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The fundamentals of regional economic development Edward W. (Ned) Hill Dean, Levin College of Urban Affairs Cleveland State University.

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Presentation on theme: "The fundamentals of regional economic development Edward W. (Ned) Hill Dean, Levin College of Urban Affairs Cleveland State University."— Presentation transcript:

1 The fundamentals of regional economic development Edward W. (Ned) Hill Dean, Levin College of Urban Affairs Cleveland State University

2 Edward W. (Ned) Hill2 This is economic development and its a zoo

3 Edward W. (Ned) Hill3 Taming the economic development zoo: Six Parts of Formal Economic Development Practice Take away: Six short run practices that dominate practice. The supply side of the regional economy is not formally a part of the practice of economic developmentbut that is where the long term benefits reside. The Great Buffalo Hunt Attraction Deepen the base of export products (Exogenous Growth) Protecting Endangered Species Protectionism Political crisis to save existing jobs (Lemon socialism) Trapping Foxes Expansion Lower operating costs Invest in resource base (Squeezing the middle lines of income statement) Searching for Gazelles Mistaken Tech Strategies Search for fast-growth firms Breeding Rabbits Entrepreneurship Product Development Process Innovation (Endogenous Growth) Feeding Ostriches Avoidance Bury your head in the sand while expecting change to take place

4 Edward W. (Ned) Hill4 Why practice economic development? oJob creation oBetter incomes oImproved tax base oWealth creation oLess cyclicality in employment oGreater diversity of the economic base Lesson: Employment is derived from product demand Lesson: In economics desirable outcomes are frequently a byproduct of market activities. The best route to those outcomes is often indirect

5 Edward W. (Ned) Hill5 1.Dont be a victim oBe realistic without being pessimistic oChange policies and attitudes that can be changed oRespond to opportunity within a strategic framework

6 Edward W. (Ned) Hill6 2.Economic development is about products; Not jobs oEmployment is derived from product demand oEnd users do not purchase technologies, they purchase products and services oA regional economy is a portfolio of products and the technologies they embody

7 Edward W. (Ned) Hill7 2.Economic development is about products; Not jobs oThe Product Cycle is real and affects strategy and implementation oCompetitive advantage changes over time as the regions product portfolio ages

8 Edward W. (Ned) Hill8 3.Productivity growth is the basis of sustained higher incomes oThe measure of economic development success is change in per capita income. oIncreases in earnings come from increases in productivity oUnderstand what productivity means: Value added per hour worked

9 Edward W. (Ned) Hill9 4. Economic development is practiced through the income statement of the business oDo you represent the worlds best place to operate the business? oGross revenuethe top line oExpense itemsthe middle lines oLabor and talent oIf not, then the business is there either through historical accident and inertia, or because of the CEOs personal housing investment

10 Edward W. (Ned) Hill10 5. Economic development is generative; Not redistributive oAsset-based; not need-based oEncourages community development, but is not community development oShort term economic development policy uses your regional assetsyour land, people, and talents oLong term economic development policy invests in your regional assetschanges the quality and cost of land, people and talents

11 Edward W. (Ned) Hill11 6. Build economies from areas of strength, while intentionally addressing areas of weakness oPractice the habits of growth oThe politics of managing decline results in redistribution, not regeneration oThere is no soft landing in the American economy oThere must be some bricks and mortar transactions. You need visible successes

12 Edward W. (Ned) Hill12 7.The economy is regional; the world is competitive oAll regions have effective competitors oAll municipalities have effective competitors oBoth within and outside of the region oIncludes the traditional central city oMarkets will beat politics into submission over time; regions will either work effectively or the economy (investment) will vote with its feet

13 Edward W. (Ned) Hill13 8. Avoid fads and silver bullet thinking; Celebrate differences and differentiators oIt is important to be distinctive, not imitative oAvoid the public sector version of not-invented-here syndrome oIf you follow fads thoughtlessly the buzz words will be there, but content will be missing oAvoid rubeaphobia oDefinition: Fear that others think you are a rube for what you do or who you are. oLeads to down playing real strengths, emphasizing imagined strengths. oResults: Prove that you are a larger rube than originally imagined

14 Edward W. (Ned) Hill14 Everyone wants high-tech operations Fight the allure of economic development fads; Do not lose sight of true competitive advantage and the power of distinctiveness; Skepticism is good. Source: Deloitte Real Estate Services 8. Avoid fads and silver bullet thinking; Celebrate differences and differentiators

15 Edward W. (Ned) Hill15 9. Economic development investment requires a long term strategy oBuilt on a widely shared transformative vision oResponds to near term political-economic crisis (the catalyst) oFlexible so that respond to opportunity oAnswers the question: Who maintains the long-term civic economic development investment agenda? Take away: Short term politics is often the enemy of long term development strategy

16 Edward W. (Ned) Hill Have a conversion experience oBusiness time the length of the deal cycle oEconomic time the length of the business cycle oPolitical time the length of the election cycle oEconomic development time the length of the product development and innovation cycle (time required to change the product mix) Take away: Converting economic development time into political time is critical for success Convert economic development time into political time Convert economic geography into political geography

17 Edward W. (Ned) Hill17 Three Parts of Successful Economic Development Practice Development Theory Development Practice Local Leadership & Context Economic Base Resources History/Culture Economic Outcomes

18 Edward W. (Ned) Hill18 What does effective leadership do? Overcomes the geographic mismatch Builds practical, functional regionalism oPolitical federal structure oMunicipality oCounty oState oNation oTrading block oEconomic federal structure oRegiongeography of labor & housing markets warped by transportation costs oNation oTrading block oGlobe Take away: Who represents the regional economy?

19 Edward W. (Ned) Hill19 The contradiction of good economic development practice Take away: Have a widely shared vision coupled with transparent practices while maintaining client confidentiality

20 Edward W. (Ned) Hill20 Summary: Do the hard stuff; Fix the basics; Change the value proposition 1.Successful economies are constructed from strength and achievement 2.Innovation and product development are the keys to long term prosperity. Invest do not spend 3.Education is at the foundation of economic success 4.Skepticism is good. Do not assume or assert competitive strengths. 5.Think of technology and product development as a portfolio One persons pork barrel project is another persons wise investment in the local infrastructure. Thomas Foley, Speaker of the US House of Representatives, 1989

21 Edward W. (Ned) Hill21 Economic development is art and science I think you should be more explicit here in step two

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