Federal Policy for The Global Economic Olympics

Federal Policy for The Global Economic Olympics Mark Drabenstott Vice President & Director Center for the Study of Rural America Federal Reserve Bank of Kansas City www.kansascityfed.org Center for the Study of Rural America, FRBKC How can federal policy help regions compete in a global economic race? • What’s the scoreboard say? • What must U.S. regions do to compete? • What can federal policy do to help? Checking the Scoreboard  Globalization is creating an uneven economic landscape.  Some regions prospering, showing that innovation & entrepreneurship are powerful new drivers of growth.  But many regions have work to do. Top 10% Dominate Economic Gains Income 74% Employment 74% Population 76% 26% 26% 24% Top 310 Counties Remaining Counties Top 310 Remaining Counties Counties Top 310 Remaining Counties Counties Source: BEA, REIS Top 310 U.S. Counties for Income Growth Source: BEA, REIS Top 310 U.S. Counties for Job Growth Source: BEA, REIS Top 310 U.S. Counties for Population Growth Source: BEA, REIS What must regions do to take gold? The New Development Challenge  Globalization has made regions the unit of development… It takes critical mass to muster a team. Globalization has changed the drivers of success… The era of cheap cost is past, the era of innovation and entrepreneurship has begun. Globalization creates a new paradigm. • Globalization’s impacts are regional in character… • But development still largely focused on single places, single firms, and single sectors. Center for the Study of Rural America, FRBKC Today’s Economic Development Challenge The vigorous pursuit of a region’s competitive edge in rapidly changing global markets. Center for the Study of Rural America, FRBKC The New Development Paradigm Competitiveness Strategy Assets Entrepreneurs Innovation Regional Growth Markets Drivers How can federal policy help regions compete? 1. Bring Federal policy into the 21st Century. 2. Target need and respond to opportunity. 3. Assure flexibility, accountability, and results. Center for the Study of Rural America, FRBKC Bringing Federal Policy into the 21st Century  Make regional competitiveness the overriding goal for community & economic development.  A sea change for Washington—today more than 180 programs, all from a different era.  Every region needs a strong competitiveness strategy — federal policy should support those Center for the Study of Rural America, FRBKC New Paradigm — New Policy Priorities Policy for Regional Competitiveness Current Policy Recruitment Recruitment Retention Retention Entrepreneurship Entrepreneurship Center for the Study of Rural America, FRBKC Source: Dabson Community Development & Economic Development— At odds? • Community development is the forerunner to economic development. • But job #1 in community development must be crafting a strong competitiveness strategy for the region. • In many cases, that means first investing in a region’s leaders. Center for the Study of Rural America, FRBKC Governance : New Key to Regional Growth • Governance is about how regions think and act as a region. It is NOT government. • Diversity and inclusion are crucial to success. Who will encourage regional partnerships? Who provides the incentive to partner? And who provides the round table? A special role for nonprofits & higher education? Center for the Study of Rural America, FRBKC 2. Target need & respond to opportunity.  Target federal funds to regions with greatest need, but develop new measures to gauge need.  Such as: capital investment, entrepreneurial activity, homeownership, underemployment. Center for the Study of Rural America, FRBKC 2. Target need & respond to opportunity.  Competitive challenge grants should become the prevailing form of assistance.  Provide capacity building assistance to help poorest communities compete for grants. Center for the Study of Rural America, FRBKC 3. Assure flexibility, accountability, and results  Provide Federal structure that ensures adherence to new policy goals and eliminates inefficiencies.  Facilitate self-defined regions, but make federal regions consistent with them.  Develop better tools to help regions form strategies & measure progress.  Require and reward non-federal co-investments, but allow exceptions in regions of greatest need. In the 21st century, economic regions matter more than political boundaries • Business alliances — to build market presence and adopt new technologies. • Community collaborations — to build critical mass for the venture and pool capital for development. • Public-private partnerships – to maximize returns on public & private investment… xx x x x Who supplies the coach ? Diagnosing a region’s competitive edge… Public or private good? What can federal policy do to help regions win gold? 1. Bring federal policy into 21st century. 2. Make regional competitiveness the unifying goal of federal policy. 3. Rethink how it helps regions build capacity and forge strategy. 4. Highlight the critical role of innovation & entrepreneurship. Center for the Study of Rural America, FRBKC