2011 Economic Development 101

Transcript 2011 Economic Development 101

Economic Development 101 for Small Towns

Jonathan Q. Morgan, Ph.D.

NCLM Annual Conference

Learning Objectives

    Understand the process of economic development (ED) Understand the role of local govt. Examine ED trends, strategies, and tools Consider challenges for local governments and small towns Community & Economic Name of Group Development Program © 2005 to Present

The Process of Economic Development

Economic Development Goals

The ED Process

increased private investment new jobs lower unemployment reduced poverty higher personal incomes increased demand for goods and services government inducements and assistance employment mutiplier Source:

Eisinger, Peter K. 1988. The Rise of the Entrepreneurial State: State and Local Economic Development Policy in the U.S. University of Wisconsin Press.

What is the single most important role of local govt.?

Provide incentives to businesses when requested. B.

Create a positive business climate.

Provide strategic leadership and facilitation.

Provide quality services and amenities.

Survey Says…

MOST IMPORTANT ROLE OF LOCAL GOVERNMENT

Provide quality services and amenities 35.9% Provide strategic leadership/facilitation 31.8

Create a positive business climate 24.9

Offer incentives to companies 4.6

n = 217

Source:

Jonathan Q. Morgan,

The Role of Local Government in Economic Development : Survey Findings from North Carolina

, UNC School of Government, 2009.

What Matters to Businesses?

• • • • • • • • • Sites and Buildings Access to Suppliers and Markets Workforce/Labor Financial Capital Regulatory Environment Transportation and Utilities Incentives Taxes Quality of Life Community & Economic Name of Group Development Program © 2005 to Present

What Matters Most for Manufacturing Firms

10.

Highway accessibility Labor costs Tax exemptions Occupancy or construction costs

State and local incentives

Corporate tax rate Availability of skilled labor Inbound/outbound shipping costs 97.3% 91.0

90.9

89.8

89.3

86.3

85.9

84.0

Energy availability and costs 82.1

Availability of buildings 81.0

Source: Area Development, 25 th Annual Corporate Survey, 2010.

What Matters Most: Quality of Life Factors

Low crime rate Healthcare facilities Housing costs Housing availability Ratings of public schools Climate Colleges and universities Cultural opportunities Recreational opportunities 84.6% 72.2

68.4

66.4

61.2

56.3

53.2

48.7

48.2

Incentives

State ED Incentives in NC

 Corporate tax credits and exemptions  Grant programs  Industrial revenue bonds (IRB)  Low-interest financing  Infrastructure assistance  Industrial training Community & Economic Name of Group Development Program © 2005 to Present

Top Local Incentives in NC

Zoning and permit assistance Infrastructure improvements

Cash grant incentives

One-stop permitting State development zone Land or building acquisition Site preparation Subsidized land or buildings 59.0% 56.2

42.4

30.0

24.0

23.0

19.4

17.5

Source:

J.Q. Morgan,

The Role of Local Government in Economic Development : Survey Findings from North Carolina

, UNC School of Government, 2009.

Are ED Incentives Effective?

 Not typically the most important factor in location decisions  Can tip the scale in some cases  Do not compensate for major shortcomings in a location  Tend to benefit prosperous communities Community & Economic Name of Group Development Program © 2005 to Present

Trends in Economic Development

Evolution of Economic Dev.

   

Traditional Approach

Industrial recruitment Cheap labor Incentives Individual firms and sectors  Large branch plants        

New Approach

Existing industry Talent and creativity Targeted incentives Industry clusters Entrepreneurship Regional collaboration Quality of place “Green” development Community & Economic Name of Group Development Program © 2005 to Present

Growth vs. Development

Quantitative:

More

– Jobs – Businesses – People

Qualitative:

Better

Trends in Economic Dev.

• Strategic focus, targeting, and evaluation of efforts • Shift from sole emphasis on industrial recruitment • Alternative ED approaches Community & Economic Name of Group Development Program © 2005 to Present

Asset-Based Development

Themes of Asset-Based Dev.

• Know your niches • Build on local strengths • Grow your own • Develop people and place • Look within for economic opportunities Community & Economic Name of Group Development Program © 2005 to Present

Economic Development Strategies

Economic Dev. Strategies

Business recruitment/attraction Business retention/expansion Business creation (“gardening”) Creativity and talent cultivation Place-making Community & Economic Name of Group Development Program © 2005 to Present

Business Recruitment Basics

• • • • • Clearly defined point of contact in the community Up-to-date information on the community and its assets A “modern” web site A targeted marketing strategy Connections with regional and state efforts Community & Economic Name of Group Development Program © 2005 to Present

Top Recruitment Tools in NC

Responding to prospect inquiries 68.7% Regional partnership 65.4

Partnership with chamber Website/community profile 59.4

57.1

Building and sites inventory Provide high quality of life Cash grant incentives 42.4

41.9

41.5

Source:

J.Q. Morgan, The Role of Local Govt. in Economic Development, UNC School of Government, 2009.

“Product” Development

Partnering on Product Dev.

•

Kerr-Tar Industrial Hub

called

Triangle North

project, now – Network of specialized industrial parks in Franklin, Granville, Vance, and Warren counties •

North Mecklenburg Industrial Park

Business Retention

• • • • Formal process for addressing business needs and concerns Get businesses involved in the community Facilitate collaboration and joint ventures among firms (clusters) Recognize and celebrate existing firms Community & Economic Name of Group Development Program © 2005 to Present

Top Retention Tools in NC

Existing industry calls and visits Business networking 48.4% 30.9

Cash grant incentives 29.0

Partnering with other local govts. 28.6

Worker training assistance 28.6

Partnering with non-govt. entities 28.6

Surveys of local businesses 24.9

Source:

J.Q. Morgan, The Role of Local Govt. in Economic Development, UNC School of Government, 2009.

Why Business Retention is Important

• Most significant source of new jobs and investment • Existing companies contribute to the tax base and employ residents • Builds the local economy from within Community & Economic Name of Group Development Program © 2005 to Present

BRE = Business Retention + Expansion

• • Keeping jobs and investment is important But so is helping existing firms grow and expand in order to create more jobs and investment Community & Economic Name of Group Development Program © 2005 to Present

Industry Targeting (Clusters)

• • •

Washington, NC (Beaufort County)

Supporting marine trades and boat building businesses Partnered with community college to develop specialized training programs in welding, etc.

Business Creation/ “Economic Gardening”

Business Creation Basics

• • • • • • Youth entrepreneurship training (K-12) Adult entrepreneurship training Networking opportunities Mentoring and technical assistance Access to financial capital Links to higher education and sources of innovation Community & Economic Name of Group Development Program © 2005 to Present

Top Small Business Tools in NC

Small business development center 27.2% Business incubator 15.7

Marketing assistance 15.7

Revolving loan fund Property improvement grants Microenterprise program 14.7

11.5

9.2

Source:

J.Q. Morgan, The Role of Local Govt. in Economic Development, UNC School of Government, 2009.

An Example: Brevard, NC

• • • Pop. 6,643; Transylvania County

Supporting entrepreneurs

An Example: Dillsboro, NC

• • Population 206; Jackson County

Entrepreneurship support for local artisans

Creativity and Talent Strategies

Workforce Development

• • • • • Improving K-12 public education Meeting skill needs of target industries Industry specific training for displaced workers Advanced skills for incumbent workers Support services like child care, transportation, and career advice Community & Economic Name of Group Development Program © 2005 to Present

Place-Making

• Quality of life amenities • Downtown development • Historic preservation • Arts and culture • Tourism development • Resident and retiree attraction Community & Economic Name of Group Development Program © 2005 to Present

Place-Making in NC

• • • •

AYDEN

(Pitt County) – Population 4,620 Comprehensive strategy for

revitalization downtown

Partnered with Main Street Program Improved streetscapes and expanded a façade grant program to attract businesses Branding: downtown Ayden is “Close to home, close to your heart”. Community & Economic Name of Group Development Program © 2005 to Present

Place Making in NC

• • • •

EDENTON

(Chowan County)

historic preservation

– Pop. 5,394

Residential development through

Partnered with Preservation NC to transform a blighted cotton mill village Used CDBG funds to upgrade water/sewer The unique and historic mill homes have attracted artists and entrepreneurs Community & Economic Name of Group Development Program © 2005 to Present

Strategy Selection

“Homegrown” Approaches

“Homegrown” Economic Development Place-making A. Social capital Arts and culture Infrastructure Economic Gardening C A D B B. Quality of life Creativity & Talent Cultivation C. Entrepreneurial culture and support D. Human capital (people)

Challenges for Small Towns

Top Barriers for Local Govt. in NC

Availability of sites and buildings 60.8% Lack of infrastructure Lack of capital/funding 44.2

42.9

Limited no. of major employers 37.3

Lack of skilled workforce 27.6

Inability to retain young people 21.2

Citizen opposition 17.1

Lack of leadership 16.6

Source:

J.Q. Morgan, The Role of Local Govt. in Economic Development, UNC School of Government, 2009.

Challenges for Small Towns

 “Old economy” vs. “new economy”  Growth vs. “development”  Residential vs. industrial/commercial development  Commercial property conversion and reuse Community & Economic Name of Group Development Program © 2005 to Present

Challenges for Small Towns

 Building analytical capacity to use incentives wisely  Measuring performance and impacts  Knowing when to collaborate and when to compete Community & Economic Name of Group Development Program © 2005 to Present

Want to Know More?

• The Role of Local Government in Economic Development: Survey Findings from NC. UNC School of Govt., 2009.

• Find a Way or Make One: Lessons Learned from Case Studies of Small Town Dev., Economic Dev. Journal, 2009.

Contact Information

Jonathan Q. Morgan, Ph.D.

UNC School of Government CB# 3330, Knapp-Sanders Bldg.

Chapel Hill, NC 27599 919-843-0972 [email protected]