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Economy Watch
Saturday, October 30, 2004 Here are the best articles on the economy I found last week. Economy sees slower growth than expected Vital Signs for the Week of Nov. 1 US consumers help economic growth in third quarter GDP: Not Great, but Encouragingly Solid Growth Of IT Economy Modest At Best--Gov't Report Favors to special interests hurt economic efficiency Fed: Economic growth continuing despite rising energy costs posted by Ed | EDA's investment in Central Michigan University EDA has invested $2.15 million with Central Michigan University for more lab space at the university's Center for Applied Research and Technology. The investment aligns with EDA's focus on technology-led, university-based development strategies. Learn more. posted by Ed | Web Watch: Saginaw Small Business Information Network Here's a good example of a common sense approach to web development. Saginaw, MI has created a practical Small Business Information Network. Using the term "roadmap", the site provides a guide to available resources. Notice the service orientation of the site and the careful use of language: "An overview of the members of the network and how they can serve you". The "Stay in Touch" box on the left provides a simple way to gather e-mail addresses. (I would recommend using the word FREE somewhere in the box. This step will help boost response. For example, on the CNN site, they encourage readers: "Get free access to CNN e-mail newsletters.") It's a good model to copy. Read more. Visit the tsite. posted by Ed | The challenge of being Richard Florida Celebrity is not free. Misunderstanding is one of the costs that Richard Florida is paying. In Akron last week, Florida worked hard to defend his ideas from the distortions of his critics. Read more. Florida has brought a lot of this on himself, my guess. He has buffed himself up to celebrity status. Read more. He has made loose assertions, especially about gays. For example: "A place that is open and tolerant of the gay population is a place that anyone can make it." Read more. His language often doesn't advance his cause. He promotes the idea of a new economy with a language of class structure invented in the industrial era by sociologists long dead. (Worse still, to my mind, is the implication that we should be promoting an economy with a Creative Class that sits on top of an Uncreative Class.) His data analysis fails to convince more rigorous economists. For example, he makes some elementary mistakes in blurring the distinction between a correlation (A and B tend to appear together) with causation (A causes B). On the policy front, he has promoted some fuzzy ideas like the Memphis Manifesto. (With echoes of Marx and Lenin's 1848 Communist Manifesto in their ears, it surprising that critics on the right are riled?) By unintentionally positioning himself on the left, some critics on the right are now hammering away. Read more. Perhaps least understandable of all, Florida has taken some ideas that have been well-developed elsewhere and repackaged them as his own. The idea that creativity is an economic driver for advanced economies first appeared in the United Kingdom in 1998, four years before Florida published the Creative Class in 2002. (He makes no mention of the extensive work in the U.K. in his book.) The Blair government was the first to address "creative industries" as a separate cluster of related businesses. Learn more. To hold himself out as the author of this idea is, well, creative. Finally, Florida is a little short on practical implementation ideas. So, people have a tough time translating his thinking into action. As a consequence, some people misunderstand what he is saying. If you come out with a "Bohemian Index", is it any wonder that some critics ridicule the idea of gay marriage as an economic development strategy? Read more. posted by Ed | Thinking regionally, Milwaukee turns to Chicago Friday, October 29, 2004 Civic leaders in Milwaukee are thinking more and more about regional approaches to their challenges. As an early step, they invited a representative of Chicago Metropolis 2020 to speak. Founded in 1999, Chicago Metropolis 2020 is a private non-profit group that promotes reform in state and regional policies to encourage regional economic development and improve regional planning. The organizations $2.5 million annual budget comes from the private secotr and foundations. Read more. posted by Ed | Demall, overhaul, ‘taj mahal’ Lakewood, WA is a city of 60,000 with a new town center. Developers have taken an old mall and "de-malled" it. They gutted the mall, except for a few anchor buildings. They next turned it into an outdoor shopping area. The place is now booming, and other older cities in the Puget Sound region are looking to replicate the model of converting an abandoned business core into a new generator of sales tax revenues. The Lakewood project is part of a boader national trend: Converting enclosed malls into open-air shopping centers anchored by civic buildings. Learn more. posted by Ed | Metro Little Rock Strategy A couple of weeks ago, Angelou Economics released its strategy report for Metro Little Rock. The plan includes measures to improve the region’s business climate. It focuses development efforts on 10 target industries: aerospace, automotive, biotechnology, financial services, information technology, food processing, health care, logistics/distribution, nonprofits and tourism. You can read more about the report. Go. posted by Ed | Nanotechnology in Northeast Ohio There's a good chance that nanotechnology can reshape the opportunities in older manufacturing regions like Northeast Ohio. Last week, Cleveland held NANO Week, a series of events that explored the emerging business opportunities in nanotechnology. Networks are emerging within our region to explore applications in medicine, materials and manufacturing. Learn more. posted by Ed | Michigan's investment in life sciences Michigan has announced $26.5 million in funding for life sciences companies. Last year, Governor Grnaholm siphoned some of this money away from life science research and commercialization, and she generated a lot of political heat for her decision. This year, she's following the policy of her predecessor, John Engler, and focusing Michigan Technology Tri-Corridor funds only on research, development and commercialization projects in life sciences.. Read more. posted by Ed | Don't send Joe Paterno to Humboldt County Some folks in Humboldt County, CA are definitely not fans of Penn State. Not long ago, a professor from the university came to Humboldt County to conduct some research. She pointed to a rather obvuous conclusion: just building IT infrastructure (big pipes) will not guarantee the development of a vibrant IT sector. In other words, if you build it they may not come. She reported her findings last August, and they continue to circulate. Read more. Critics in Humboldt County argue that the report is flawed by "hit and run" research. Read more. Contrary to being inept as the PSU report implies, local officials believe that they are following a prudent, integrated strategy to bring their rural county to the threshold of the knowledge economy. posted by Ed | Anatomy of a deal: Shopping for Kmart Georgia is offering a reported $30 million in tax credits to attract Kmart's headquarters. Despite the lure of Atlanta, Michigan leaders are sounding more optimistic that they will keep the headquarters. Michigan is offering $45.5 million in incentives, in the form of $44.7 million in tax credits and a $750,000 grant to train employees. The jobs numbers are bouncing around a bit. Current corporate employment is about 2,200 workers. Michigan wants Kmart to agree to keep at least 1,500 jobs in the state as a condition for accepting its incentive package. According to Georgia's papers, if Kmart does move, the job total in Atlanta will be closer to 1,000. So, it turns out that the incentives per job are about equal. Michigan is offering $45 million for at least 1,500 workers ($30,000 per job). Georgia is offering $17 million for what it expects will be 1,900: 1,000 headquarters jobs and 900 data center jobs ($9,000 per job). Read more: Money or culture to decide Kmart move Georgia’s Kmart bid too low Cities tailor incentives to lure Kmart Michigan fights to keep Kmart Kmart: Georgia cautious in attempting to lure retailer to leave Michigan posted by Ed | Building entrepreneur networks in the Lehigh Valley Here's a good article that talks about the importance of building entrepreneurial networks in the Lehigh Valley. Part of the challenge involves building quality, connected places: young entrepreneurs say there are not enough amenities -- such as coffee shops with wireless Internet connections -- to make the place sticky. Equally important, the Valley needs a "central nervous system" of open networks. This point underscores an important insight: regions that build networks can move faster to see business opportunities and translate these ideas into wealth through innovative businesses. Read more. posted by Ed | West Virginia's computing grid West Virginia will launch its state-sponsored Internet computing grid next month. Grids allow computer processing jobs to be split up and farmed out over a network to many computers so the work can be done fast on any machine that's available. Read more. posted by Ed | Targeting study for Waterloo, Iowa Lockwood Green, the consulting firm, has completed a targeting report for the Greater Cedar Valley Alliance in Iowa. The report recommends development in six sectors. Read more. posted by Ed | Anatomy of a deal: Dell in the Triad Thursday, October 28, 2004 The Dell deal is heating up in North Carolina. The governor has requested a special legislative session to consider an incentive package for the company. Now, two counties in the Triad region are rumored to be the front-runners. Read more. The combined state and local incentive packages total about $110 million for the 2,000 jobs ($55,000 per job). Of the total about $13 million represents local incentives. All these numbers are speculative. Read another article on the deal: Triad's our No. 1 pick, Dell says. And here's still another: Facts and FAQs on the PC giant eyeing the Triad posted by Ed | Georgia promotes entrepreneur-friendly communities Georgia has a good-looking initiative to certify communities as "entrepreneur-friendly". To receive the designation, communities must follow a set of guidelines to build a local environment to support entrepreneur and small business development. Read more. This initiative is part of Georgia's broader effort to develop its Entrepreneur and Small Business Network. Visit the web site. The site includes some interesting community best practices. posted by Ed | Branding a value added agriculture strategy Value added agriculture holds promise as an economic development strategy in rural counties. But pulling this approach off is not simple. At the core, the strategy calls for developing stronger brands for locally produced products. Here's an interesting report from Iowa that explores how Iowa can develop branded food products. Read more. You can download the report from this page. posted by Ed | Debunking the baseball myth Washington is trying to lure a baseball team, and promoters are pushing economic development as a reason. Not so fast, say two economists. They have released a report: "Caught Stealing: Debunking the Economic Case for D.C. Baseball". Read more. Download the report from this page. posted by Ed | Amendments in Arkansas and North Carolina The November election could change the economic development landscape in Arkansas and North Carolina. In Arkansas, Amendment 2 would allow the state legislature to issue general obligation bonds for "super projects" that create at least 500 jobs and include a minimum $500 million investment. Read more. In North Carolina, Amendment 1 would amend the state constitution so that municipalities can more easily borrow money for some projects without voter approval. Read more posted by Ed | Greensboro consolidates Four Greensboro groups have agreed to merge their boards to form a single economic development organization. Fragmentation has long been an issue for Greensboro. It now appears that collaboration -- pioneered by the region's foundations -- has taken root. Read more. posted by Ed | State policies to promote bio Here's an update on what state's are doing to promote biotech. Learn more. posted by Ed | Economy Watch Saturday, October 23, 2004 Political reporting is crowding out economics reporting. Here are the best articles I came across last week. Vital Signs for the Week of Oct. 25 IMF continues warning on US deficit FedEx boss still bullish -- for now US consumer confidence flat in Oct 17 week-report Oil Retreats on Signs Economy Hurting Post-Election Investment Scenarios posted by Ed | Business climate and innovation A report on the business culture in eastern Washington State has hit a nerve. The basicc premise of the report argues that business culture matters to innovation and productive investment. It's a valuable report, even if critics are not comfortable with the research. Read more. By comparing the business cultures in Boise and Spokane. the report touches on a critical dimension of innovation: productive investment arises from dynamic networks. In communities where trust levels are relatively low, innovation lags. Networks are slow to form. Equally important, the report touches on the role of research universities in dynamic regions. Download the report posted by Ed | The controversy over municipal wireless The debate over municipal wireless systems is continuing to heat up. Here are a couple of articles to get you up to speed. Cities find Wi-Fi future Wi-Fi? Because everyone deserves free Internet, group says The issue is not an easy one for public officials. In Minnesota, the mayors of St. Paul and Buffalo have taken opposite sides. Read more. This week, the Heartland Institute issued a report strongly advising against municipally owned wireless. Read more. Download the report. At the same time, Philadelphia is moving ahead with its ambitious plans. In September, City officials announced a $10 million plan to transform all 135 square miles of the city into one Wi-Fi hot spot. They plan to place cells on street lights and other devices. Read more. posted by Ed | Anatomy of a deal: Michigan's offer to Kmart Michigan has offered Kmart $45 million in tax incentives to stay put. The offer is contingent on a commitment from the company to keep 1,500 jobs for ten years. Read more. My own guess is that Michigan would be better off to put the $3,000 per employee per year into early childhood education programs. Learn more. Unfortunately, I can't think of any state that is set up to make these policy trade-offs. By accepting the challenge of a bidding war, Governor Granholm, who has otherwise shown valuable leadership in economic development, has missed a chance to make a strong statement about Michigan's future direction. Brainpower drives our future prosperity. Incentives will work best if we focus them on people, not companies. The case of Kmart shows the weakness of our political approach to economic development. Political leaders operate on calculations of short term rewards, not long term benefits. posted by Ed | A successsful incubator in Maine In the global knowledge economy, there are no simple answers. But there are strategies that work. Incubators can provide an important landing strip for entrepreneurs with ideas. Here's an example from Maine. This incubator is generating three new start-ups a year. Read more. What is more important, I suspect, is the change in mind-set that successful incubators represent. They demonstrate that a new approach to economic development -- one that relies on open networks --is taking hold in a region. This incubator demonstrates another important trend: entrepreneurial leadership at our educational institutions. posted by Ed | Beloit works to consolidate ED For those of you who are laboring with competing economic development organizations, take a page from other regions. They are moving toward more streamlined economic development efforts. You might look at what Beloit, WI is doing to consolidate entities. Read more. posted by Ed | It's not just beauty shops, anymore Friday, October 22, 2004 Here's a good article on the expanding world of home-based businesses. These businesses are growing at twice the rate of the overall workforce. Read more. posted by Ed | Recruiting brainpower Over the next few years, the site selection game is going to shift from companies to people. You are already seeing the change in communities that are embracing Richard Florida's theory of the Creative Class. Here's another dimension. Universities are aggressively recruiting top researchers to expand their research and technology base. The University of North Carolina-Greensboro is a good example. Read more. posted by Ed | Bay City gets a wake-up call This week, Bay County, Michigan got a slap in the face from a consulting report. This message should help the community accelerate the efforts at cooperation that are now underway. After years of conflict, the city and the chamber have joined to form Bay Future, Inc. Read more. posted by Ed | Time is the enemy in site selection Site selection specialist Mark Sweeney gave a speech this week to the business leadership of Tulare County, CA. His message. Be prepared. Read more. posted by Ed | Texas releases cluster strategy On Wednesday, Texas governor Rick Perry announced it cluster-based development strategy. The state will focus on six clusters: advanced technologies and manufacturing, which includes the chip and automotive industries; aerospace and defense; biotech; information and computers; petroleum refining and chemicals; and energy and power generation. The governor is also going to ask the legislature for another pool of money for the Texas Enterprise Fund. Governor Perry has spent about half of the current $295 million fund on incentives for a dozen projects, ranging from helping keep the Sematech chip research consortium in Austin to landing a Vought Aircraft plant in Dallas. Learn more. posted by Ed | Resource: State business tax climate Tuesday, October 19, 2004 The Tax Foundation has released its annual ranking of business tax climates. Read more. Download the report. The Foundation's approach is not as useful as a more detailed comparison based on hypothtical taxpayers. This approach compares indivudal and corporate taxes based on different income levels. By taking this approach, policy makers have a far better insight into the equity and efficiency of their tax codes. In general terms, a good tax code raises adequate revenue for a package of state and local services by keeping the base broad and the rates as low as possible. Special tax incentives undercut this strategy by weakening the based and -- eventually -- putting upward pressure on rates. The Foundation's indicators also provoke critics of the Fondation. See this article from Iowa as an example. posted by Ed | Biosciences in Jonesboro When you think of biosciences, Jonesboro, Arkansas dowes not jump into your head. But the new Arkansas Biosciences Institute in Jonesboro represents an interesting new model of business development. Here is the interesting twist: The center has fourteen faculty members: 25% of the faculty serves as entrepreneur faculty. Entrepreneur faculty do not teach regular classes, although they do lecture. They spend most of their time on research, building business contacts, and starting their own businesses. The center in Jonesboro is one of five centers across the state funded with Arkansas' share of the tobacco settlement funds, Read more. posted by Ed | Business climate report for Washington State Every year, the Washington Alliance for a Competitive Economy (WashACE) issues a report on the business climate in Washigton State. It's a good example of an effort to remain focused on key business climate issues. Read more. posted by Ed | Rutgers Food Innovation Center Value added agriculture represents a promising avenue for development in rural counties. But this strategy requires a different set of support initiatives than most rural counties have in place. One example: food or kitchen incubators help entrepreneurs experiment with new products, share vendors with other entrepreneurs (lowering costs through bulk buying, for example), and trigger new business opportunities. In addition, these incubators can provide remote classrooms for distance learning. New Jersey the Rutgers Food Innovation Center is extending its reach to rural counties in the southern part of the state. Read more. posted by Ed | Auditor reviews Louisiana's venture investments Louisiana's State Auditor is questioning how the Department of Economic Development invests in venture capital funds. Read more. This report points to the challenge facing publicly financed venture capital funds: political considerations inevitably intervene. The auditor points out that less than half of the investments produced direct benefit to the state. posted by Ed | Anatomy of a deal: Building a NASCAR Track Monday, October 18, 2004 If you ever wondered what kinds of incentives a community dumps into a NASCAR track, here's the answer. Read more. posted by Ed | Economy Watch Sunday, October 17, 2004 The campaign seems to be crowding our good journalism on the economy. Jobs: The Lull Will Linger Vital Signs for the Week of Oct. 18 The Monster Trade Gap Is No Phantom Report: IT Salaries Show Upward Trend, Outsourcing Overblow posted by Ed | Regional thinking in Milwaukee and Des Moines Central cities and suburbs are exploring important issues of regional cooperation in both Milwaukee and Des Moines. In Milwaukee this week, the mayor is underscored the importance of cooperation to gain more federal money. Read more. At the same time, business leaders are moving to develop a regional economic development plan. Read more. In Des Moines, the issues of cooperation between city and suburbs are more tightly drawn. This November, voters will determine whether to merge the governments of Des Moines and Polk County. Read a good series of articles. posted by Ed | The link between economic development and universities A few articles this week highlight the growing connection between economic development and higher education. The University of Arkansas has opened a new Innovation Center. Read more. The University fo Arizona understands the economic importance of retaining star faculty who generate strong research budgets. Read more. In Colorado, a conference pointed to the growing role that Colorado State University and the University of Colorado are play in the state's economy. Read more. posted by Ed | Seattle's Prosperity Partnership Saturday, October 16, 2004 Seattle's civic leadership has created the Prosperity Partnership to create 100,000 jobs. The effort is budgeted at $900,000. The Economic Development Administration, local governments and the private sector are sharing the investment. Read more. posted by Ed | Colorado's higher education innovations Friday, October 15, 2004 Here's an interesting innovation from Colorado. Increasingly, in a knowledge economy driven by brainpower, a state's higher education system will determine its economic future. Many state systems are rife with politics and inflexible. Turf battles choke innovation and slow our adaptation to new global realities. In that context, Colorado's higher education initiative looks promising. Under a new statute, public colleges and universities must negotiate a performance contract with the State. This appraoch will enable Colorado to align the interests and resources of its colleges and universities more clearly. One hopeful outcome: more standardized core courses, so that students have more flexibility in transferring credits. Also important: a clearer understanding of how each institution will focus. For example, Colorado State University will be developing targets in four areas: Building partnerships that support CSU's role as a public research university; Developing "super-clusters" of research like in areas of agricultural science and biomedical sciences; Expanding student diversity; and Improving financial stability by raising more grants and private funding for research and securing enough tuition to accommodate academic needs. Read more. posted by Ed | Web Watch: Michigan's Cool Cities initiative Michigan has launched a new web site for its Cool Cities initiative. The new site is designed to build the Michigan brand in a new way. The target audience: younger adults. Read more. Visit the web site. posted by Ed | West Virginia launches a grid computing initiative West Virginia joins North Carolina in launching a grid computing initiative. Grid computing uses the Internet to aggregate the idle or unused computer processing resources. (Think of a utility grid and except with computers.) It provides a "computational infrastructure" that represents the next generation of economic development infrastructure investment. Read more. posted by Ed | Louisiana tries to reshape its image In another sign that Louisiana is trying to change its ways, a delegation of economic development leaders will be traveling to New York to tell the state's story to the business press. Read more. posted by Ed | Manufacturers competing globally Here's an interesting story from Pittsfiled, MA. In a recent speech, a local leader of manufacturing pointed to two companies that have competed successfully against Chinese competition. The keys to success: Innovation and product development. Read more. posted by Ed | Anatomy of a deal: Chattanooga's 21st Century Waterfront Project Wednesday, October 13, 2004 Chattanooga's 21st Century Waterfront Project, to be completed next Spring, is unique among urban waterfront financing models: it does not rely on any funding from the city's general fund or from the state or federal governments. Included in this revitalized 21st Century Waterfront Project (129 acres) will be: -- $30 million expansion of the Tennessee Aquarium (the world's largest freshwater aquarium) -- $20 million expansion of the Hunter Museum of American Art. (A recognized leader among museums specializing in American art) -- $3 million addition to the Creative Discovery Museum (named one of the top 20 children's museums in the nation) -- $6l million for enhanced public parks and recreation facilities along the Tennessee River banks. Led by Chattanooga's Mayor Bob Corker, this 21st Century Waterfront Project has both an unusual funding formula and a community involvement record. For example: 1. No funds are provided from the City' s general fund. 2. The $120 million funding package is divided between the public and private sectors, with $69 million generated from a dedicated lodging tax and the balance $51 million has been raised in the private sector. 3. More than 800 people, from all walks of life, participated in the planning process. The American Planning Association and American Rivers.org have hailed the project as a national model. They have recommended the initiative to other cities as a formula for luring residents and businesses downtown. Learn more. The investments are building Chattanooga's reputation as a tourism destination. Read more. posted by Ed | Pennsylvania expands technology investments Pennsylvania has expanded its investments in its technology-led economic development initiatives. Governor Rendell announced $13.6 million in state investments. Read more. You can get additional details from the press release. posted by Ed | Fixing state taxes: Ohio and Connecticut Two articles in Cleveland's local paper highlight the sorry state of Ohio's tax code. Ohio's tangled tax code. Reality check: Are Ohio taxes too high?. To address these issues, Ohio can take the lead of Connecticut. Yesterday, state lawsmakers announced a task force to explore how Connecticut's tax system affects economic development and job growth. Read more. Here's an article from Governing Magazine that rates the states on how they tax. Read more. posted by Ed | Denver is focusing energy downtown Denver continuously makes investments in its downtown. Here's a good review of the recent steps. There appears to be a strong consensus on the role of downtown Denver in the regional economy. As the mayor points out: “That's the way the community continues to invest. All of it focuses energy downtown and makes the entire region stronger.” Read more. posted by Ed | Resource: Report on biopharma The Milken Institute has issued a new report that ranks the states on economic growth prospects for biotechnology and pharmaceuticals. You can download it from this page. Here's an overview article that highlights Massachusetts' leading postion. Go. You can see the impact of biopharm in your state by exploring this web site. posted by Ed | A value-based perspective on outsourcing Tuesday, October 12, 2004 There's a lot of talk about outsourcing these days. The campaign (at least on the Democratic side) has heated the rhetoric. But what is the business case for outsourcing? Here's a good article that explores this perspective. It makes the case that cost-driven justifications are often short-term and narrowly focused. A cost-driven strategy can get a busness into trouble. The author argues that managers should focus on value creation when thinking about outsourcing strategies. Read more. My own experience bears this out. Prior to launcing my career in economic development, I was a corporate consultant. In that role, I helped multinational companies -- Ford, Volvo, GE -- understand their global manufacturing systems. Invariably, companies got into trouble if they did a shallow cost-based analysis of outsourcing. Moving a production offshore is a more complex decision than comparing labor rates. posted by Ed | The role of formal venture capital How often have you heard the complaint: We don't have enough venture capital? The implication is that venture capital is like a water sprinkler. Just turn it on and everything will grow. There's only one problem: the thinking is backward. Venture capital is not an "input" to a dynamic economy. It is a reflection -- and "output" -- of a dynamic economy. Now, when I refer to "venture capital", I am talking about formal, organized venture capital. Set aside for a moment angel investment which represents networks of informal investors. Formal venture capital is not the leading edge of a dynamic economy, it is the trailing edge. By that I mean venture capital follows good deals. If a region -- like Northeast Ohio, for example -- scores low on venture capital investment, this fact indicates that the underlying "real" economy (as opposed to the financial economy) is not producing enough quality business plans. (In my own view, the civic leadership in Northeast Ohio really doesn't understand the role of a research university in spurring technology-based growth.) I'm painting with a broad brush here. The general point is important: EDPros need to focus on the underlying economy and not be enamored by proposals to create venture funds. So, I was encouraged to read an article out of Wisconsin about a group of venture investors who are doing just that. They are exploring the underlying dynamics of venture investing in the Midwest. Read more. posted by Ed | "It's innovation, stupid" For years, the Economic Development Administration focused on infrastructure projects as a way to spur economic development. This strategy is rooted in the Depression-era roots of the organization, no doubt. Now, however, the EDA's leadership is focused on the core issues facing our long term competitiveness: innovation and workforce skills. As David Sampson, head of the EDA, recently told an audience in Tucson: “Innovation is the only sustainable source of economic prosperity.” Read more If only the presidential campaigns were paying attention. posted by Ed | Birth of a cluster in Portland, OR A cluster of Linux-based businesses is forming in Portland, OR. Here's a good article on the birth of a cluster. Read more. The article reinforces an important notion for EDPros. Clusters are not "things", like roads, bridges or industrial parks. Clusters are complex, adaptive systems that emerge from networks of relationships. To induce their development, EDPros need to become more attuned to systems thinking: the ability to see and map interconnections. In this way we can identify the appropriate intervention points to accelerate the development of the cluster. At Case, we are exploring the tools of social network analysis to help EDPros understand and map these interdependencies. Porter's insights into the importance of clusters are valuable. At the same time, EDPros also need practical tools to understand the structure and improve the performance of clusters. posted by Ed | Arts and economic development The arts groups in Johnson County -- located in suburban Kansas City -- are promoting a strong linkage between arts and economic development. For this suburban community, the proposed plan places arts investments on the same plane as investments in infrastructure. Read more. While that may be a stretch for traditional EDPros, it is not too much to say that from an economic development viewpoint, the arts are critical to branding communities. Branding is more than simply a logo. Branding focuses on the experience consumers have with a product, service or place. EDPros focused on downtown development understand that the arts are critically important to creating a unique experience for a community. This unique branding can have important economic development spill-overs. (Before Austin's technology strategy took off, the city had developed a reputation for a vibrant music scene.) As this article from Salt Lake City explores, the arts often provide the leading edge to strategies for revitalizing a downtown. Read more. posted by Ed | Anatomy of a deal: Dell announces distribution center in Ohio Dell has announced a new distribution center in southern Ohio, close to DHL's consolidated expanded hub. Ohio provided a $10 million package to Dell, on top of its $400 million package for DHL. Read the details. posted by Ed | Marketing in the Washington Metro Here's a simple introduction to marketing places. The example comes from the Washington metro area. Read more. posted by Ed | Economy Watch Saturday, October 09, 2004 Here's the latest on the economy: Employment rises less than expected in September News Analysis: A first since Hoover in 1932 Experts: Bank Mergers Typically Lead To Mass Layoffs Vital Signs for the Week of Oct. 11 Weak economic data could make Fed pause-McTeer $50-plus oil drags on economy CEOs see U.S. economic growth slowing in '05-survey Fed's McTeer: U.S. Economy Back on Track posted by Ed | Rural Vermont gets creative The Vermont Council on Rural Development issued a report last week, Advancing Vermont's Creative Economy. The report lays out the case that rural communities must embrace an economy based on ideas and creativity. Read more. You can learn more about the project from this page, and you can download the report. posted by Ed | Metrics for tech transfer in North Carolina The governor's science advisor in North Carolina wants to alter the metrics for university technology transfer. He would like to create more incentives to university faculty and staff to focus on clear economic development goals. Typically, university technology transfer offices focus on metrics such as invention disclosures, patent applications, patents, and license revenues. The economic development focus would move attention down to business formation, jobs and incomes. Meanwhile, university professors are focusing on a different target: streamlining internal tech transfer procedures. Read more. posted by Ed | Duke Power invests in community colleges Duke Power has announced that it will donate $3 million a year in grants to the state's community colleges. The investments are designed to help the state's manufacturing businesses. Read more. In August, Duke Power announced that it would lower rates in South Carolina for the same reason. In June 2003, Duke Power's president also announced that the company would become far more engaged in the Charlotte Regional Partnership. Read more. posted by Ed | South Carolina and nanoscience The University of South Carolina is another place where leaders are making big investments in nanoscience. Read more. posted by Ed | Michigan commission explores tech transfer Last summer, Governor Granholm in Michigan appointed a Commission on Higher Education and Economic Growth. She charged the Commission with the task of developing initiatives to double the number of citizens with a post-secondary degree. According to Granholm, "To compete in a global economy, a post-secondary degree or certificate is no longer an option – it’s essential." This fall, the Commission started hearings around the state. One of the focal points: how to accelerate university-based economic development. Read more. Earlier this week, the governor announced that she will award a University Award for Commercialization Excellence. The state will grant two $25,000 prizes to Michigan university researchers that successfully commercialize technology stemming from research at Michigan's public universities. Read more. The strategy makes sense. Also this week, the University of Pennsylvania's technology transfer office reported that it was launching companies at a rate of about 14 new companies a year. Read more. Michigan has a relatively strong research base at its universities, but a relatively weak record in generating start-up companies. posted by Ed | Minneapolis appoints a "results manager" Figuring out how to be more responsive represents one of the central challenges of government. Here's an experiment worth watching. Minneapolis has created a "results manager" position to oversee the city's efforts to be more responsive to its residents. Read more. posted by Ed | Military base closings move closer More military base closings are likely. Congress has removed obstacles to the next round. Read more. Pentagon officials have talked about shutting the equivalent of about 100 of the nation's 425 bases. That's more than in the four previous rounds of base closures combined. (A recent report by the Government Accountability Office, the investigative arm of Congress, found that the military had a 24% excess capacity in its base structure.) The Defense Department will present its list of bases for closure by May 16, 2005 to the Base Realignment and Closure Commission (BRAC). The BRAC will present its recommendations to the President by Sept. 8, 2005. If he accepts the list, the closures become law in 45 days unless Congress blocks them — something Congress did not do in the first four rounds. posted by Ed | Tennessee's new regional approach to development At the recent governor's conference on economic development, Tennesee outlined a new regional approach to economic development. University of Tennessee professor Bill Fox told the conference to focus on the education/economic development link. He recommends the state push for a minimum educational attainment of a two-year college degree. According to Fox: ''The notion that you only need a high school diploma to get good jobs, that era is over". Dr. Fox said a more detailed analysis of educational attainment shows that in some areas of the state as much as 25 percent of the population hasn't been schooled beyond the 9th grade. "That is really scary," he said. Read more. Download the report, prepared by Fox, on Tennessee's economic strategy regions. Go. posted by Ed | Buffalo's workforce system needs adjustment In my view, one of the facts of our economic life is that the federal Workforce Investment Act doesn't work very well. Despite efforts to reform WIA, complaints among the business community are common. In Buffalo, the business community sees the workforce investment board as being out of touch. As one business leader concludes, "You have a 50-member board and one of the most difficult things for the WIB to do is get enough board members to come to a meeting to have a quorum. If you're spending most of your energy doing that, you can guess that the more important issues like economic development take a backseat. The board of directors is far too large, the organization is far too cumbersome and too risk-averse, I think. There's very little accountability, particularly to the employer segment." Read more. posted by Ed | Michigan adds a Smart Zone Michigan has authorized Lansing to establish a "Smart Zone". The legislation, signed by the governor last week, enables local leaders to dedicate property tax dollars to technology improvements within the district. Michigan has ten other Smart Zones. The size of each zone varies. A governing board determines the size of the zone and the amount of tax money to be redirected out of public coffers and into the Smart Zone fund. On average, the state's other Smart Zones capture 2.7 percent of the overall assessed property value in the zone.Read more. Learn more about Smart Zones. posted by Ed | The Race at Case: Manufacturing in Northeast Ohio We held the Vice Presidential debates at Case this week, and you can imagine that our campus was buzzing like a rock concert with The Race at Case. A number of out of town reporters stopped by to discuss manufacturing in Northeast Ohio. As a swing state in the election, we are understandably attracting a lot of attention. Here are some of the articles on the manufacturing challenges facing our region: The jobless plead for a fix Lost job is familiar story in key state of Ohio Innovation seen as trade battlefront posted by Ed | Building roads in North Carolina The truth be told, the major development strategy in most states is highway policy: where do the roads go. Certainly, road construction has fueled sprawl. And sprawl imposes serious costs on an economy. (If you are interested in this issue, here's a good report on Pennsylvania from Brookings. It outlines the economic consequences of policies that encourage sprawl and abandonment. Now in North Carolina, a professor at the University of North Carolina-Charlotte argues that the state is spending too much on new road construction and not enough on repairing its existing roads and bridges. Read more. posted by Ed | Mental models and economic development Most of us have heard the terms "paradigm shift" or "mental models". These ideas relate to one of the major developments in social science in the last decades: the birth of cognitive science. Through the mid-1950's behavioral scientists put forward views that became widely accepted throughout the social sciences. They thought that you can only really study behavior. You should avoid abstract concepts like "ideas" or "thoughts." Beginning in the mid-1950's, the "cognitive revolution" began. Cognitive science focuses on the "inner processes" of reasoning, perception, memory, and learning. It is a highly interdisciplinary science at the intersection of psychology, computer science, and philosophy. Why is this important to economic development? We all know that attitudes matter. How we think drives how we feel. In the years ahead, successful economic developers will become more skilled at guiding communities toward positive outcomes: shifting widely held beliefs about what is possible. My colleague at Case, David Cooperrider has developed a valuable approach to shifting the thinking of large groups, Appreciative Inquiry (AI). Through an AI process, a community can search for the strengths that form the basis of a more innovative, prosperous economy. Learn more about AI developments at Case. This week I came across a number of articles that underline the connection between public attitudes and prosperity. In Ottawa, one commentator asked his readers to define what Ottawa is. He is frustrated by the lack of a clear sense of the future in his city. In Pittsburgh, another writer argues that we need to change the way we perceive business-government relationships in a global age. In the Quad Cities, consultant Angelos Angelou argues that the region's future depends on changing negative attitudes. All of these issues involve cognitions: how we think, how we envision ourselves as a community, what futures we are able to see. posted by Ed | Making new connections in Wichita An outside consultant has drawn an interesting connection for the people of Wichita: The region's strength in aerospace provides a good platform to develop some bsuinesses in the biosciences. Read more. posted by Ed | Building pathways to prosperity in poor cities Dennis Archer is the former mayor of Detroit, and in a recent address to civic leaders in Benton Harbor and St. Joseph, Michigan, he encouraged civic leaders to work more cloesly together. Why is this important? If you recall, in June 2003, Benton Harbor erupted in a riot after an incident in which a black motorcyclist died. The youth crashed after being chased by a white police officer from Benton Harbor. Benton Harbor is located on Lake Michigan in the southwest corner of Michigan. The small city of 12,000 is known for its scenic Lake Michigan beaches. It is plagued with high unemployment, poverty and chronic financial troubles. There is little money for youth programs and schools. 33% of the residents have incomes below $10,000. Whirlpool Corporation has its world headquarters nearby. In African-American politics, there is a trend emerging toward economic isolation: the idea that wealth in the African-American community can be built through "black-only" incentives. This policy is emerging, for example, in Detroit. Read more. Archer, an African American, sees the world differently. "We need to think like a global society. There is an inordinate amount of time spent dealing with race." Read more. posted by Ed | Akron Arts Alliance Friday, October 08, 2004 Earlier this week, I gave a talk to the Akron Arts Alliance on creative industries in Northeast Ohio. Members of the audience requested the slides and some additional resources, so I thought I would share them more widely with the EDPro community. You can download a copy of my presentation here. Alternatively, you can view the presentation on-line from this page. Finally, if you would like additional background, you can find it on this site. I put these sites up quickly, so if there are any broken links or missing files, please e-mail me. posted by Ed | Emerging tech cities Wednesday, October 06, 2004 Entrepreneur magazine has published an article on four cities that are emerging with successful technology-led economic development. A couple will surprise you. read more. posted by Ed | The economic value of an NFL team Tuesday, October 05, 2004 Here's an interesting article from Dallas on the economic value of an NFL team. Read more. Citing a recent study by the Federal Reserve Bank in Philadelphia, the Dallas article explains that stadiums induce relatively little "new" spending. That's because people tend to have a fixed budget for entertainment. If they go to a football game, they cut back on going to a concert or going out to eat. Download the FRB study. (Warning: noneconomists might gag on the language.) (The same rationale applies to the local market for a casino. That's why casinos make economic development sense only if they are clearly going to attract large numbers of people outside the region. A casino may make sense for Tupelo, but not for Detroit.) posted by Ed | Cornell's commitment to nanotechnology Tomorrow, Cornell University will be dedicating Duffield Hall, it's major new facility for nanoscale research. Nanotechnoogy represents the science of small things. "Nano" means one billionth. So a nanometer is one-billionth of a meter. A human hair measures 50,000 nanometers across. Nanoscience represents the study of molecules and structures (nanostructures) between 1 and 100 nanometers across. Nanotechnology is the application of nanostructures to useful nanoscale devices. (Nanotechnology is different than another emerging fields MEMS: microelectromechanical systems. MEMS devices are larger: generally between 1,000 and 1,000,000 nanometers. The most common MEMS device is probably the triggering mechanism in your car airbag.) Back to nanotechnology: you can read two interesting articles on the new Cornell facility. Article 1 and Article 2. If you would like to see some pictures of nanoscale devices, visit this page. Nanotechnology is important, because many analysts see this area of research as providing the foundation for entirely new markets. The National Science Foundation predicts that nano-scale devices could reach $1 trillion by 2015. That would make it one of the fastest growing industries in history. Nanotech is already a major priority for companies like NEC and IBM. If you are interested in keeping up with developments in these markets, read Small TImes. posted by Ed | Economy Watch Saturday, October 02, 2004 Here's the latest on the economy (all except the campaign stuff). G7 Countries: Oil Prices Threat to Economy Vital Signs for the Week of Oct 4 IMF Optimistic on World Economic Growth US economy now faces $50-a-barrel oil Economic View: Whoever wins, tax rise seems inevitable Microsoft founder says we must adapt to global economy posted by Ed | Promoting collaboration among Michingan's tool and die businesses For the last few years, Michigan has been trying to encourage collaboration among its tool and die makers. There's a lot of these businesses in the state, well over 1,000. The state has set up a program to reduce the taxes on toolmakers, but they must submit collaborative proposals. This requirement is proving hard to meet. Read more. For more background on what Michigan is doing to promote collaboration among toolmakers, you can download thier 2002 policy report from this page. posted by Ed | Web Watch: North Richland Hills, Texas The best ways to design a web site is to copy one...the structure that is. Here's a good one that launched last week. The Economic Development Department of North Richland Hills, TX. Visit the site. The web site integrates three databases to give residents and potential investors a quick insight into the community. You can use this structure and the clean navigation to guide you as you develop your own site. Read more. posted by Ed | Anatomy of a deal: Kmart moving to Atlanta? A battle is brewing over Kmart's corporate headquarters. The choice has been narrowed to two options: Staying in Troy, MI or moving to Atlanta. With 1,000 jobs at stake, the incentives will fly on this one. Both sides are gearing up to prepare their packages. Read more. posted by Ed | Columbus region tries to develop cooperation rules One of the biggest challenges facing regional cooperation is developing a code of conduct to keep one area from poaching firms from another. Columbus civic leaders are diving into this challenge. They are trying to figure out regional ground rules. One effort, led by a task force of the mayor's 21st Century Responsible Growth Team, has been looking at how the Denver metro area handles the issue. Read more. posted by Ed | Sarasota launches new economic development organization Last week was a big one for economic development in Florida. In addition to new reports in Broward County and Flagler County, Sarasota launched the Economic Development Corporation of Sarasota. With $1.2 million of funding in place, the Corporation is set to implement its economic development strategy. You can learn more about the strategy and download the report from this page. Meanwhile, over in Tampa, business leaders are trying to figure out how to reorganize. Learn more. posted by Ed | Connecting education and economic development Most of us have grown up professionally in a world in which economic development and workforce development represented two distinct spheres. Most EDPros steered as far away from workforce issues as they could. No wonder. Workforce development has always seemed heavily bureaucratic and esoteric. Now these boundaries are falling down. Here's a good example from Oklahoma. The governor is holding a conference on workforce and economic development. Tagged "The Power of E3", the conference will explore the connections of employment, education and economic development. Learn more. This meeting provides a model for others to follow. This challenge of connecting education and economic development is not limited to the U.S. Also last week, New Zealand held a conference on Learning for the Information Age. The conference highlighted the importance of creating a more responsive, flexible education system. Read more. posted by Ed | Roanoke's regional clusters Roanoke, VA has a new cluster study. From the looks of it, the report provides a good guide to economic strategies in the region, called NewVA. The report cost $35,000, far lower than Charlotte's CEDS report, which was also released last week and cost $200,000. (In fairness, it is not a direct comparison. Charlotte's project involved public meetings.) Completing a cluster report is no mystery. It essentially involves computing location quotients for different industry groups. (If you are not sure what a location quotient is, the planning department at Florida State University has a good background article. Learn more.) Read more about the Roanoke study. Download a copy of the report. Go. posted by Ed | Louisiana may be pulling its wagon out of the ditch There's reason to hope that matters in Louisiana are slowly turning around. Long a hotbed of cronyism, Louisiana's economic development has been stifled by "wink and nod" corruption. Here's another indication that the climate is starting to change. The Baton Rouge Chamber has recruited an impressive young native son to return to the state. Read more. Meanwhile, in Lafayette, their technology development efforts are starting to gain some national attention. Read more posted by Ed | Anatomy of a deal: Attracting Dell to the Triad In order to get Dell to locate in the Triad, EDPros have turned their attention to Dell's suppliers. At the same time, two economics professors in Tennessee warn EDPros in North Carolina to be careful with incentives. They have concluded that the city and state provided too rich an incentive package to lure Dell to Nashville. "The economic impact has not been large enough to justify the expenditure." according to one of the professors. Read more. posted by Ed | Broward County releases strategy Broward County has released its new economic development strategy. You can read more about it here. You can also download the report and related presentations from this page. posted by Ed | Leaning into the sharp points of outsourcing Outsourcing is both relentless and a fact of life. It's also true that the press has probably exaggerated the short term impacts of outsourcing on our economy, but we have probably underestimated the long term impacts. (See a recent analysis by Brookings: Go. Here's another by the Public Policy Institute of California. Go. Also, a week ago, the Government Accountability Office released a report saying that there is not enough evidence to reach any firm policy recommendations. Download the report. Go.) Take the case of call centers. After a recent report on 60 Minutes, you'd think that outsourcing had devastated our call center business. But as the folks in Spokane are finding, companies are still investing in call centers. Read more. At the same time, business process outsourcing has become an important long term economic development strategy for developing countries. Here's a good article on what is happening in Vietnam. Learn more. How to we respond? The state legislature in California has got it wrong. They recently passed a bill "outlawing" the State's vendors and contractors from outsourcing. Last week, the governor vetoed the bill. Read more. The EDPros in Washington State have it right. Lean into the sharp points of outsourcing. Form commercial relationships. According to this article from a Vietnamese newspaper, Washington State hopes to develop long term trading relationships with Vietnam. Read more. posted by Ed | Raising questions about Maryland's tax incentives More citizen groups are raising questions about tax breaks provided to companies in the name of economic development. The latest report comes out of Maryland. Read more. You can download the Maryland report here. The report -- although marred by hyperbolic rhetoric -- picks up on an important line of reasoning. Tax incentives cost the public treasury in foregone revenue. In the 1960's a Harvard law professor, Stanley Surrey, coined the term "tax expenditure" to describe these tax provisions. Surrey made an important point: tax provisions that shield taxpayer income from prevailing income tax rates are analogous to government expenditures, and they should be treated to the same scrutiny as normal budget expenditures. Of course, they are not, and chances are they never will be. But the recent 6th Circuit opinion striking down Ohio's investment tax credit means that this issue will not soon go away. Read more about the opinion here. Download the opinion. We can expect more scrutiny of tax expenditures, and that's a good step toward better accountability. posted by Ed | Strategy for the Charlotte region A consultant who compiled the Comprehensive Economic Development Strategy (CEDS) for the region around Charlotte released his findings last week. (A CEDS represents an initiative of the U.S. Economic Development Administration. To learn more about the CEDS process, visit this page.) Angelos Angelou recommends that the region focus on business development in the following areas: defense and security; software development, particularly in financial services; bioinformatics (the combination of molecular biology and computing); fuel cells and hybrid-vehicle manufacturing; and optoelectronics (the merger of electronics and optics). Read more. Download the report/ Go. posted by Ed | Protecting rural character In some rural areas, subdivisions have been chewing up the landscape. Residents fret that the development will ruin the rural character of their county. This pattern of development is taking place in most metro areas as development sprawls. Conservation easements represent one approach to protecting a county's landscape and rural character. Here's a good article from Kentucky that explains how conservation easements work. Read more. These easements are flexible, and they work well for landowners who want to preserve their land. You can learn more about conservation easements from the Land Trust Alliance. posted by Ed | Economic development in the big city Economic development is often a contact sport in big cities. Good economic development balances public participation with leadership direction. You need to design a process that includes public comments and ideas. But your process also needs clear definition and direction, if it is to lead anywhere. Take the case of Philadelphia. The mayor recently held an economic summit to which 150 people were invited. The summit did not include the media or the general public. The mayor's economic development staff indicated that they would publish an interim report in six to eight weeks. Not good enough, according to one member of the city council. He has gotten the city council to approve the issuance of a subpoena to get control of documents prepared for the summit. Now move to Cleveland. Mayor Jane Campbell is trying to rally the leadership to do something about the city's dismal record on poverty. At her summit -- also an invitation only event, but open to the press -- she has organized working groups to tackle different dimensions of the problem. Not good enough, according to a member of the city council, who plans to hold his own "grass roots" summit. Meanwhile, in Detroit, the city council has endorsed a really bad idea: create a publicly funded development agency that would benefit only black business owners. Read more about Philadelphia. Read more about Cleveland. Read more about Detroit posted by Ed | Organic farming and rural development Organic farming is emerging as a new option for economic development in rural areas. Here's an article that gives you some background. Go. Wisconsin has pushed organic farming to the front of its rural development agenda. Read more. But organic farming is not just a rural play. Chicago, for one, is part of a regional network promoting organic farming. Read more. Visit the Local Organic web site. posted by Ed | MEP gets emergency funding The Manufacturing Extension partnership received $8.5 million in emergency funds for the coming fiscal year. This move is designed to keep the program in tact until Congress passes the 2005 budget. The budget year began last Friday. In one of the bonehead moves of the year, Congress cut the MEP program's budget by 60% last year. Congress cut funding for the manufacturing program, usually budgeted at $106 million a year, by $66.4 million to $39.6 million in 2004. Meanwhile, Senator Grassley managed to slip in a $50 million appropriation for his rain forest project in Iowa. Read more. posted by Ed | Anatomy of a deal: NASCAR's expansion to the Northwest NASCAR has selected a site in Washington State for its expansion into the pacific Northwest. The critical question: how will the $140 million project be financed? Read more posted by Ed | Framing an incentive package Here's an interesting view on the increasing importance of accountability provisions for economic incentives. The author, a consultant based in Indiana, proposes a framework for both sides to look an incentive package. Read more posted by Ed | Battling Wal-Mart Wal-Mart generates controversy with its expansions, but, according to this report from Minnesota Public Radio, the controversy is nothing new. Small town retailers have a history of doing battle with national companies. Read more. posted by Ed | China Notes Back from China last night. If you'd like to find out what I've been doing for the past week, you can download my notes of the trip. if you are interested in learning more about the China market, pick up the latest issue of Fortune magazine. They devote the entire issue to China. Figuring out how to develop a productive relationship with China is tricky, as the civic leadership in Winston-Salem is learning. 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