be addressed via targeted consulting services and business coaching—services that are provided (at relatively low costs) by woefully underfunded agencies like MITC.
At the same time, Federal agencies could do a better job. The MITC study lauds efforts such as the FoodExport USA market access program. But, many of these programs are difficult to access for smaller firms, and as a recent GAO report has noted, coordination among US export promotion agencies is still quite limited. If we are truly serious about spurring small business growth, we need to get serious about helping US firms compete and succeed overseas.
This morning, the Chicago Council on Global Affairs released a powerful call to action on immigration reform. The report, developed by a blue ribbon panel over the past 14 months, makes a strong case for the important role that immigrants (not just high tech entrepreneurs and engineers) play in the Midwest’s economy. When you think about ground zero for immigration debates, you probably think of Arizona, Florida, Texas, and maybe Chicago. But, you probably don’t think about St. Louis, Fargo, or Willmar, Minnesota. All of these communities are profiled in the study–along with many others who are struggling to embrace new immigrants despite an outdated set of immigration laws and rules.
The study reminds us that immigration reform is a critical issue for all American communities, and that smart reforms will make a difference across the country. Immigration reform should not be an issue to score political wins; it is an imperative for our future economic competitivness.
I attended the release event, and I was particularly impressed by the opening remarks from John Rowe, Chairman Emeritus of Exelon Corporation and a Task Force Co-Chair. He quipped that: “I’m conservative, but I don’t know when it became conservative to stop people (i.e. undocumented immigrants) who want to work and pay taxes.” He also concluded that immigration reform is one issue where “the moral imperatives and the economic imperatives are the same.” Well said!
I spent this morning at the National Academy of Sciences where leaders of the MIT Taskforce on Innovation and Production released their preliminary findings, which will be published in an expanded book form later this year. The preliminary findings are facscinating, and based on an interesting mix of new research, including extensive interviews with manufacturers on how they innovate. Long-time manufacturing policy wonks won’t be surprised by the findings, but the study does bring a fresh persepective with its focus on rebuilding an innovation ecosystem that is closely tied to home-based production capacities and systems.
If there’s one message I took from today’s proceedings, it was the message from Suzanne Berger (the project’s co-chair) that, when it comes to innovation, US firms are “home alone.” If they develop a new innovation, it’s solely up to them to scale it up and bring it to market. In contrast, foreign manufacturers can tap into a diverse network of resources, including specialized funding, training programs, technical assistance and the like. American firms continue to innovate, but success often depends on heroic effort, massive risk, and lots of luck. A more robust innovation system, which links firms to resources for research, worker training, and financing tools, would reduce some, but not all, of the risks in developing new products, processes, and services. We need to rebuild the “industrial commons,” and the preliminary ideas from this Task Force are a good place to start.
Marty Vanags is one of my favorite people in the world of economic development. I guess I’m not alone as Marty has recently been hired for an exciting new position at the Indy Partnership in Indianapolis. But, for the past few years, Marty was CEO of the Bloomington-Normal (IL) Economic Development Council. In his parting note to his colleagues in Illinois, Marty wrote what I think is an excellent, straight-talking, and common sense explanation of what economic development means today. His remarks are understandably focused on Bloomington-Normal, but they are relevant to many communities across the US.
There are a lot of gems in here, like his call for “business listening” as opposed to “business retention.” A short quote captures the overall flavor: “The best economic development strategy starts at home. Demonstrating to the world that a local start-up culture is vibrant. . . and that local businessses have a tremendous opportunity to grow is your attraction strategy. What company outside of our community looking in wouldn’t want to be a part of a community like that?” That’s basic common sense that too many local officials fail to understand.
This short note is definitely worth a read. Best of luck to Marty in his new adventures!!!
The latest edition of our quarterly newsletter, EntreWorks Insights, is now available. This issue looks at how local governments are striving to improve customer service for small business customers. You can access the newsletter and learn about subscribing here.
The North Carolina Rural Economic Development Center has just released a new report, Our Manufacturing Future, that examines the state of manufacturing in North Carolina’s 85 rural counties. (EntreWorks Consulting contributed to this report in collaboration with our colleagues and project leaders at the Center for Regional Economic Competitiveness).
The report provides a detailed mapping of how rural manufacturers, primarily small businesses, are faring and also assesses key issues, such as access to skilled workers or expansion capital, impeding their growth. If you’re from North Carolina, I’d humbly suggest this report is a “must read” to get a clear-eyed assessment of the state’s manufacturing sectors. If you’re not from North Carolina, the report is still worth a look as many of the issues facing local firms are identical to those pressing manufacturers across the US. In addition to assessing key policy issues, the report also takes a deeper dive by assessing key market trends in a number of leading sectors, including packaged foods, medical devices, transportation equipment, and many others.