Local Economic Deelopment for the 1990s

The Secretary points out that America's economy is the sum of dierse regional economies that can rise and fall independently of national economic trends. For the national economy to grow, localities should not be overly reliant on luring economic opportunity away from their neighbors, as in the 1970s, nor should they be caught unprepared or unwilling to address globalization and other economic shifts, as was often the case in the 1980s.

To adapt to external economic forces, the Secretary first urges local goernments to identify their comparative advantages -- "critical masses of skill, information, and infrastructure" that reinforce each other -- and then to plan strategically to exploit those advantages. Although not every metropolitan area can be a popular tourist destination, a manufacturing hub, or a center of finance, all areas have a set of characteristics that can be built upon to create specialized market niches.

In fact, since the 1970s, Miami has built on the cultural heritage of its significant immigrant population, which some have viewed as a barrier to the city's prosperity, and created a physical and institutional infrastructure that supported a comparative advantage in international trade. These foreign trade connections, in turn, have had a multiplier effect on other industries that are strengthening Miami's economy.

Recent research has found that the factors most strongly influencing the locational decisions of corporations were those that can be affected by local public policy, such as low lease rates, an educated labor force, major highways, and low construction costs. Therefore, the Secretary also recommends that local and regional goernments increase their attractiveness to businesses by enhancing their communities and business climates. Inner-city public schools, which educate almost one-third of all American children, must improve their performance. The needs of the growing millions living in urban neighborhoods of concentrated poverty must be addressed immediately to prevent further draining of municipal coffers. To further reduce the costs of doing business, local governments should continually reassess their local tax structures, land use policies, and other regulations.

In the case of the Raleigh-Durham-Chapel Hill region of North Carolina, State, local, and university leaders worked together for over three decades to harness the comparative advantage of three major universities into a high-technology center. The result, Research Triangle, has strengthened the regional economy, enhanced labor force quality, and fostered development of new community amenities and infrastructure that will attract further economic development.

In describing the third step toward successful economic deelopment, the Secretary points out that a growing number of localities are realizing that regionally inclusive public and private economic development endeavors are beneficial because the economic well-being of a region depends on the conditions of its jurisdictions. Privately led coalitions are serving as excellent forums for sometimes opposing forces to work at the same table, setting priorities and strategies for regional economic development. For example, Cleveland's public leaders and a privately led coalition, Cleveland Tomorrow, have been working regionally to change the focus of their economic development efforts, after realizing that smaller manufacturing industries were thriving even as the traditional backbone of the Cleveland economy, large manufacturers, were closing down or leaving the area. Regional leaders know that, although they cannot stem the exodus of many large industrial firms, they can work collaboratively to support the needs of smaller companies and to enhance the overall business climate of the metropolitan area.

Finally, the Secretary recognizes that although these locally-based strategies may be most crucial to the economic well-being of the Nation's localities and regions, Federal programs that encourage economic deelopment initiatives still provide critical support for metropolitan areas. Single copies of Urban Entrepreneurialism and National Economic Growth are now available free of charge from HUD USER. Please contact HUD USER to obtain print copies.