The State of the States

Last week, I participated in a National Governors Association symposium on “States and Innovation:  Setting the Stage for Job Creation.”  This event brought together leading policy makers from 30 states, including many state Secretaries of Commerce and Economic Development, to examine how new innovation policies can help boost new job and new wealth creation. 

Not surprisingly, the discussions also yielded a host of insights on what’s keeping state economic development officials up at night.   Here’s my take on some of the big challenges/questions they are facing:

1) New Management Structures:   Several states, such as Ohio and Iowa, are in the process of privatizing their economic development (ED) departments.  Most states aren’t going that far, but they all are looking for ways to operate more efficiently and effectively.  Many state ED offices have something of a “kitchen sink” quality; they manage dozens, if not hundreds, of discrete programs that may have little in common.  For example, the Ohio Department of Development has jurisdiction over, among other things,  homeless assistance, exports, tourism, brownfields, and historic preservation.  Few ED departments sought these diverse missions–they were often pushed to these missions by earlier governors or legislators.  Nonetheless, cleaning up the organizational charts is a big challenge ahead.

2) Really Embracing Regionalism:  ED leaders have always “talked the talk” on regionalism.   But, now they plan to “walk the walk.”   Many states are decentralizing and seeking to operate based on regional offices or divisions.  New York’s new Governor Andrew Cuomo is making a big push to create new Regional Councils as a key part of the state’s ED infrastructure.

3) Metrics:  State ED leaders are also getting more serious about measuring the impact of their investments.  Just counting jobs is no longer sufficient.  They are hungry for new tools and approaches that track the impact of investments to support innovation and entrepreneurship as well.

4) Rethinking the Role of  Manufacturing:   State ED leaders have not bought into the downer message that manufacturing is dead.  In many ways, US manufacturing is quite healthy and productive.   But, these industries will not create or support as many jobs as in the past.  So, all states, not just traditional manufacturing centers, are thinking about where manufacturing fits within their state’s overall economic portfolio.

5) Telling the Story:  All of the participants also agreed that they need to do a better job of telling the story of how economic development investments build prosperity.   Better metrics and closer regional ties can help here, but telling the story also means closer partnerships with governors and with business leaders who see first hand how these programs can help firms grow and prosper.

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