Edward FeserUniversity of Illinois at Urbana-Champaign

ORGANIZING FOR REGIONAL COLLABORATION IN ECONOMIC AND COMMUNITY DEVELOPMENT

Annual Meeting of the Community Development Society

Charleston, South Carolina, 23 July 2013

Five major advantages collaborative, interjurisdictional ED/CED strategy

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1. Capturing the advantages of scale

2. Pooling and sharing scarce resources

3. Recognizing “region” as a marketable asset

4. Conserving natural resources and enhancing environmental sustainability

5. The benefits of networking

Why don’t we collaborate more?

Source: New York Times database. Includes cash grants, corporate income tax credits, sales tax exemptions or refunds, property tax abatements, low‐cost loans or loan guarantees and free services like worker training.

Total cost, 2012

Cost per capita, 2012

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CD Specialist

Supporter, catalyst of regional—multi-jurisdictional—economic and community development strategies

Evolution in economic development practice and profession

Uncertainty in collective action in economic affairs

Shifting US/AIC economic competitive advantage and individual and household outcomes

Guides: Collaborative Regional Economic and

Community Development

1

2

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Spoiler1. US federal, state and local economic development

institutions are deep need of reform2. Local and regional economic development should

be viewed as an integral element in national economic strategy

3. Collaborative regional development is best pursued as a joint economic and institutional collective action strategy

Shifting competitive advantage

The new economy?

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Rising direct and indirect foreign competition Production fragmentation and location integration Increased sectoral and functional specialization Slower job growth Polarizing wages

Low Skill Mid Skill High Skill

Wage Terciles

Education Terciles

Lousy and Lovely Jobs: United States?

Source: Feser & Renski (2012)

The new economy?

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Rising direct and indirect foreign competition Production fragmentation and location integration Increased sectoral and functional specialization Slower job growth Polarizing wages Rising income inequality Constrained fiscal degrees of freedom

13C

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FP US Decline-o-meter

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Post‐war expansion ’74‐5 ’81‐2 ’90‐1 ’00‐1

20001970 19901955 1960 1980 2010 2020

’08‐9

Kindleberger’sMaturity Hypothesis

Scitovsky: Institutional 

Sclerosis

FP US Decline-o-meter

• Are we in the trough of a long wave?

• For the next wave…

– Will it occur in AICs?

– Can AICs capture same advantage if located elsewhere?

• Is sustained collective investment possible any longer in AICs?

• Do we have the political will?

Collective action uncertainty

Three stories

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RDAs, LEPs, and City Deals (UK) Smart Specialisation (EU) Regional Innovation Clusters (US)

Guide to Research and Innovation Strategies for Smart Specialisations (RIS 3), May 2012

Choice & critical mass

Prioritisation based on own strengths and international specialisation (minimum of duplication across ERA)

Competitive advantage

Mobilise talent…via entrepreneurial discovery process

Connectivity& clusters

Develop “world class clusters”, “arenas for related variety/cross‐sector links internally in the region and externally”

Collaborative leadership

Public‐private partnership, quadruple helix (“giving voice to unusual suspects”)

Jurisdictional level of intervention or action

Sub‐national National International

Jurisdictionallevel defining economic challenge or opportunity

Sub‐na

tiona

l Industrial prospects traced to sub‐national characteristics and 

conditions (e.g., cities and clusters). National fate left to 

sub‐national policy. Devolution; sub‐national industrial policy.

Industrial prospects traced to sub‐national characteristics and conditions. Sub‐national policy options of national design and 

control. Regional policy.

Industrial prospects traced to sub‐national characteristics and conditions. Policy actions of international scope and 

implementation. Multi‐lateral options (e.g., regional cohesion 

policy).

Nationa

l

Industrial prospects traced to national characteristics and 

conditions. National fate left to sub‐national policy. Weak 

central state/national policy paralysis. The national policy 

vacuum.

Industrial prospects traced to national characteristics and conditions. Policy actions of 

national scope and implementation. National 

industrial policy.

Industrial prospects traced to national characteristics and conditions. Policy actions of international scope and 

implementation. Multi‐lateral options, international cohesion 

policy.

Internationa

l Industrial prospects traced to international characteristics and conditions. National fate left to 

sub‐national policy. Weak central state/national policy 

paralysis. The national foreign/trade policy vacuum.

Industrial prospects traced to international characteristics and conditions. Policy actions of 

national scope and implementation.  Strategic trade 

policy.

Industrial prospects traced to international characteristics and conditions. Policy actions of international scope and implementation.  Activist multilateral strategy; 

integration.

References: Gore 2000, 2010; Stiglitz 2009.

Institutional design of economic policy action

Who’s in the bigger mess?

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Jurisdictional level of intervention or action

Sub‐national National International

Jurisdictionallevel defining economic challenge or opportunity

Sub‐na

tiona

l Industrial prospects traced to sub‐national characteristics and 

conditions (e.g., cities and clusters). National fate left to 

sub‐national policy. Devolution; sub‐national industrial policy.

Industrial prospects traced to sub‐national characteristics and conditions. Sub‐national policy options of national design and 

control. Regional policy.

Industrial prospects traced to sub‐national characteristics and conditions. Policy actions of international scope and 

implementation. Multi‐lateral options (e.g., regional cohesion 

policy).

Nationa

l

Industrial prospects traced to national characteristics and 

conditions. National fate left to sub‐national policy. Weak 

central state/national policy paralysis. The national policy 

vacuum.

Industrial prospects traced to national characteristics and conditions. Policy actions of 

national scope and implementation. National 

industrial policy.

Industrial prospects traced to national characteristics and conditions. Policy actions of international scope and 

implementation. Multi‐lateral options, international cohesion 

policy.

Internationa

l Industrial prospects traced to international characteristics and conditions. National fate left to 

sub‐national policy. Weak central state/national policy 

paralysis. The national foreign/trade policy vacuum.

Industrial prospects traced to international characteristics and conditions. Policy actions of 

national scope and implementation.  Strategic trade 

policy.

Industrial prospects traced to international characteristics and conditions. Policy actions of international scope and implementation.  Activist multilateral strategy; 

integration.

References: Gore 2000, 2010; Stiglitz 2009.

Institutional design of economic policy action

LED practice and profession24

A changing practice

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Traditional measures of success suggest failure

“New economy” demands flexibility, custom strategy

Organizations facing program lock-in

Personnel turnover, shifting skill set needs

Rising primacy of workforce development

Local development coalitions fracturing

Local understanding of LED/CED remains rudimentary

Growing inability to ignore land use

Aging community leadership

State economic development reformSummary of Recent Public‐Private Economic Development Initiatives, by U.S. StateState Date Initiative or New Organization Charge/Mission

Alabama 2011 Alabama Economic Development Alliance Strategic planning and coordination.

Arizona 2011 Arizona Commerce Authority Lead unit in economic development.

California 2010 Governor’s Office of Economic Development Lead ED unit and business one‐stop shop.

Florida 2011 Department of Economic Opportunity Lead ED unit.

Georgia 2011 Georgia Competitiveness Initiative Strategic planning.

Iowa 2011 Partnership for Economic Progress General reorganization creating Economic Development Authority (lead organization), Economic Development Corporation (grants and incentives vehicle), and Economic Progress Partnership (strategic planning).

Kansas 2011 Council of Economic Advisors Strategic planning and coordination; policy and agency performance evaluation; research.

Nevada 2011 Advisory Council on Economic Development and Board of Economic Development

Strategic planning and coordination.

New Jersey 2010 Choose New Jersey Marketing and strategic planning.

Ohio 2011 JobsOhio, Inc. Lead ED unit.

Rhode Island 2010 Expansion of Rhode Island Economic Development Corporation governing board.

Lead ED unit.

Wisconsin 2010 Wisconsin Economic Development Corporation1 Lead ED unit.

Source:  Feser & Poole (2011).  1Proposed.

Regional collaboration

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CD Specialist

Supporter, catalyst of regional—multi-jurisdictional—economic and community development strategies

Evolution in economic development practice and profession

Uncertainty in collective action in economic affairs

Shifting US/AIC economic competitive advantage and individual and household outcomes

Guides: Collaborative Regional Economic and

Community Development

1

2

34

How to approach

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As a strategy problem that blends economic and collective action solutions There is no one size fits all

Understand the reasons place competition persists Understand and counter barriers to collaboration Build a legacy of collaboration over time

Strategy

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DiagnosisChallenge or opportunity

Reduced complexity

Explanation and domain of action

Guiding policyThe signpost, the channeling of action

ActionsCoherence

Consistent, coordinated

Why place competition?

The persistent logic of competition among neighboring places Most ED organizations serve

specific jurisdictions

Communities “prefer” different mixes of services, programs, and taxes

Not all elements of an ED strategy benefit significantly from collaboration

Rectifiable factors driving needless or detrimental competition The lack of advocates for

collaboration within jurisdictions

Mistrust traced to history of interactions among jurisdictions

Ignorance of areas of policy and programming that would most benefit from collaboration

Differing resource constraints and opportunity sets facing potential partners

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Competition can make sense But sometimes it doesn’t

Cooperation, competition, or “coopetition”?

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Collaboration need not be not an either-or proposition

Cooperation in one arena (or on one issue) can co-exist with competition in another arena (or on another issue)

Ideal is a spirit of competition and not a sense of warfare

Collaboration will not always occur with the same partners or in the same regional configuration

“Region” should be viewed flexibly, i.e., not as a fixed entity

Areas of competition should be open and jointly acknowledged in order to maintain trust required for cooperation in selected arenas

The flexibility of “region”

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Todd Letts, Former President and CEO, Greater Kitchener Waterloo Chamber of Commerce

“The concept of concurrent regionalism, that is, many regional initiatives occurring at the same time, is not uncommon. The definition of region is dependent not only upon geography but the issue, individuals and organizations involved.”

“Optimizing Regional Economic Development Impact: An Essay on the Role of the Chamber,” in Strong Economies and Strong Communities: Regional Chamber Strategies for Growth, American Chamber of Commerce Executives, 2008.

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Quality of service/outcomes hard to define/measure

Very different demographics

Political over professional management

Short political and/or professional tenures

Very different political structures

Weak networks

Limited history of success in collaboration

Barriers

Build local technical capacity

Within jurisdictions

Between jurisdictionsFactor in distance

Educate

Shift form of government

Clarify roles

Lengthen tenures

Reward professional standards and competence

Cultivate bridging ties

Cultivate clustered networks

Reform structures

Build from simple to complex

Summary

Main points

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Collaborative regional development is a matter of joining economic strategy to a workable model of collective action

Success in regional development is contingent on reform at state and federal levels

We’ll succeed if we can move past a generic understanding of the role of government in economic affairs