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Economic Development As A Triage Activity Marc Anderberg Director, Applied Research Texas Workforce Commission Annual Workforce Conference Phoenix, AZ.

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Presentation on theme: "Economic Development As A Triage Activity Marc Anderberg Director, Applied Research Texas Workforce Commission Annual Workforce Conference Phoenix, AZ."— Presentation transcript:

1 Economic Development As A Triage Activity Marc Anderberg Director, Applied Research Texas Workforce Commission Annual Workforce Conference Phoenix, AZ April 10-11, 2008

2 Limitations of Cluster Theory Scale –Limited number of “trophy-size” recruits –Competition (86 of 86 MSA for biotech) –Enough to tip the scales??? TX Emerging Technology Fund vs San Diego, SD, KS Intangibles (CA, MA, WI, MO referenda) –Small businesses and microenterprises Existing scale Job creation Creative Destruction –Exploitive vs exploratory innovation –Vulnerability

3 When Cluster Theory Doesn’t Apply (continued) Regional Differences –Inside versus outside the “Texas Triangle” –Rural vs metro and suburban counties within same LWDA Migration and aging of the population –Talent supply (“Brain Drain”) Critical mass/agglomeration (Jane Jacobs) Theory of the “Creative Class” (Richard Florida) –Consumer demands Wealth creation versus job creation “Market Failure” –Location – spatial mismatch –Equitable distribution

4 ALTERNATIVES Triage concept (remember M*A*S*H) –“Walking wounded” –Critically injured –Beyond hope

5 ALTERNATIVES Strengths and Opportunities Continue to do what you do best –Ag (crops and livestock) and Oil & Gas –Diversify and differentiate –Capture more of the value added Intermediate vs final demand New markets (niche, international) Quality, branding and marketing –Become more efficient –Pooling of resources – cooperative –Be Opportunistic in “appropriating” cluster language

6 ALTERNATIVE Strengths and Opportunities Understand your comparative advantage Differentiate between export industries and population-serving industries –Retail is NOT economic development Retail and personal services follow population and income growth Conserve scarce resources for export industry development –Resist notion that bidding wars are “business as usual –Use information resources and indirect incentives –Understand leakage, displacement and import substitution –Stimulate population growth Quality of place –Enhance natural amenities –Market them through tourism and residential relocation Quality of life –Cheap land, low crime, low cost of living –Market to equity rich-city weary snowbirds –Upgrade services (e.g., cure problems like medically-underserved)

7 ALTERNATIVES Strengths and Opportunities Footloose industries Business as a virtual platform Place still matters Proximity to final consumer –I have deployed lots of IT – I just don’t have any knowledge worth transmitting across the globe at the speed of light –Knowledge vs Information-based economy Quality of life and quality of place Green Economy & Tradability of Skills

8 ALTERNATIVES Strengths and Opportunities Grow your own World class education –Foundation –Entrepreneurship –Stewardship Access to capital (angels, micro-lenders, conventional) –Information broker and networking –Business plan development (see Dot Com Flame-outs) –Tech assistance SCORE, ag extension, MEP, SBDC Incubator, industrial park and exit strategy Scale and expectations –IT as enabling rather than as a cluster (There are no low tech industries, only low tech firms) ― Get the infrastructure right

9 ALTERNATIVES Addressing Weaknesses Base closure and abandoned factories –Resources and best practices –Recovery, renovation (speed essential) –Market spade-ready, finish-out ready Cooperation –Rather than competition (bury the hatchet, ford the river Mr. Rhoden presentation) –Get a piece of the action

10 ALTERNATIVES When life gives you lemons, make lemonade Reversing cluster logic Absence of legacy industry as barrier (Twin Cities) –Incremental change rather than breakthroughs –Risk-aversion and protectionism Too much is disadvantage –Degradation of quality of place & quality of life San Jose, CA migration to Austin, TX –Dispersion of vulnerable critical infrastructure Gulf Coast refining vs Arkansas, Oklahoma or inland Texas

11 ALTERNATIVES Addressing Weaknesses Public good argument Function of government is to fill gaps where market forces fail Market forces will “take care of” the metro and suburban areas With substantial comparative advantage, they can’t make the “but for” argument to justify financial incentives Rural areas (and inner-city ones) need larger allocations in order to level the playing field Rural areas and inner-cities have a greater need for wealth creation and jobs Productive use of human resources in rural areas and inner-cities achievements decrease “drag” on the system.

12 Measuring Success Efficiency, ROI and net job creation are not the only measure Equitable distribution of cost and benefits Earmarked funds USDA –and HUD –and EPA DoD (dual-use) and Homeland Security NSF and Department of Education NIH and HHS Special programs Enterprise and Empowerment Zones Community Redevelopment Act Reduced vulnerability Diversification of the economic base Dispersion of critical infrastructure Retention of jobs relative to expected loss Stemming the brain drain –Expanding the knowledge base –Nimble to respond to changing demands –Innovation and entrepreneurship are the foundations of wealth creation

13 Marc Anderberg Phone (512) Mail Marc Anderberg Director of Applied Research TWC – LMCI 9001 N. IH-35, Suite 103A Austin, TX 76753h Getting Down to Business: Applied Cluster Theory Economic Development As a Triage Activity (in 2007) Job Chains and Churning Megatrends: An Environ- mental Scan of the Forces Sculpting Texas’ Eco- nomic Landscape (in 2007) Becoming and Employer of Choice: Talent Recruitment and Retention During the Coming Skills Shortage Technology Workers in the New Texas Economy Infusing Strategic Planning with Local Wisdom Bridging the Digital Divide: Under-representation of Women and Minorities in Technology-Intensive Occupations The Emerging Biotechnology Industry The Study of Emerging Occupations


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