When I formally joined the economic development field nearly two years ago after serving as deputy chief of staff to Louisville Mayor Greg Fischer, and after 10 prior years in the private sector, I knew it was about job creation and business attraction, retention, and expansion. I also was warned by a friend in the field that “economic development” could mean just about anything depending on who you asked and who needed to borrow the term for his or her cause. All of the above has turned out to be true.
But, as Amy Liu describes in her recent paper, “Remaking Economic Development,” economic development in the 21st century is very much evolving toward a more rigorous, sophisticated approach to strengthening regional markets and expanding opportunity. Reflecting today’s increasingly competitive global knowledge economy and the fact that over 80 percent of state job growth is created by expansion of existing businesses and start-up activity, economic development today is as much or more about talent attraction, place-making, innovation, and global engagement as it is about company recruitment.
Mayor Fischer recognized that shifting paradigm early in his administration as the city worked closely with Brookings on a metropolitan business plan and regional economic growth plan with the neighboring city of Lexington and the surrounding 22-county super region. Export and foreign direct investment planning efforts also helped inform new thinking.
This evolving definition prompted a fundamental reorganization of regional economic development. In 2014, Louisville launched a new integrated economic and community development entity, Louisville Forward, ending a long-standing outsourcing arrangement for business attraction, retention, and expansion and pairing business development functions with the city’s real estate, land use, planning, and design activities.
One of the immediate outgrowths from that work was a focus on talent development as an element of economic development. We reconstituted our workforce investment board and integrated their staff in our work to better link labor supply and demand and provide a trained workforce for employers in many fields. Louisville has had a longstanding initiative to increase the number of residents attaining two- and four-year college degrees, but our scope has now expanded to include certificate programs, given the important role they play in quickly meeting the changing demands of employers. As a result, we now have best-in-class credentialing programs in advanced manufacturing and coding.
The new structure has also changed the focus of many of our other programs. By aligning our built environment team with our business development staff, we are working together to create a quality of place that will attract a talented workforce. We have also changed our incentive awards to focus on high-wage jobs, and offer incentives to companies willing to locate in, and hire from, distressed neighborhoods. By looking at median wages rather than average wages, we have gained deeper insights into both individual projects and our economy at large.
The big frontier for remaking economic development is metrics. Despite discussion and experimentation underway in the field—including Brookings’ recent Metro Monitor examining measures of economic growth, prosperity, and inclusion—economic development still generally measures itself along three basic data points: number of jobs created, total dollar investment, and the number of new projects. There is nothing wrong with those measures, and Louisville still competes in the top 10 nationally in that regard.
But real economic growth is much more complex and requires deeper measurement. We must continue to evolve incentive structures to ensure that we are really benefitting those we seek to lift up. We know that we have recovered from the Great Recession, but we also know that many citizens aren’t reaping the benefits of that recovery.
As economic developers, we must be willing to remake the way we do our work and the way we measure it to ensure that all have an opportunity to prosper—a successful economy depends on it.
Photo: The Pug Father via Flickr.