2050 report regional economic development 2009

8/3/2019 2050 Report Regional Economic Development 2009

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America 2050 Research SeminarDiscussion Papers and Summary

Healdsburg, California March 29-31, 2009

New Strategies for RegionalEconomic Development

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America 2050 Research Seminar - March 29-31, 2009

2

Lincoln Institute of Land Policy

Lincoln Institute o Land Policy is a nonproft and tax-exempt educational institution ounded in 1974 to improvethe quality o public debate and decisions in the areas oland policy and land-related taxation. Te Institutes goals

are to integrate theory and practice to better shape landpolicy and to provide a nonpartisan orum or discussiono the multidisciplinary orces that inuence public policy.Inspired by the work o Henry George as expressed in thebook Progress and Poverty (1879), the Lincoln Instituteintroduces his thinking and ideas into the contemporaryland and tax policy debate to advance a more equitable and

productive society. www.lincolninst.edu

w w w . r p a . o r g

Edited by Petra Todorovich and Yoav Hagler, with contribu-tions by Laura Poulsen.Graphic design by Benjamin Oldenburg.

Copyright 2009 by Lincoln Institute of Land Policy andRegional Plan Association.

All Rights Reserved.

Regional Plan Association

Regional Plan Association (RPA) is an independent, not-or-proft regional planning organization that improvesthe quality o lie and the economic competitiveness othe 31-county New York-New Jersey-Connecticut regionthrough research, planning, and advocacy. For more than80 years, RPA has been shaping transportation systems,

protecting open spaces, and promoting better communitydesign or the regions continued growth. We anticipate thechallenges the region will ace in the years to come, and wemobilize the reg ions civic, business, and government sectorsto take action.www.rpa.org

America 2050

America 2050 is a national initiative to develop a rame-work or Americas uture growth and development in aceo rapid population growth, demographic change and inra-structure needs in the 21st century. A major ocus o Ameri-ca 2050 is the emergence o megaregions large networks o

metropolitan areas, where most o the projected populationgrowth by mid-century will take place and how to orga-nize governance, inrastructure investments and land use

planning at this new urban scale.www.America2050.org
http://www.lincolninst.edu/http://www.rpa.org/http://www.america2050.org/http://www.america2050.org/http://www.rpa.org/http://www.lincolninst.edu/


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Contents

Introduction:Identifying Underperforming Regions 5

Yoav HaglerAssociate Planner, America 2050 Regional Plan Association

Toward A National Reinvestment Strategyfor Underperforming Regions 13

Robert D. YaroPresident, Regional Plan AssociationProfessor of Practice, University of Pennsylvania

Spatial Strategies forU.S. Economic Development 20

L. Nicolas Ronderos

Director, Urban Development ProgramsRegional Plan Association

Summary of Proceedings 28

Participants 35


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Introduction:Identifying Underperforming Regions

Yoav HaglerAssociate Planner, America 2050Regional Plan Association

In an eort to develop a balanced and sustainable growthstrategy or the United States, Regional Plan Associationand Lincoln Institute o Land Policy, through their joint

venture, America 2050, brought together two dozen schol-ars and economic development practitioners in March 2009

to explore new economic development strategies or thenations underperorming regions. Tis research seminar,entitled New Strategies or Regional Economic Devel-opment, gathered people with a range o expertise anddiversity o backgrounds, including those rom declining,

post-industrial regions, rural and rontier communities, andexperts on state and ederal economic development policy toaddress strategies or declining and bypassed regions withinthe nations emerging megaregions and the vast whitespaces in between.

Te white spaces reers to the more than 75 percent othe land area and 25 percent o the population o the coun-try not included in one o the 11 emerging megaregions.America 2050 began several years ago, organized around

the idea that these 11 megaregions, home to three-quarterso the nations population, are the economic engines othe nation and the new competitive units in the globaleconomy. Tese regions will also be home to the majority othe growth in both population and jobs in the next hal cen-tury. As such, special attention to the specifc inrastructureneeds o these megaregions, such as high-speed rail systems,is crucial to a nations long term interests. However, as theinitiative shis its ocus to the development o a nationalgrowth strategy, it must address not only the 11 megare-gions but also the other 75 percent o the land area and 25

percent o the nations population i the process is to resultin a strategy that is truly national.

Te inspiration to address these white spaces in the

context o an economic development strategy comes romthe territorial cohesion program in the European Union,

which promotes balanced economic development. Tisprogram has identifed economic hot spots, rural reg ions,and declining regions and has explored how these regions

work together within the context o the EU. In contrast, theeconomic development strategies that have been pursued inthis country have emphasized productivity over cohesion.As a result, vast areas o the nation have been le behind,

while the nations economic productivity is concentrated ina declining number o hot metropolitan regions.

Te primary goals o the March 2009 seminar were toexplore ways in which this country could pursue a balancedeconomic development and growth strategy and to articu-late a coherent conception o this balanced approach. Tisincludes a synthesis o dierent strategies, including eco-nomic development, landscape conservation, smart growth,and urban revitalization.

Identifying Underperforming Regions

o ground this conversation in real-world geography andmake it less theoretical, RPA sought to identiy regions othe country that have underperormed national economicand population growth trends. Te resulting mappingexercise described in this chapter builds on America 2050s

previous studies o spatial development in United States.Most o the 11 U.S. megaregions are ast-growing regions, asmeasured by population and job growth, with the excep-tion o the Great Lakes and Gul Coast megaregions. Tisanalysis o the nations underperorming regions attemptsto add another spatial component to our understanding oeconomic and population trends in America by exploring

the geography o economic perormance.Te frst step in this process was to identiy regions that

can be described as underperorming relative to overallnational economic perormance. o do so, we identifedcounties that have not kept pace with national trends overlast three decades in terms o population, employment, and

wages. Data were collected rom the Census and the Bureauo Economic Analysis related to population growth, em-

ployment growth, and wages or all o the more than 3,000counties in the nation rom 1970 to 2006.

An index was created based on our criteria to identiyunderperorming counties:

1) Population change from 1970-2006

2) Employment change from 1970-2006

3) Wage change 1970 2006

4) Average wages in 2006

Counties that were ranked in the bottom third in atleast three o these categories were considered underper-orming.


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City of 50,000 or more (population center)

County containing population center

County within 25 miles of a population center

County 25 to 50 miles from a population center

County more than 50 miles from population center

Underperforming Counties

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Counties Exhibiting 3 of 4

Underperforming Characteristics

Counties Exhibiting 4 of 4

Underperforming Characteristics

Megaregion

FIGURE 1: Underperforming Counties

FIGURE 2: Distance from Population Center

source: RPA analysis of U.S. Census and BEA data



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The Criteria:Population Change: Between 1970 and 2006 the nations

population grew by 47 percent rom approximately 200 mil-lion to just under 300 million. For counties that ranked inthe bottom third, the average growth rate was less than 7.5

percent. O these counties, 826 had a negative populationgrowth rate.

Employment Change: Employment or the nation during this

period grew by 93 percent, rom 90 million to 174 millionjobs. Counties that experienced less than 24 percent growthin employment were ranked in the bottom third.

Wage Change: Adjusted or ination, average wages grew by18 percent between 1970 and 2006 rom $35,151 to $41,573(in 2006 dollars). Counties in the bottom third saw theiraverage wage grow by less than 6 percent during this time

period. Six hundred eighty two o these counties experi-enced a decline in real wages.

Average Wage 2006: Te average wage in 2006 was $41,573.Counties with an average wage o $28,039 or 33 percent be-low the national average were counted under this criterion.

able 1 displays the results o this index.

Counties that met at least three o these criteria wereconsidered underperorming. Six hundred orty coun-ties were identifed as underperorming. Tis represents

just over 20 percent o the total counties but less than fvepercent o the population. Te 640 counties were located insix distinct regions: Te Northern Rockies including partso Montana and Idaho, the Great Plains stretching romthe Dakotas in the north to western exas in the South, theborder regions o the Rio Grande Valley in southern exas,the Mississippi Delta including parts o Louisiana, Missis-sippi, Arkansas, and Missouri, the Rust Belt including

western New York, Pennsylvania, Ohio, Indiana, and WestVirginia, and the Deep South including parts o Georgia,Alabama, and Mississippi.

Tese counties are identifed in blue on the map in Fig-ure 1. With the exception o the Great Lakes Megaregion,the identifed underperorming counties are overwhelm-ingly located outside o the megaregions. Most o the 640underperorming counties are rural counties ar rommetropolitan centers. O the 79 identifed counties located

in one o the 11 megaregions, 75 are in the Great Lakesmegaregion. Tese seventy fve counties account or nearly 6million o the 13.4 million total residents in the underper-orming counties.

Figure 2 illustrates this isolation o many o the under-perorming counties. Te map depicts counties by distancerom a city or town with a population o at least 50,000.Te darkest grey counties contain a city o this size. Telighterst shade o grey represents counties that are more

than 50 miles rom a city o at least 50,000 people. Sevenhundred eighty six counties, one-quarter the nations coun-ties ft this description. Tirty fve percent o these isolatedcounties met at least three o the criteria described aboverepresenting 44 percent o the total counties identifed asunderperorming.

Age, Education, and EmploymentCharacteristics of Underperforming Counties

Te population o the underperorming regions tends to beless educated and older than the population o the nation asa whole (able 2). Roughly 15 percent o people 25 and over

living in one o these 640 counties has a bachelors degree,compared to 24 percent nationwide. About 16 percent othe population in these counties is over the age o 65, com-

pared to 12 percent or the nation. Tese actors exacerbatethe challenges in providing transportation, education, andother services in low density, isolated communities.

Table 2: Age and Education Discrepancy between

Underperforming Counties and the Nation

Percent over Age 25

With Bachelors DegreePopulation over

the Age of 65

Nation 24% 12%

UnderperformingCounties 15% 16%

source: U.S. Census

Tese counties tend to be in agricultural and resource-dependant rural regions, as well as ormer industrial regions.During the time period measured there was a signifcant de-cline nationwide in manuacturing employment; however,manuacturing employment still ell disproportionately inunderperorming counties. Nationwide, employment inthe manuacturing sector ell by 26 percent between 1970and 2006 rom 19 million to 14 million. Tis decline is il-lustrated in the maps in Figure 3. In underperorming coun-ties, employment in this sector ell by 50 percent during thistime period rom 1.5 million to 750,000 jobs.

Table 1: Ranking of U.S. Counties Underperforming National Rates of Population Growth and Average Wages

RankNumber of

CountiesPercent of

totalPopulation

1970Population

2006Perent Change in

Population

PercentChange in

Employment

PercentChange in

WagesAverage Wage

2006

0 1107 36% 104,587,456 191,345,884 83% 153% 22% 41,828

1 707 23% 33,699,693 44,099,727 31% 75% 9% 36,850

2 645 21% 48,416,403 47,284,431 -2% 14% 23% 47,606

3 419 14% 12,783,669 11,703,076 -8% 14% -5% 30,5764 221 7% 2,115,528 1,733,019 -18% 6% 0% 24,427

3099 201,602,749 296,166,137



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jobs with jobs in other skilled proessions. During that sametime period, Cook County experienced total job growtho 500,000 jobs and wage growth on an ination adjustedbasis o 19 percent. Los Angeles added 2 million jobs andexperienced real wage growth o 13 percent. And althoughemployment in New York was at during this time period,real wages grew by nearly 90 percent.

Although employment in this sector el l dispropor-tionately, signifcant decline in manuacturing jobs didnot ensure a countys underperormance. In act, the threecounties with the largest total decline in manuacturingemployment, Cook County, Il linois (Chicago) (550,000

jobs lost), New York (375,000 jobs lost), and Los Angeles(330,000 jobs lost) were not underperorming counties.Although these counties experienced large declines inmanuacturing employment, all three replaced these lost

source: Bureau of Economic Analysis

FIGURE 3: Counties with at least 50 Percent of Employmentin the Manufacturing Sector in 1970 and 2006

A) 1970

B) 2006


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areas in terms o economic and population growth in recentdecades. However, this county level analysis ails to capturethe signifcant variation in economic perormance withinthe megaregions.

In order to locate the cities that have experienced rela-tively lower population and economic growth rates in recentdecades, the analysis o underperorming counties wasreplicated at the city level. Tus, the second part o the iden-tifcation exercises aims to inorm a national development

strategy that more specifcally targets urban revitalization.For the purposes o this study, cities are defned as urbanareas with a population o at least 50,000 people.

Te same method used on counties (with some slightvariations due to availability o data at the relevant geog-raphy1) was used to identiy underperorming cities. Tecriteria applied included: 1) population change 2) numbero people employed 3) average per capita income change 4)average per capita income in 2007. Cities that ranked in thebottom third in at least three o the our categories wereconsidered underperorming. For comparison purposes,high-growth cities were defned as cities that ranked inthe top third in at least three o the categories.

The Criteria

Population Change: Between 1980 and 2007 total urbanpopulation grew by 35 percent rom approximately 81 to109 million people. Te underperorming cities experienceda population decline o 9 percent while the population inhigh-growth cities grew by 176 percent.

Employment Change: Te number o people employed grewby an average o 103 percent or all cities. For the under-

perorming cities the growth rate was 44 percent and orhigh-growth cities 292 percent.

1 Te county level analysis relied on data rom the Bureau oEconomic Analysis to determine economic and employmentchange. Since this data is not collected at the city level, data onemployment and income was collected rom the Census o Hous-ing and Population and the American Community Survey 2005-2007 and 2007 or the purposes o this analysis. Moreover, thehistorical redrawing o city boundaries complicated the collectiono comparable data or 1970 and 2007, so 1980 was chosen as thebase year or the analysis.

Other counties with large declines in manuactur-ing employment were not able to replace these jobs withothers in high skilled industries. Wayne County Michigan(Detroit), St. Louis, Missouri, and Mahoning County, Ohio(Youngstown), lost 281,000, 92,000, and 30,000 manu-acturing jobs respectullyall large percentages o theirmanuacturing base. Over this same time period, overallemployment also declined in Detroit by 20 percent and St.Louis by 40 percent. Overall employment in Mahoning was

at, although real wages declined by 18 percent, as much othese manuacturing jobs were replaced with jobs in the low

wage service sector.Agricultural actors also had a high correlation with the

ranked index. Te greater the number o underperormingcharacteristics a county presented the greater proportiono the countys land was in agricultural uses and the greaterthe size o the average arm. On average, underperormingcounties had more than 40 percent o their total land inagriculture. Counties that have large arms and a higher

percentage o corporate arms also tend to be the countiesthat have lost population and jobs.

Although these data present a clear correlation betweenunderperormance and arm size, it is important to note

that these both might be eects o other conoundingvariables. Further, total arm employment in these under-perorming counties represented only 12 percent o totalemployment in 1970, suggesting that other economic ac-tors might be a larger orce. Further research on the connec-tions to both agricultural and manuacturing employmentis needed to draw defnitive conclusions on their impacts onunderperormance. For this research, correlations are notintended to imply causation, and are oered as an exampleo many o the potential actors that have caused regions tounderperorm national trends in population and economicgrowth.

Identifying UnderperformingCities and Metropolitan Areas

Te county level analysis described above identifed sixunderperorming regions composed o primarily ruralcounties. Tese counties are generally located outside o themegaregions and in relative isolation rom metropolitancenters. Te fndings o the frst part o the identifca-tion exercise seem to confrm the general observation thatmetropolitan areas have ared signifcantly better than rural

Table 3: Comparison of Counties with High Losses in Manufacturing Employment

CountyManufacturing

Jobs LostPercent of

Employment in 1970Percent of

Employment in 2006Total Change in

Employment

Cook (Chicago), IL 548,185 29% 8% 19%

New York, NY 376,838 15% 2% 0%

Los Angeles, CA 330,944 24% 9% 66%

Wayne (Detroit), MI 281,508 31% 10% -20%

St. Louis (City), MO 92,127 26% 9% -40%

Mahoning (Youngstown), OH 30,325 32% 8% 6%

source: Bureau of Economic Analysis


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Lawrence

Brockton

Fall River

New Bedford

Pawtucket

Providence

Chicopee

Springfield

Hartford

New Britain

Waterbury

New Haven

Bridgeport

SchenectadyUtica

SyracuseRochester

Scranton

Paterson

East Orange

NewarkElizabeth

New Brunswick

Trenton

Allentown

Reading

Philadelphia

CamdenLancaster

Baltimore

0 50 100 Miles

!

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Underperforming City

Other City

Underperforming County

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! Underperforming City


Megaregion

FIGURE 4: Underperforming Cities with Populations Greater than 50,000


FIGURE 5: Underperforming Cities in the Northeast Megaregion



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Underperorming cities outside the megaregions tendto cluster near the edges o the underperorming counties,including the regions o the Great Plains and the MississippiDelta.

O the 13 million people who live in underperormingcities in the megaregions, the Northeast and Midwest aloneaccount or 11 mi llion residents. wenty-six cities were

identifed as underperorming in the Northeast megaregionrepresenting 35 percent o al l cities in the megaregion andaccounting or 26 percent o the urban population (Figure5). Fiy-three cities were identifed as underperorming inthe Great Lakes megaregion representing 43 percent o allcities in the megaregion and accounting or 39 percent othe urban population (Figure 6).

In both the Northeast and the Great Lakes megaregionsthe share o underperorming cities is greater than the shareo the urban population living in them. Tis reects theact that many o this underperormance occurs in smalland medium sized cities within the megaregions, with thenotable exceptions o Philadelphia and Detroit, while themajor population centers in these regions including New

York, Boston, and Washington D.C. in the Northeast and

Average Per Capita Income Change: Adjusted or inationaverage per capita income grew by 37 percent rom $18,700to $25,600 or high-growth cities and or cities in general.Te growth rate was 17 percent or under underperormingcities.

Average Per Capita Income in 2007: Te average per capita

income or the urban population was $26,000 in 2007. Itwas $19,000 and $30,000, respectively, or underperorm-ing and high-growth cities.

Underperforming Cities

One hundred twenty-six o a total o 673 cities were identi-fed as underperorming. Seventeen million people or 16

percent o the total urban population lived in one o these126 cities. While 72 percent o the underperorming citiesare located within the megaregions, underperorming citiesaccount or only 17 percent o the total number o cities

within the megaregions. In comparison, underperorming

cities constitute 25 percent o the total number o citiesoutside the megaregions.

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Niagra FallsBuffalo

Erie

Youngstown

Canton

Akron

Parma

ClevelandLakewood

ElyriaLorain

TaylorWestlandDetroit

WarrenSt. Clair Shores

Flint

Lansing

Kalamazoo

Milwaukee

West AllisRacine

La Crosse

Waterloo

Davenport

Decatur

Terre Haute

Florissant

St. Louis

Evansville

Owensboro

MuncieAnderson Springfield

DaytonKettering

MiddletownHamilton

SkokieDes Plaines

Rockford

BerwynOak Lawn

Hammond GarySouth Bend

Wyoming

Elkhart

Arlington Heights

Saginaw

Pontiac

Southfield

DearbornDearborn Heights

Grand Rapids

!

!


Other City


0 100 200 Miles

FIGURE 6: Underperforming Cities in the Great Lakes Megaregion



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nations growth and prosperity over the coming decades.Tis paper outlines some o the principles and best practicesthat have proved successul in turn-around eorts in both

the United States and other countries and which shoulddrive a new national commitment to revitalizing Americasbypassed cities and regions. Te principles and best practicesincluded in this paper are drawn rom the authors ourdecades o experience in working with underperormingurban and rural communities across the United States andin Europe, Japan, and North Arica.

In the third section, Spatial Strategies for U.S. Eco-nomic Development, L. Nicolas Ronderos discusses currenteconomic development issues and policy approaches in theUnited States and documents the positive and negative out-comes o such eorts at the national, state and local levels.Te paper describes current investment programs at theU.S. Economic Development Administration as a case study

o current development practice. Te paper then summariz-es a spatial economic development point o view ocusing onaspects o economic activity. Finally, the paper discusses thecurrent economic development issues and policies outlinedin the frst section in the context o the spatial point o viewor planning and implementation. Te paper provides anappendix o current tools or economic planning used in theUnited States, documenting their spatial implications whereapplicable.

In the fnal section, a summary o the proceedings o theMarch 2009 seminar is provided.

Chicago, Indianapolis, Minneapolis, and Columbus in theGreat Lakes have kept up with national growth trends thelast three decades and thus were not identifed as underper-orming.

Identiying underperorming and bypassed regionscan help inorm ederal programs to promote regionaleconomic development strategies. Dierent strategies needto be tailored or the underperorming cities both withinand outside the megaregions and the rural regions ar rommetropolitan centers. Although the eleven megaregions arehome to more than 70 percent o the nations populationand economic activity, and will require major investmentsin inrastructure tailored to their specifc needs, a nationaleconomic development strategy must a lso ocus on weavingthese bypassed and underperorming regions back into thenational economy. Tis includes improving physical connec-tions between the metropolitan centers within megaregionsand the rural and rontier lands that surround them, invest-

ments in technology so residents can engage in the globaleconomy while living in rural regions, and providing placebased economic development incentives so residents o theseregions who want to stay in these areas are not orced tolook elsewhere or economic opportunity. In the ollowingsections, two research papers explore these issues in urtherdetail.

In, Toward a National Strategy for UnderperformingRegions, Robert D. Yaro outlines a proposed national strat-egy or revitalizing underperorming regions o the UnitedStates. Te goal o this strategy is to ensure that every areao the country has the opportunity to participate in the

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Rio GrandeValley

Northern Rockies

Great Plains Great Lakes

AppalachianMountains

Mississippi

Delta Deep South



Federal Lands

Megaregion

FIGURE 7: Underperforming Regions



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Toward A National ReinvestmentStrategy for Underperforming Regions

How can the ederal government serve as a catalyst orthe transormation o declining regions? Norman ebbitt,a member o British Prime Minister Margaret Tatcherscabinet once amously urged the unemployed to Get on

your bike and look or work! in other words, move toplaces where opportunities were greater. 3 Tat is, in eectthe current U.S. policy on this issue. Should the ederal gov-ernment promote outmigration rom declining regions inthe United States, or should it take a more activist approach

to rebuilding these places, as Ms Tatchers successors havedone. Tis paper will argue that a more activist approach isurgently needed.

Te need is, in act great: vast rural and urban regionsacross the United States have been underperormingeconomically or decades. Te largest o these places, interms o population and economic potential is the seven-state Great Lakes megaregion stretching rom NorthernMinnesota to Western New York and Pennsylvania . With a

population o 54 million, Te Great Lakes megaregion haslost millions o manuacturing jobs in the automobile andrelated industries since 1990 and much o the areas indus-trial economy is now in ree all. Since 1990 this megaregionhas lost more than 1.2 million manuacturing jobs and lost

more than 2.2 million since 1970, bringing the share omanuacturing employment down rom 29 percent o total

jobs to 11 percent over the past three and a hal decades. 4Te nations largest underperorming rural region is

the Great Plains, encompassing parts o ten states rom theDakotas and Montana to West exas. Large areas o thePlains have also been experiencing decline or decades, asagriculture has been transormed rom a labor intensive to ahighly mechanized activity, requiring ever smaller numberso agricultural workers. As the number o arms and armhouseholds has declined, hundreds o ormerly productiverural centers have experienced severe, or in many cases, ter-minal decline. Many Plains counties now have populationdensities ar below those that they had a century ago. Hal

o the nearly 1,000 counties that comprise the ten GreatPlains states have lost population since 1970, with over amillion people leaving this sparsely populated region.5

Te Appalachians, encompassing portions o ten statesextending rom New Yorks Southern ier to Northern Ala-bama, have been depressed or decades, as sustained losses inmining and related industries have led to sustained popula-tion loss. Another large underperorming rural region is the3 http://www.labourhome.org/story/2008/8/13/82041/80864 Bureau o Economic Analysis: otal ull-time and part timeemployment by SIC industry, NAICS industr y.5 United States Census 1970, 2000.

Robert D. YaroPresident, Regional Plan AssociationProfessor of Practice, University of Pennsylvania

Overview:

Tis paper outlines a proposed national strategy or revital-izing underperorming regions o the United States. Te

goal o this strategy would be to ensure that every area othe country has the opportunity to participate in the na-tions growth and prosperity over the coming decades. Tis

paper outlines some o the principles and best practicesthat have proved successul in turn-around eorts in boththe United States and other countries and which shoulddrive a new national commitment to revitalizing Americasbypassed cities and regions. Te principles and best practicesincluded in this paper are drawn rom the authors ourdecades o experience in working with underperormingurban and rural communities across the United States andin Europe, Japan, and North Arica.

Te reality is that in an era o tumultuous economictransition, every place has to reinvent itsel, by creating

new economic activities to replace those that are in decline.Te most successul regions o the country are those thatanticipate and lead in these transormations. Places suchas New York, Boston, the San Francisco Bay Area, Seattle,Denver and Chicago have done this successully, makingthe transition rom economies driven by traditional manu-acturing and deense industries to economies driven byadvanced services and high technology. For example, CookCounty (Chicago) Illinois has lost more than hal a millionmanuacturing jobs since 1970, more than any other countyin the nation. However, over that same time period, thecounty has added more than hal a million total jobs replac-ing those lost in manuacturing with jobs in other sectors,keeping the economy o Chicago and the county thriving

and relevant into the new century.1 Places that have notmade this transition, such as the industrial Midwest andthe Great Plains, now fnd themselves in decline. WayneCounty (Detroit) Michigan lost nearly 300,000 manu-acturing jobs and was unable to replace these with jobs inother high skilled industries experiencing decline in overallemployment as well .2

1 Bureau o Economic Analysis: otal ull-time and part timeemployment by SIC industry, NAICS industry.2 Ibid.


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Te Chinese government is now investing vast sums in acomprehensive strategy to rebuild the economy o Manchu-ria, Chinas rust belt. Tese precedents are described inadditional detail below.

In the United States, by comparison, the ederal govern-ment has virtually ignored the needs o similar places ordecades, relying on out-migration to address the problems o

poverty and unemployment in its underperorming places.Despite this policy o benign neglect at the national level, agrowing number o struggling U.S. cities and regions suchas Pittsburgh, Chattanooga and Providence, are succeedingin their own bottom-up turn-around strategies, providinginspiration and lessons learned to other places seeking toollow in their ootsteps.

Rebuilding the economies o these places will requirespecial skills and innovation: while most o the planning

proession is ocused on growth management, the challeng-es acing these places requires a new expertise in changemanagement strategies to stabilize, and then revitalize,underperorming cities and regions.

The American Tradition of RegionalEconomic Development

While national planning in the United States would appearto be, in Robert Fishmans words, an act o bureaucratichubris, best le to the French, the reality is that a nationalregional development strategy would be consistent with thefnest tradition o American politics and policy.6 Since theearliest days o the Republic the ederal government has pro-moted strategies to improve the economy o underdevelopedareas o the country. George Washington promoted inclu-sion o the interstate commerce clause o the Constitutionbecause o his personal rustration in attempting to build

the Chesapeake and Ohio Canal in Maryland and Virginiaunder the Articles o Conederation.

In 1808 at the direction o President Tomas Jeerson,reasury Secretary Albert Gallatin prepared a national planto promote the development o the recently purchased landso the Louisiana Purchase through the creation o a networko national roads and canals. Jeerson was also interested instrengthening the links between the newly acquired landsin the West with the already developed areas o the EastCoast to avoid increased sectionalism. Te fnancing mecha-nism or these improvements proposed by Gallatin theuse o ederal land grants to private investors building theseacilitieslater provided the fnancial underpinning toAmericas great 19th century railroad construction boom,

the Homestead Act and the Land Grant university system.During the Civil War President Abraham Lincoln

urthered these initiatives when he promoted developmento the rans-Continental Railroad. Lincoln promoted thisrail link as a means to develop the West and to tie it moreclosely to the Union. He also promoted adoption o theHomestead Act to promote settlement o vast underde-

veloped areas o the West by veterans o the War. And he

6 Fishman, Robert. (2007). 1808-1908-2008:National Plan-ning or America. New York: Regional Plan Association.

Mississippi Delta, encompassing portions o fve states be-tween the Missouri Boot Heel and Louisiana. Other ruralcounties across the Deep South and the Rio Grande Valleyand dozens o urban and isolated rural counties across thecountry have also experienced decades o economic and

population decline.But regional decline isnt isolated to these places. Many

second tier cities and smaller metropolitan regions in theNortheast and Midwest, as well as other areas o the coun-try have lost their raison detre as industries have declinedand business services, utilities and other unctions haveconsolidated in larger metropolitan centers. By a numbero measures, including household income, educationalattainment and levels o unemployment, these places havesome o the nations lowest levels o economic attainment.Many o these places will never regain the population andemployment that they had at their peak o prosperity in themid-to-late 20th century. But they do have the potentialto stabilize their employment levels and support smaller

populations with a decent standard o living and economicopportunities.

Te decline o many o these places has also had adisproportionate impact on minority populations: manydeclining rural areas o the Northern Plains have largeconcentrations o Native Americans; the poorest areas othe Delta and Deep South and many declining northern cit-ies are predominantly Arican American, while the poorestareas o the Rio Grande Valley and declining areas o theSouthwest have large Latino populations.

The Politics of Economic Transformation

Te Obama Administrations top priority has been promot-ing recovery rom the current economic crisis. Conse-

quently its frst large legislative action was the $787 billionAmerican Recovery and Reinvestment Act enacted by theCongress in February 2009. For the most part this programocuses on short term stimulus eorts. Unortunately,however, short-term stimulus measures will not address theeconomic undamentals o large areas o the country thathave experienced recession or even depression conditionsor years, or in some cases decades. But this legislation did

put a toe in the water in promoting longer term economictransormation, with major new investments in broadband,

power grid and transportation inrastructure. o transormthe nations underperorming regions will require a largenew commitment to policies, programs and investmentsover decades. But the whole nation will not return to pros-

perity unless a strong and sustained national commitment ismade to addressing this need.

By contrast, in Europe, Japan, Korea and China, theEuropean Union and national governments have investedhundreds o billions o dollars in inrastructure, indus-trial land reclamation, urban re-greening, technology,higher education, and quality o lie strategies to transormsimilar places, with strikingly positive results. A number oormerly bypassed and severely distressed cities and regions,in places like Glasgow, Scotland; Dublin, Ireland; Lille,France; Bilbao and Barcelona, Spain; and the Ruhr regionin Germany, have been transormed by these initiatives.


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Since the New Deal vast areas o rural America havealso received hundreds o billions o dollars through agricul-tural subsidies, promoted by senators rom arm states. Inact the United States Senate, with its two senators rom ev-ery state, including those with small rural populations, has

promoted vast ederal spending in some o the nations mostisolated areas. But in the absence o a coherent economic

agenda or bypassed rural and urban regions, much o thismoney has been spent ineectively.

Toward a National Reinvestment Strategy forUnderperforming Regions: European Precedents

What would a 21st century development strategy orunderperorming U.S. regions look like? It could build onboth U.S. historic and contemporary European precedents.Te European Union has devoted most o its resources ordecades to the revitalization o underperorming urban andrural regions.

Te EUs two largest programs are targeted to these

places: Te Common Agricultural Policy (CAP), which allo-

cates tens o billions o Euros annually to rural regionsacross Europe. Te CAP has been reormed in recent

years away rom unding or commodity production tosupport or value added agricultural production andlandscape management.11

Te EU Structural Fund directs vast amounts o moneyto regeneration o bypassed regions across Europe.Structural und investments in inrastructure, highereducation and environmental improvements in placeslike Ireland, Spain, Portugal and Eastern Germanyhave transormed the economic prospects o these

places. Tese unds have been supplemented by nationalinvestments in industrial and urban land reclamation,housing and quality o lie improvements in such placesas Germanys Ruhr region, Northern England and Scot-land and the ormer steel producing region o NorthernFrance. As part o the Structural Fund, the EU has also

promoted cross border regional economic developmentstrategies, demonstration projects and institutionsthrough a program called Interreg.

In addition, the EU has also promoted development oa rans European Network o passenger and goods move-ment systems, which has directed hundreds o billions oEuros to high-speed rail, highway, bridge, tunnel and reight

links designed to promote the integration o ormerly iso-lated areas o Europe into the Continental-scale economicsystem.12

Across Europe, national governments have complement-ed EU development programs with their own strategies torevitalize underperorming regions and communities. Inthe United Kingdom, or example, despite her skepticismabout government intervention to promote regional devel-opment, in the 1980s Prime Minister Margaret Tatcher11 http://ec.europa.eu/agriculture/publi/capexplained/cap_en.pd12 http://ec.europa.eu/ten/index_en.html

advanced the Morrill Act to create a nationwide networko public universities to bring higher education to the West,utilizing Ga llatins land grant model to promote creation othe national network o public universities.7

In 1908, President Teodore Roosevelt directed ForestService Director Giord Pinchot to prepare a second na-tional plan with the dual goal o preserving and developing

the nations natural resources and promoting developmento its underperorming regions. Among the plans strategieswere proposals to provide water or power generation, irriga-tion and navigation and to bui ld a nationwide network onational parks and orests.8

Many o these projects were implemented by Rscousin President Franklin Roosevelt, through the public

works programs o the New Deal. Tese included hydro-power, navigation, irrigation, ood control and economicdevelopment initiatives in river valleys across the South and

West. Te development o the ennessee Valley Authority,Colorado River Project, Bonneville Power Administrationand other New Deal agencies transormed the economies o

vast areas o the country. When the World War II deense

build up began in the late 1930s, much o this activity wasconcentrated in these same areas, with their readily available

power resources.9Other New Deal public works projects developed new

destinations in the National Park and Forest systems romcoast to coast with long-term economic development ben-efts or ormerly isolated and poor rural regions. Notableamong these were the imberline Lodge in Oregons MountHood National Forest, the Natchez race Parkway in West-ern ennessee and Mississippi, and the Skyline Drive andother improvements in the Great Smoky National Park oEastern ennessee, North Carolina and Virginia.

New Deal-era public works programs were coordinatedby the National Resources Planning Administration, an

executive agency reporting directly to FDR, and chairedby is uncle Frederic Delano. Te NRPA also proposed twokey initiatives that promoted post-war development o theSunbelt:

Te 1939 proposal or a National oll Road and FreeRoad System, which called or creation o a nation-

wide limited access highway system. Tis proposalprovided the inspiration or the 1956 National DeenseInterstate Highway Act;10 and

Te 1942 proposal or what became the GI Bill oRights two years later, which created deep subsidies or

postwar housing and higher education or returningveterans.

Tese initiatives, along with other ederal subsidies ormiddle-class suburban housing, including the mortgage taxdeduction on ederal income taxes, played an important

part in creating late 20th century metropolitan America,with its bands o suburban middle-class housing and devel-opment, all o it organized around the Interstate highways.

7 Ibid.8 Ibid.9 Ibid.10 Ibid.


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velopment and other earmarks that are being wasted in theabsence o a more coherent economic development strategyor bypassed regions. Tese currently add up to tens o bil-lions o dollars annually.14,15

Economic development strategies must be targeted tomeet the needs o individual regionsthere are no onesize fts all solutions to the problems acing these places.

Rural and urban regions require very dierent strategies, asoutlined below.

Rural Regional Development

Revitalizing underperorming rural regions will not beeasy or happen immediately. Te undamental issue willbe strengthening the economic and transportation linksbetween rural areas and the megaregions and major metrosthat are the drivers o the national economy. Te largedistances in the United States will make this more dicultto achieve than it has been in Europe, but the internet andtransportation improvements being proposed by America

2050 and other groups could lay a oundation or these con-nections.

Better targeted agricultural and alternative energyprograms would begin to rebuild resource based economiesin these places. But a comprehensive strategy o promotingresource-based, value-added economies in rural regions, andtaking steps to connect them with metropolitan markets

will be needed to stabilize and then revitalize these areas.A good place to begin would be reorming existing

agricultural subsidies, which currently direct tens o billionso dollars to a handul o commodities with little economicbeneft outside a ew isolated regions. Te current agricul-tural subsidy programs could ollow European precedents,and be restructured to support small arms and higher value

and value-added agricultural products that would add moreto the economy o rural areas. Tese subsidies could alsobe used to promote resource conservation and landscape

preservation activities in areas with special natural or sceniceatures. While the corn ethanol subsidy programs havedemonstrated the potential or bio-uel subsidies to be mis-allocated and ineciently used, alternative energy subsidiescould be targeted to underperorming rural regions andmeet both regional development and national a lternativeenergy goals. With its ample sunshine, wind and arable landresources, the Great Plains, or example, could become aocal point or solar, wind and cellulose based biomass pro-ductionallowing the Plains to become a veritable SaudiArabia o alternative energy. Funds included in the 2009

stimulus bill or modernization o electric grids could beused to link even isolated wind and solar power regions withmetropolitan energy markets.

Beyond this it will be necessary to create a criticalmass o population, economic activities and amenities indesignated rural centers. Other smaller, less successulcenters may continue to decline, or in some cases, simplydisappear. It will be necessary to re-magnetize designatedgrowth areas to attract and retain residents, and in particu-14 http://www.obpa.usda.gov/budsum/y09budsum.pd15 SAFEEALU: http://rwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=109_cong_bills&docid=:h3enr.txt.pd

and her Secretary o State or the Environment, MichaelHaseltine, created metropolitan development corporationsin Liverpool, Manchester, Glasgow and other cities to lead

vast urban regeneration schemes. Tey also promoted anationwide network o Groundwork rusts in dozens ocommunities across the U.K. to reclaim ormer industrialsites or new housing, commercial development and other

uses. Tese initiatives have been sustained by subsequentU.K. governments and have transormed a number o citiesand regions across northern England, Scotland and Wales.

Prime Ministers ony Blair and Gordon Brown havecontinued these eorts, through national and regionaldevelopment eorts in underperorming areas o theUnited Kingdom. Te largest o these is a program calledTe Northern Way, which is a comprehensive program oeconomic development in a network o depressed regionsstretching rom Liverpool across Northern England toNewcastle-on-yne.13 Tese strategies have been supportedby national transportation, housing, brownfeld reclamationand related policies designed to reinvigorate underperorm-ing areas.

In Germany, the Federal Government and state govern-ments are engaged in similar eorts across the ormer East-ern Germany and in declining industrial regions, such asthe Ruhr Valley. In Eastern Germany, a Shrinking Citiesmovement has stabilized a number o cities and begun tointegrate them into the national and European economies.In the Ruhr, once Germanys most depressed ormer indus-trial region, a comprehensive program o urban greening,derelict land reclamation, park and cultural development,higher education and other activities has transormed theimage and quality o lie o the region, reversing generationso population and economic decline.

National governments in Japan, Korea and China arepursuing similar strategies. Te Chinese government, or

example, is engaged in a comprehensive strategy to revitalizeManchuria, Chinas rustbelt. In act, the United States is

virtually alone among industrialized nations in not havingsome kind o national program to revitalize bypassed andunderperorming regions. It would appear that all o ourcompetitors have reached the conclusion that it undercutstheir competitiveness to leave large regions and populationsbehind. I the ederal government were to create a similarregional economic development strategy or underper-orming regions o the United States, it could incorporate

principles and practices derived rom these European andAsian precedents.

Envisioning a U.S. Regional Development Fund

A U.S. Regional Development Fund, equivalent to theEuropean Structural Fund could be designed to promote re-gional economic development strategies or underperorm-ing regions. Based on both U.S. and European precedents,this und should be substantial in size. But a substantial

portion o the dollars needed or a U.S. Structural Fundcould come rom existing, poorly targeted agriculturalsubsidies and Congressional transportation, economic de-

13 http://www.thenorthernway.co.uk/


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with ora and auna, including American Bualo herds,which were present in the Plains prior to European Settle-ment in the 19th century. Tese restored landscapes couldbecome a ocal point or tourism in the Plains. Tey alsocall or revitalization o viable Plains town and city centersas a part o this broader strategy. While the initial reactionrom Plains residents to these proposals was overwhelm-

ingly negative, over time the Poppers have gained signifcantpolitical support or these concepts. Te Bualo Commonsconcept should be adopted, at least through a series o dem-onstration areas.

Important lessons could also be learned rom Europeanexperience in revitalizing isolated rural centers and regions.In France, or example, national and regional governmentresources have gone into a broad range o investments inhousing, retail development, historic preservation, and

public realm improvements, cultural, higher education andother improvements in small and mid-sized provincial citiesand towns. As a result, isolated regional centers and smalltowns in places ormerly depressed regions like Lorraineor Brittany have become vital, magnetic places, and have

attracted a new generation o well-educated young people.Tese places provide a range o employment, services andcultural and other activities to their rural hinterlands, li-ing up the economy o whole rural regions.

Te key to revitalizing bypassed regions will be inte-grating them into metropolitan and global markets tosell goods and services or which they have a uniquecompetitive advantage. Te internet and broadbandcommunication provide new opportunities or entrepre-neurs to sell products and services in distant metropoli-tan markets, in the United States and globally. Here arethree examples with which the author has had personalexperience:

In Utah and Arizona, Hopi and Navaho craers usedto sell bolo ties and other hand craed jewelry at retailoutlets on or near their reservations, with limited sea-sons and narrow margins. oday, websites like bolo.comsell these products year-round, and all over the world.Tis allows craers to sell directly to customers withoutgoing through wholesalers or retail markets and to reachmarkets that were ormerly not open to them.

In Brooklin, Maine, an isolated Downeast coastaltown with a population o 900 people, 14 wooden boatbuilders employ hundreds o skilled crasmen and sellhigh quality boats all over the world, using modern

composite technologies developed at the University oMaine. Also in Brooklin is WoodenBoat Magazine,a bi-monthly industry trade and enthusiast journal

with a world-wide circulation o more than 100,000.While Internet access is limited in Brooklin, wirelessbroadband access is available at the village library and

WoodenBoat Magazine provides boat builders withconnections to customers worldwide.

lar the well educated, young people who drive innovationand entrepreneurship. And these people have been leavingisolated, underperorming rural regions or decades. Inrural counties (defned as a county more than 50 miles roma city or town with a population o at least 50,000) only17 percent o people have a bachelors degree, compared to27 percent in counties with a city o at least this size. Tese

rural counties also tend to be older with 15 percent o theirpopulation over the age o 65, compared to 12 percent orurban counties.16

With this goal in mind, several key investments wouldbe necessary to revitalize these communities and their sur-rounding rural regions. Tese would include investments inbroadband communications, higher education, the publicrealm, historic preservation, cultural activities, as well assubsidized loans or small business creation. In addition,improved transportation links to rural communities wouldbe needed to strengthen their connections to the closestmetropolitan area, as described below in the section on the

proposed rans-American Network.A renewed commitment to the Land Grant University

system could promote the creation o new campuses indesignated rural growth centers, or expansion o existingcampuses in these places. One possible unding source orthis expansion would be the original basis or the LandGrant Universities more than a century ago: sale o ederallands. In a number o places in the West, such as Las Vegas,Phoenix or Southern Caliornia, public lands could be soldto permit the planned expansion o major urban centers,

with the proceeds distributed among the states or new orexpanded Land Grant campuses.

Where there are existing or potential national parksand orests, or other scenic and recreational resources, itmay be possible to promote tourism in rural centers aroundthese attractions. In the late 1980s the National Park

Service identifed dozens o landscapes across the countrythat could become new units in the National Park system,or partnership parks developed with the states. Many othese could become ocal points or new tourism develop-ment in underperorming rural areas.

Communities adjoining these parks could serve asgateways to these recreational destinations, providing visitorand tourism services, as has occurred in a diverse range ocommunities in places such as Springdale and Moab, Utahnear Zion and Arches National Parks, respectively. Andthese communities could be given a frst shot at conces-sions in nearby national parks and orests, with the goalo having local frms and residents provide jobs and otherservices in these acilities. Tis would retain the economic

multipliers o these activities in rural communities, ratherthan in distant metropolitan areas, as is presently the case

with most national park concessions.In 1987 Rutgers University Proessors Frank and

Deborah Popper proposed that a vast 139,000 square mileBualo Commons be created in the Great Plains, which

would encompass many elements o the strateg y outlinedabove.17 Te Poppers proposal calls or returning vast areaso un-productive armland to its natural state as a prairie,16 United States Census, 200017 Popper, Deborah Epstein, and Frank J. Popper. Te GreatPlains: From Dust to Dust.. Planning December 1987


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c. Education: World class higher education, arts,cultural and medical institutions play a key rolein attracting and helping to retain creative people.Eds and Meds are also the major employers andeconomic oundations in many bypassed and un-derperorming cities and regions. Tey can provideleadership and a technology and placemaking o-

cal point or urban and regional economic develop-ment eorts.

d. Immigration: Underperorming places need toattract new people rom outside. olerance and ac-ceptance o diversity is important to attract creative

people rom diverse cultures and liestyles.

e. Networks: Building inormal networks o entrepre-neurs and venture capitalists can nurture creative

people and the ideas and technologies that ormthe oundation or new industries and enterprises.Several states and regions are adopting open net-

work economic development strategies instead otraditional top-down models. Tese strategies can

be used to rebuild the manuacturing economy oplaces like the Great Lakes megaregion.

2. Place Matters

a. Self Image: Te frst step in transorming bypassedand underperorming places is to turn around thesel-image o the place, by transorming the publicmood rom one o despair and decline to sel-conf-dence and hope in the uture. o achieve this trans-ormation requires leadership, a well-constructed

plan and physical evidence o positive change.

b. Existing Strengths: Most regions have existingconcentrations o industries, technologies and

skilled workers. Underperorming regions can buildon these strengths to sustain current industries andcreate new ones.

c. Quality of Life: Underperorming communitiesneed to take steps to improve their quality o liethrough urban regeneration and placemaking,re-greening ormer industrial sites, and creatingurban and regional parks and greenways. Te key tosuccess o urban and regional regeneration eorts isidentiying, protecting and rebuilding around theunique sense o place and history that is inherent ineach place.

d. Urban Revitalization: Revitalized downtowns are

the public ace o the community and region. Ithey are rundown and unsae they project an imagethat will undercut the civic pride and sel-image ocurrent residents and repel newcomers. Revitalizeddowntowns can play a critical role in creating or rec-reating quality o lie in bypassed cities and regions.Downtowns contain the cultural institutions, urbanhousing, restored historic buildings and districtsand the public spaces and edge that are needed toattract and retain creative people.

When the author was seeking a custom-made white oakShaker style coat rack, he went online and purchasedone rom an English woodworker living in an isolatedrural community in the Vosges Mountains o EasternFrance. Te whole transaction was conducted on theinternet, and the fnished product arrived in a FedEx

package rom France 10 days aer it was ordered.

Te Obama Administrations support or universalbroadband service in rural areas, and unding or this pur-

pose in the American Recovery and Reinvestment Act willunderpin broader strategies to reconnect these places withnational and global markets and play an important role inreturning these places to prosperity.

Revitalizing Former Industrial Regions

Federal leadership and sustained investments will be es-sential i the nation is to return underperorming places to

productivity and prosperity, but the ederal role cannot take

the place o bold, sustained local leadership rom govern-ment as well as the business, civic and philanthropic sectors.Te experience in U.S. and European industrial cities andregions is that these transormations require decades toachieve and sustained leadership rom all levels and all sec-tors. Successul transormations also require a broad rangeo strategies and investments in eect, silver buckshotnot a silver bullet.

Perhaps the frst step is to recognize that these placeswill require dierent, and more diverse economies i theyare to be brought back to prosperity. And most o them willhave smaller populations than they did at their peak decadesago.

Te authors own experience in working in underper-

orming cities and regions and his study o the process thathas been used in other U.S. and European places that havereturned to prosperity suggests a set o principles and best

practices which can drive a national recovery program orunderperorming industrial regions and cities. Tese areoutlined below.

1. Building on Economic Foundationand Attracting Skilled People

a. Population Growth: In a nation that will add 140million new residents and double or even triple itsGDP by 2050, the challenge is to re-magnetizeunderperorming places to attract a air share o

new Americans and economic activity. Unlesseective measures are taken at the local, regional,state and ederal levels, these places will continuedto decline putting even more pressure on successulregions and megaregions.

b. Skilled Workers: Urban and regional economiesare built around creative, entrepreneurial, skilled

people. Successul places are the ones that can at-tract and retain these people, and quality o lie isthe key to doing this. Te goal should be to create aninventive, entrepreneurial economy to transorm the

prospects o these places.


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employment markets. In Europe and Asia, newhigh-speed rail (HSR) networks are being usedto reconnect bypassed places with growing citiesand megaregions. Te America 2050 initiative has

proposed that a new rans-American PassengerNetwork o rail, bus and road improvements bemade. Te network includes proposals or new HSR

and other improved rail and bus services that wouldimprove links to underperorming cities and ruraland industrial regions.

c. Smart Growth: Cities and regions need to be rede-signed including sidewalks, bike lanes, transit, anddense mixed use centers.

Conclusion

While the nations and the Obama administrations im-mediate ocus is on the urgent need to address the currenteconomic crisis, its attention must soon shi to creating a

long-term commitment to returning Americas underper-orming regions and communities to prosperity. Ultimately,the whole U.S. economy will be held back i large areaso the country are not ully participating in the nationaleconomy and sharing in the nations prosperity. In theabsence o a coherent strategy the Congress and Senatorsrom rural states will continue to direct earmarks to these

places anyway, but these expenditures will have little chanceo creating the transormation that is required.

President Obamas Chie o Sta, Rahm Emmanuelhas amously said You never want a serious crisis to goto waste. Well, there is a serious crisis in the vast areas othe country that have become detached rom the nationaleconomy and the nations prosperity. Now is the time to

address this crisis.

NOTES:

Te author gives special thanks to the ollowing people ortheir contributions to this paper:

Vincent Goodstadt, University o Manchester, and ound-ing Executive, Glasgow and Clyde Valley Joint StructurePlanning Committee

Hunter Morrison, Youngstown State University, and or-mer Director o City Planning, City o Cleveland

Kip Bergstrom, Executive Director, Urban RedevelopmentCommission, Stamord, C, and ormer Director, RhodeIsland Economic Policy Council

Yoav Hagler, Associate Planner, America 2050; and

L. Nicolas Ronderos, Director o Urban Development,Regional Plan Association

3. Leadership and Partnerships

a. Federal Role: Te ederal government should sup-port and incentivize successul local, and regionaland state eorts by developing a sustained nationalinitiative to revitalize bypassed cities and regions.Tis program should include targeted investmentsin inrastructure, industrial land reclamation,downtown revitalization, urban re-greening, sup-

port or higher educational and medical institu-tions and high-speed rail and other transportationimprovements.

b. Regional Role: Successul urban strategies need tobe embedded in regional plans designed to curtailsprawl and ocus housing and jobs in centers.

c. Collaboration: Leadership can come rom govern-ment, business, and labor, civic or philanthropic sec-tors. Ideally, all o these sectors will collaborate todevelop and implement recovery strategies, and theleadership o chie elected ocials (mayors, county

executives and governors) is essential. Building al-liances o a diversity o community leaders that canbe sustained over time is the key to the long-termsuccess o rebuilding and transormation eorts.ransorming the relationships between the sectors,or example by building new collaborative relation-ships between business and labor, can provide aoundation or growth and renewal o local andregional economies.

d. Planning: Successul plans need to be built arounda bold and compelling vision, major policies andinvestments that can achieve this vision, and earlyaction projects that can make the plan real, immedi-ate and credible.

e. Sustained Commitment: ransormation o under-perorming places is not or the aint o heart or theimpatient. Te transormation o places that havebeen in decline or decades will require years, andoen decades o concerted, consistent and hard

work. Tis will require sustained bi-partisan leader-ship at the ederal, state and local level, which mustbe sustained through political and economic cycles.

4. Infrastructure

a. Brownelds: Te ederal government should partnerwith states and cities to create a vast program o

industrial land reclamation and natural resourcerestoration. Hundreds o thousands o acres that arenow eyesores and public health hazards could be putto new productive use and could also become thecore o new urban parks and preserves in cities thathave lost a third or more o their population andemployment.

b. Transportation: Strengthening the links to large andsuccessul nearby metropolitan regions through im-

proved transportation can invigorate the economyo bypassed and underperorming cities and regionsby plugging them into larger regional housing and


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Spatial Strategies forU.S. Economic DevelopmentL. Nicolas RonderosDirector, Urban Development ProgramsRegional Plan Association

Regional Planning designates the proper adjustment oareas to uses.1

Introduction

Tis paper discusses current economic development issuesand policy approaches in the United States and documentsthe positive and negative outcomes o such eorts at thenational, state and local levels. It also describes current in-

vestment programs at the U.S. Economic Development Ad-ministration as a case study o economic development policyin practice. Te paper then summarizes a spatial economicdevelopment point o view ocusing on aspects o economicactivity and a local economys ability to bring in new dollars.Finally the paper discusses the current economic develop-ment issues and policies outlined in the frst section inthe context o the spatial point o view or planning andimplementation. Te paper provides an appendix o current

tools or economic planning used in the United States,documenting their spatial implications where applicable.

Current U.S. Economic DevelopmentIssues and Policies

Teories, policies and economic development tools in usetoday were developed and have been implemented withsome degree o consistency since the second hal o the 20thcentury.2 Lessons learned rom these decades o economicdevelopment practice allow us to identiy positive andnegative outcomes and areas o improvement or currenteconomic development practice.

Positive outcomes include:

Leveraging private investment or economic develop-ment;

1 Robert Murray Haig. Major Economic Factors in Metropoli-tan Growth and Arrangement. Regional Survey o New York andits Environs, Volume I. 1927. Page 182 Richard D. Bingham. Preace. Teories o Local EconomicDevelopment. Perspectives From Across the Disciplines. Sage,1993

Public sector human and fscal capacity-building initia-tives that have increased the ability o governments toimprove their communities;

Improved leadership at the state and local levels to bet-ter engage stakeholders in planning or the uture;

Consolidation and expansion o economic developmenttools in response to perormance and track records;

Successul governance partnerships in which public andthe private sectors share the responsibilities and accom-plishments o policy making.

Negative outcomes include:

Uncoordinated regional land use policy, resulting insprawl that is detrimental to the wellbeing o communi-ties as it disperses residential activity, increases costso living, and costs o operation or governments. Tisuncoordinated land use policy also contributes to envi-ronmentally and economically unsustainable settlement

patterns.

An exclusive ocus on commercial and industrial devel-

opment in urban areas and residential development insuburban and rural areas creating a spatial mismatchbetween place o work and place o residence that con-tributes to economic underperormance;

A narrow understanding o economic developmentexemplifed in a silo mentality resulting rom aninability to think holistically about the problems andsolutions at hand;

Areas of improvement for economicdevelopment include:

Te need or more systematic, proactive, and spatially-

ocused initiatives to improve upon the business attrac-tion and retention approach o economic development;

Te engagement o businesses and residents o economi-cally underperorming areas in planning and implemen-tation o economic development strategies;

A ocus on technology and inrastructure-based strate-gies to bring physical assets to communities;

Te broadening o education and workorce develop-ment to increase the skills o the labor orce;


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Te building o partnerships between stakeholders toleverage resources and ampliy the potential success ostrategies;

Te creation o innovative fnancing mechanisms toleverage private investments;

And, capacity building in the economic development

proession to attract and create leaders in the feld.3

In recent years, consolidation o the proession has alsoled the way to identiying distinct approaches to design andimplement economic development strategies at the na-tional, state, and local levels. Tese are not inclusive o everystrategy being pursued currently, but represent the generalactivities under the rubric o economic development and are

provided here as a summary o current trends in the feld.

National Economic Development Approaches4

Reindustrialization Approaches: A nationwide rein-dustrialization policy to rebuild the nations industrial

stock by growing specialized, new, globally competitiveindustries through a new set o targeted tax incentivesand national fnancing o inrastructure development.

Free-market Approaches: A small government andderegulation policy that aims to ree trade restrictionsand decisions by the private sector to encourage themost viable economic activities that would take root ontheir own to succeed.

Local Economic Development: A locally based nationalpolicy that increases community control and promotesendogenous growth o economic activities at the mu-nicipal, county and state levels through market-basedand regulatory approaches.

State Economic Development Approaches5

Business Recruitment & Attraction: argets outsidebusinesses by oering them incentives to move to the at-tracting community, usually in competition with others.

Business Retention & Expansion: Focuses on oeringincentives to existing businesses in a community and

providing loans and grants or expansion.

Cluster Development: Focuses on using regional resourc-es to support the growth o industrial clusters o relatedfrms linking technology, human resources and capital,rather than dealing with frms one by one.

Tese dierent approaches are applied in practice withdierent degrees o emphasis depending on the region andlocality, and provide an example o common economic de-

velopment practices. In this context the existing investmentpolicy at the U.S. Economic Development Administration(EDA) within the Commerce Department provides a case

3 Adapted rom: Shari Garmise et.al. Forty Years o Urban Eco-nomic Development: A Retrospective. International EconomicDevelopment Council. February 20084 Edward Blakely. Planning Local Economic Development.Teory and Practice. Sage, 2002. Page 295 Ibid. Page 42

study o a bundled set o programs targeted to promoteinnovation and competitiveness to be assessed through theoutcomes, areas o improvement and approaches identifedabove. An inormal survey and literature review o stateand municipal programs suggests comparisons to national

policy, especially in its use o diverse strategies to accom-plish results.

EDAs Investment Programs: A Case Study

EDA by its own defnition targets assistance to attract pri-vate capital investment and create higher-skill, higher-wagejobs especially in communities and regions that are sueringrom economic distress. Economic distress is defned by theEDA as areas that have:

An unemployment rate that is at least one percentgreater than the national average unemployment rate;

Per capita income that is 80 percent or less than the

national average per capita income; or A special need, as determined by EDA.

Generally, EDA investments are ocused on local ly-de-veloped, regionally-based economic development initiativesthat achieve the highest return on the taxpayers investmentand that directly contribute to economic growth. With thismandate the agency ocuses on a set o seven interconnectedinvestment programs, summarized below.

Public Works: Empowers distressed communities to revi-talize, expand and upgrade their physical inrastructureto attract new industry, encourage business expansion,diversiy local economies and generate or retain long-term, private sector jobs and investment.

Economic Adjustment: Assists state and local interests indesigning and implementing strategies to adjust or bringabout change to an economy. Te program ocuses onareas that have experienced or are under threat o seri-ous structural damage to the underlying economic base.

Research and National Technical Assistance: Supportsresearch o leading edge, world class economic develop-ment practices and inormation dissemination eorts.

Local Technical Assistance: Helps fll the knowledge andinormation gaps that may prevent leaders in the publicand nonproft sectors in distressed areas rom makingoptimal decisions on local economic development issues.

Partnership Planning: Supports local organizations(Economic Development Districts, Indian ribes, andother eligible areas) with long-term planning eorts.

University Centers: A partnership o the ederalgovernment and academia that makes the varied and

vast resources o universities available to the economicdevelopment community.


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Trade Adjustment Assistance: A national network oeleven rade Adjustment Assistance Centers to helpmanuacturers and producers aected by increasedimports prepare and implement strategies to guide theireconomic recovery.

Furthermore, guidelines or investment projects are

provided by the agency on the basis o several criteria thatreect the priorities o the Federal Government in its eco-nomic development activities. Tese investments should:

Be market-based and results-driven;

Have strong organizational leadership;

Advance productivity, innovation and entrepreneur-ship;

Look beyond the immediate economic horizon, an-ticipate economic changes and diversiy the local andregional economy;

Demonstrate a high degree o commitment by exhibit-

ing: High levels o local government or non-proft

matching unds and private sector leverage,

Clear and unifed leadership and support by localelected ocials,

Strong cooperation between the business sector, rel-evant regional partners and local, state and ederalgovernments

Tese EDA investment programs reect the mostcommon national, state, and local economic developmentapproaches. Regulatory, market-based approaches andbottom-up strategies are valued highly by the agency in its

programs and evaluation criteria. Business recruitment,attraction, retention, expansion, as well as cluster develop-ment strategies are also oered and supported by the agency.At a practical level, specifc projects would qualiy or one oranother investment program and such suitability reects the

particular approach emphasized in each specifc program.It is important to note that unding or the EDA

Investment Programs is inadequate to meet the currentneeds in the U.S. and its unding is spread thinly among theapplicants. otal appropriations or fscal year 2007 or theEconomic Development Assistance programs were $250million.6 Tese programs are highlighted here, however, to

provide an example o U.S. policy on economic develop-ment.

One spatial aspect o the EDA programs worth notingis the economic distress areas targeting. Te EDA pro-grams aim to have an impact in communities o need. Indoing so, EDA combines current economic developmentguidelines with variables that arise rom local realities. Bytargeting distressed areas, EDA is considering place as a ac-tor o economic development and an important aspect o its

programs. However, spatially based economic developmentstrategy at EDA ocuses only on distressed areas. A com-

6 Economic Development Administration, Fiscal Year 2007Annual Report: http://www.eda.gov/PDF/2007AnnualReport.pd

prehensive and systematic policy would look to implementspatial strategies in successul areas too, to promote theirgrowth as the local economic development approach sug-gests. Tis emphasis on place is the ocus o the next section,

where I will explore a spatial perspective on economic devel-opment in order to evaluate the current issues and policieso existing strategies and programs.

A Spatial Specialization Perspectiveon Economic Development

For the purpose o this paper, economic development isunderstood as the activities undertaken to improve theeconomic wellbeing o a community. Such eorts aregenerally ocused on the public or private side o economicactivity. Government services and investments all underthe umbrella o economic development. Private economicactivities constitute the other part o the economic develop-ment universe and include businesses and consumers. Overtime in the United States and internationally, the emphasis

on either public or private approaches to development hasgenerated a ertile area o discussion and innovation.

ECONOMIC DEVELOPMENT FOCUS ALTERNATIVES

GOVERNMENT SECTOR PRIVATE SECTOR

With the goal o improving the economic well being ocommunities, several approaches have been undertaken atthe national, state, and local levels since the 1950s in theUnited States. In this section I explore a spatial approachto economic development issues and policies. Tis spatialmodel o decision making is a partial and simplifed modelo reality, but in its simplicity it provides a robust set o

practical applications.Several economic theories rame the nature o interac-

tions among government and private economic units. Temost important distinction among these various theories istheir inclusion or exclusion o space within their defnitiono the issues and solutions. For most o the history o eco-nomic theory, place has been relegated to a secondary role inanalysis and policies. Here we want to emphasize the spatialcomponents o economic development and build on recentdevelopments in the economic literature and proession.

Urban development policies aimed at assisting low wagelabor markets are oen characterized as either supply-sideor people-based, where directed toward individuals, or de-mand-side or place-based, where eligibility is conditioned

on location. People based strategies ocus on issues such asworkorce training, education, micro loans, personal savingsaccounts rom a perspective in which targeting o programsand initiatives look to inuence individuals or groups andnot geographies.7 Tis paper considers these strategies di-erent o

2050 report regional economic development 2009

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