2011 Economic Development 101

Report
Economic Development 101
for Small Towns
Jonathan Q. Morgan, Ph.D.
NCLM Annual Conference
October 24, 2011 – Raleigh, NC
Community & Economic
Name of Group
Development Program
© 2005 to Present
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
Community & Economic
Name of Group
Development Program
© 2005 to Present
Economic Development Goals
•
•
•
•
•
•
Job creation
Private investment
Tax base expansion
Wealth creation
Higher quality of life
Higher standard of living
Community & Economic
Name of Group
Development Program
© 2005 to Present
The ED Process
inc reased
p rivate
investm e nt
new job s
governm ent
ind ucem en ts and
assistan ce
lo w er un em p loym e nt
red u ce d p ove rty
hig h er p e rso nal inc om es
increa se d
d em an d fo r
good s a nd
services
e m p loym e nt m utiplier
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.
Community & Economic
Name of Group
Development Program
© 2005 to Present
What is the single most
important role of local govt.?
A. Provide incentives to businesses when
requested.
B. Create a positive business climate.
C. Provide strategic leadership and
facilitation.
D. Provide quality services and amenities.
Community & Economic
Name of Group
Development Program
© 2005 to Present
Survey Says…
MOST IMPORTANT ROLE OF LOCAL GOVERNMENT
Provide quality services and amenities
Provide strategic leadership/facilitation
Create a positive business climate
Offer incentives to companies
35.9%
31.8
24.9
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.
Community & Economic
Name of Group
Development Program
© 2005 to Present
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
1.
2.
3.
4.
5.
6.
7.
8.
9.
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
Energy availability and costs
Availability of buildings
97.3%
91.0
90.9
89.8
89.3
86.3
85.9
84.0
82.1
81.0
Source: Area Development, 25th Annual Corporate Survey, 2010.
Community & Economic
Name of Group
Development Program
© 2005 to Present
What Matters Most:
Quality of Life Factors
1.
2.
3.
4.
5.
6.
7.
8.
9.
Low crime rate
Healthcare facilities
Housing costs
Housing availability
Ratings of public schools
Climate
Colleges and universities
Cultural opportunities
Recreational opportunities
Community & Economic
Name of Group
Development Program
© 2005 to Present
84.6%
72.2
68.4
66.4
61.2
56.3
53.2
48.7
48.2
Incentives
Community & Economic
Name of Group
Development Program
© 2005 to Present
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.
Community & Economic
Name of Group
Development Program
© 2005 to Present
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
Community & Economic
Name of Group
Development Program
© 2005 to Present
Evolution of Economic Dev.
Traditional Approach
 Industrial recruitment
 Cheap labor
 Incentives
 Individual firms and
sectors
 Large branch plants
Community & Economic
Name of Group
Development Program
© 2005 to Present








New Approach
Existing industry
Talent and creativity
Targeted incentives
Industry clusters
Entrepreneurship
Regional collaboration
Quality of place
“Green” development
Growth vs. Development
Quantitative:
More
– Jobs
– Businesses
– People
Community & Economic
Name of Group
Development Program
© 2005 to Present
Qualitative:
Better
– High-wage jobs
– Quality of life
– Diversification
– Sustainability
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
• Relates to the local context of a
place
• Leverages distinctive
community assets
• Strengthens locally to attract
externally
Community & Economic
Name of Group
Development Program
© 2005 to Present
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
Community & Economic
Name of Group
Development Program
© 2005 to Present
Economic Dev. Strategies
1.
2.
3.
4.
5.
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
Regional partnership
Partnership with chamber
Website/community profile
Building and sites inventory
Provide high quality of life
Cash grant incentives
68.7%
65.4
59.4
57.1
42.4
41.9
41.5
Source: J.Q. Morgan, The Role of Local Govt. in Economic
Development, UNC School of Government, 2009.
Community & Economic
Name of Group
Development Program
© 2005 to Present
“Product” Development
•
•
•
•
•
Infrastructure
Land and sites
Business/industrial parks
Speculative buildings
Property rehabilitation and
reuse
Community & Economic
Name of Group
Development Program
© 2005 to Present
Partnering on Product Dev.
• Kerr-Tar Industrial Hub project, now
called Triangle North
– Network of specialized industrial parks in
Franklin, Granville, Vance, and Warren
counties
• North Mecklenburg Industrial Park
– Cornelius, Davidson, and Huntersville
Community & Economic
Name of Group
Development Program
© 2005 to Present
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
Cash grant incentives
Partnering with other local govts.
Worker training assistance
Partnering with non-govt. entities
Surveys of local businesses
48.4%
30.9
29.0
28.6
28.6
28.6
24.9
Source: J.Q. Morgan, The Role of Local Govt. in Economic
Development, UNC School of Government, 2009.
Community & Economic
Name of Group
Development Program
© 2005 to Present
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.
• Created incubator to assist small firms
that supply boat manufacturers
Community & Economic
Name of Group
Development Program
© 2005 to Present
Business Creation/
“Economic Gardening”
•
•
•
•
•
Entrepreneurship
Information brokering
Specialized infrastructure
Social capital - networking
Business incubators
Community & Economic
Name of Group
Development Program
© 2005 to Present
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
Business incubator
Marketing assistance
Revolving loan fund
Property improvement grants
Microenterprise program
Source: J.Q. Morgan, The Role of Local Govt. in Economic
Development, UNC School of Government, 2009.
Community & Economic
Name of Group
Development Program
© 2005 to Present
27.2%
15.7
15.7
14.7
11.5
9.2
An Example: Brevard, NC
• Pop. 6,643; Transylvania County
• Supporting entrepreneurs
• Using local retired business
executives to provide consulting
and assistance to existing small
firms and start-ups
Community & Economic
Name of Group
Development Program
© 2005 to Present
An Example: Dillsboro, NC
• Population 206; Jackson County
• Entrepreneurship support for
local artisans
• Using methane gas from the county
landfill to power studios for artisans
• Incubator for fledgling artisans
Community & Economic
Name of Group
Development Program
© 2005 to Present
Creativity and Talent Strategies
•
•
•
•
•
Workforce development
Community amenities
Arts and culture
Leadership development
Social capital
Community & Economic
Name of Group
Development Program
© 2005 to Present
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 downtown
revitalization
• 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) – Pop. 5,394
• Residential development through
historic preservation
• 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
1.
2.
3.
4.
5.
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
“Homegrown” Approaches
1. Place-based Development
2. Creativity and Talent
Cultivation
3. Economic Gardening
Community & Economic
Name of Group
Development Program
© 2005 to Present
“Homegrown” Economic Development
Place-making
A. Social capital
Arts and culture
Infrastructure
B. Quality of life
C
Economic
Gardening
C. Entrepreneurial
culture and support
A
D
B
Creativity &
Talent Cultivation
D. Human capital
(people)
Challenges for
Small Towns
Community & Economic
Name of Group
Development Program
© 2005 to Present
Top Barriers for Local Govt. in NC
Availability of sites and buildings 60.8%
Lack of infrastructure
44.2
Lack of capital/funding
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.
Community & Economic
Name of Group
Development Program
© 2005 to Present
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.
• Small Towns, Big Ideas. Available at:
www.sog.unc.edu/programs/cednc/stbi/
Community & Economic
Name of Group
Development Program
© 2005 to Present
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]
Community & Economic
Name of Group
Development Program
© 2005 to Present

similar documents