planning for economic and job growth

7/31/2019 Planning for Economic and Job Growth

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Planning for Economic and Job Growth

Mayors Innovation ProjectWinter 2012 Meeting

January 21, 2012

Mary Kay LeonardInitiative for a Competitive Inner City


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AGENDA

Source: Porter/Stern/Delgado (2010), Porter (2003)

The Evolving Model for Urban Economic Development

Using Cluster Basted Approaches to Economic and Job Growth

Why Integrate Specific Strategies for Inner Cities

Copyright 2011 ICIC 1


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Define the Value Proposition

Every City Requires a Specific Economic DevelopmentStrategy

What is the distinctive competitive position ofthe geography given its location, legacy, existingstrengths, and potential strengths?

What unique value as a business location?

For what types of activities and clusters?

Develop Unique StrengthsAchieve and Maintain

Parity with Peers

What elementsofthebusinessenvironment can be unique strengths relative

to peers/neighbors? What existingandemerging clusters

represent local strengths?

What weaknesses must be addressed toremove key constraints and achieve parity

with peer locations?

Economic strategy requires setting prioritiesand moving beyondlong lists ofseparate recommendations

Source: Porter New Hampshire Competitiveness: Creating a State Economic Strategy (August 2011) Copyright 2011 ICIC 2


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Operationalizing a City Strategy


Strategy is just coordinated, directional action.

It has some important benefits over pure market approaches:

Pooled information and shared understanding of market opportunities andchallenges

Alignment of objectives between and private sectors and across public sectoragencies

Commitment to targeting and aggregating resources to realize opportunities



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Operationalizing a City Strategy


Economic development is evolving.


Tactical(Zero Sum Competition)

Strategic(Positive Sum Competition)

Focus on attracting new investments Also support greater local investment by existing

companies Compete for every plant / investment Reinforce areas of specialization and emerging

cluster strength

Offer generalized tax breaks Provide state support for training, infrastructure, andinstitutions with enduring benefits

Provide subsidies to lower / offset business

costs

Improve the efficiency of doing business

Every city and sub-region for itself Harness efficiencies and coordination acrossjurisdictions, especially with neighbors

Government drives investment attraction Government and the private sector collaborate tobuild cluster strength


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II. Using Cluster Based Approaches toEconomic and Job Growth



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What is a Cluster?: Example of the Food Cluster

Source: ICIC/Karp/Next Street Food Cluster Project

Local/Regional IndependentWholesalers

Food Safety Regulation

(FDA, Food Safety Modernization Act;USDA, Food Safety and Inspection Service)

Federal Nutrition Regulation and Subsidy

(WIC, School Lunches, Farm-to-SchoolPolicies, SNAP, Community Food Projects

Fish and FishProducts

AgriculturalProduction

Processing

Local Land Conditions:Zoning, building availability,use restrictions (agriculture, processing)

Local Procurement Standards(e.g., schools, hospitals,government)

Foundations(e.g., support for food-relatedInitiatives)

Wholesale

Aggregators andDistribution

Non-AgriculturalIngredients

Packaging

Machinery

Inspections andCertifications


Retail

Food Services andCatering

Restaurants

National IndependentWholesalers

DistributionCenters

Terminal and OtherMarkets

Jobbers


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Why Clusters Matter


Clusters increase productivity

Efficient access to specialized inputs, services, employees, information,institutions, training programs, and other public goods

Clusters encourage new business formation

Easier commercialization of new productsand greater opportunities forstarting new companies due to available skills, suppliers, etc.

Cluster policy leverages policy investments over numerous companies

Investments in training, information, export promotion, etc. will benefit manycompanies across a range of industries

Cluster policies are less distortive than those aimed at individual firms orindustries

Cluster policy does not pick firm or cluster winners

Build on existing and emerging clusters rather than chase hot fields



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Types of Clusters

Source: State of the Inner City Economies (SICE) Database, ICIC analysis, Porter (2010)

Traded Clusters Local Clusters

Definition Compete to serve national andinternational markets

Serve almost exclusively the localmarket. Not directly exposed tocross-regional competition

Representative Clusters Life sciences Transportation and logistics

Local health services Local retail

High wage jobs Higher productivity and

innovation potential

Maximum job creation Jobs that match resident skills

Relative Productivity 144.1 79.3

National Annual Wage (2009) $56,900 $37,280

National Wage Growth (1998 2009) 9.8% 6.2%

Patents (per 10,000 employees) 23.0 0.4

Share of National Employment (2009) 27% 72%

Share of Inner City Employment (2009) 26% 74%

National Employment Growth (1998-2009) -3.5% +11.4%

Inner City Employment Growth (1998-2009) -9.6% +0.4%



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$14

$19

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$27

$27

$30

$31

$31

$36

$37

$43

$46

$46

$50

$50

$56

$67

$0 $20 $40 $60

Local Hospitality

Local Retail Clothing

Local Personal Services

Local Community and Civic Orgs

Local Education and Training

Local Food and Beverage

Local Entertainment and Media

Local Motor Vehicle Products and

Local Household Goods and Services

Local Logistical Services

Average Local Cluster Wage

National Average

Local Health Services

Local Real Estate

Local Industrial Products and

Local Commercial Services

Local Financial Services

Local Utilities

Average Annual Wage, 2009 ($k)

Local Cluster Job Accessibility

Educational Requirements by Cluster Type

41%45%

30%

32%

29%23%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Traded Clusters Local Clusters

%ofWorkers

Local Cluster Average Wages

Source: SICE; BLS; ICIC Analysis.

High School or Less

Some College

College or Higher



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Aligning Economic Policy and Clusters

Specialized Physical Infrastructure

Land Use and Zoning

Environmental Improvement

Science & Technology Investments(e.g., Centers, University Departments)

Education and Workforce TrainingBusiness Attraction andRetention

Export Promotion

Clusters provide a framework for organizing the implementation of manypublic policies and public investments to achieve greater effectiveness

Standard Setting / CertificationOrganizations

Clusters

Source: Porter (2008) Copyright 2011 ICIC 10


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Example: Developing A Strategy for DetroitWHAT/HOW?


BENCHMARKING THEECONOMY

To understand the economicperformance of Detroit and the largerregion, we:

1.Compiled industry- and cluster-levelemployment data for the 100 largest

U.S. cities and their 83 regions

2.Benchmarked Detroits clusterperformance against other U.S. citiesand regions

3.Performed ~100 interviews with firms,business groups, capital providers andintermediaries, cluster experts, and

city and state personnel

4.Based on these analyses, we haveidentified 12 clusters that will driveDetroits growth and are targeting 7for cluster strategies

TARGET SELECTION/CLUSTER STRATEGIES

To develop target clusters and strategiesfor cluster growth in the city of Detroit,we:

1. Identified those clusters that willdrive the citys job growth

performance in the future

2.Identified a subset of clusters withthe greatest potential for employingDetroit residents

3.Will identify the current land usageand future land needs of theseclusters

4.Will develop cluster strategies thatidentify growth opportunities withineach cluster, structural barriers togrowth, and potential remedies.

5.DEGC and other local leaders willconvene cluster working groups todetermine organizational structuresfor coordinating cluster activity.

IDENTIFYING LANDASSETS

To catalogue the usage and availabilityof the citys industrial land, we:

1.Surveyed 95% of the citys industrialland tracts noting occupancy, level ofusage, and site characteristics

2.Merged these data with site-specificinformation from the city and privatedata sources to estimate site size,building size, industry, andemployment

3.Performed a quality check on theinitial industrial database by visiting

and contacting hundreds of individualfirms


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Example: Operationalizing Detroits Strategy


Retention/expansion strategiesfor five clusters

Attraction strategies for threeclusters

New partnerships from the state toregion to neighborhood levels

MEDC Talent Team Workforce Innovation Network Earn and Learn Neighborhood Jobs Pipeline

How DEGC Organizes for Cluster Focused Development

StaffOrganization

Retention vs.Attraction

Cluster Specialization

Financing Traditional CapitalSources

New Tools Tailored toProject Needs

Incentives By-right Incentives Gap-fillingIncentives

Growth Accelerators

Talent Employer-basedIncentivesWorkforce Silos

Talent PipelinesIntegrated withEmployer Needs

Land Liability Asset, Tool for Equity

Old Model New Model


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III. Why Integrate Specific Strategies for InnerCities in Urban and Regional Plans



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0.1% of U.S.land area

31% of U.S.minority poverty

19% of U.S.poverty

8% of U.S.population

Poverty, especially minority poverty is concentrated in inner cities

Inner Cities and Poverty

Source: U.S. Census 2000, ICIC analysis Copyright 2011 ICIC 14

Definition of Inner City

Contiguous census tracts in central cities that are economically distressed, as defined by having:

Poverty rate 20% or higher Or Two of three other criteria

Poverty rate 1.5 times or more than the MSA

Median household income 50% or less than the MSA

Unemployment rate 1.5 times or more than the MSA


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Inner Cities and Employment Growth

Inner cities have experienced a net job loss over the past decade

Net Job Growth 1998-2009

Number Percentage

Rest of U.S. +5,900,000 7.2%

Rest of

Central City+700,000 4.2%

Inner City -300,000 -3.3%

100 Largest Inner Cities vs. Rest of U.S. (1998-2009)

95

100

105

110

115

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Inner Cities

Rest of Central City

Rest of U.S.

Job Growth(1998 = 100)

Source: State of the Inner City Economy Database (SICE) Database, ICIC analysis Copyright 2011 ICIC 15


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Why Inner City Jobs Matter

Inner City Residents Hold:Creating 100 New Jobs for Inner CityResidents Would Require:

450 inner city jobs

850 jobs in the rest of the central city

1,450 jobs in the rest of the region

22% of jobs in the inner city

11% of jobs in rest of the central city

7% of jobs in the rest of the region

Jobs anywhere are not enough. Often inner city residents cannot accessjobs in the rest of the region

Inner city-based firms hire disproportionally more inner city residents

Source: U.S. Census Special Tabulation; ICIC analysis Copyright 2011 ICIC 16


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Conclusion


Every city requires a specific economic development strategy

These strategies are evolving to: Focus on strong and emerging clusters Align with neighboring jurisdictions Incorporate all public levers Build on public/private collaboration

These strategies require new organizational structures

These strategies need a specific focus on the citys most distressed areas

planning for economic and job growth

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