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Economic Development As A Triage Activity. Marc Anderberg Director, Applied Research Texas Workforce Commission Annual Workforce Conference Phoenix, AZ April 10-11, 2008. Limitations of Cluster Theory. Scale Limited number of “trophy-size” recruits Competition (86 of 86 MSA for biotech)

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economic development as a triage activity

Economic DevelopmentAs ATriage Activity

Marc Anderberg

Director, Applied Research

Texas Workforce Commission

Annual Workforce Conference

Phoenix, AZ

April 10-11, 2008

limitations of cluster theory
Limitations of Cluster Theory
  • Scale
    • Limited number of “trophy-size” recruits
    • Competition (86 of 86 MSA for biotech)
    • Enough to tip the scales???
      • TX Emerging Technology Fund vs San Diego, SD, KS
      • Intangibles (CA, MA, WI, MO referenda)
    • Small businesses and microenterprises
      • Existing scale
      • Job creation
  • Creative Destruction
    • Exploitive vs exploratory innovation
    • Vulnerability
when cluster theory doesn t apply continued
When Cluster TheoryDoesn’t Apply(continued)
  • Regional Differences
    • Inside versus outside the “Texas Triangle”
    • Rural vs metro and suburban counties within same LWDA
  • Migration and aging of the population
    • Talent supply (“Brain Drain”)
      • Critical mass/agglomeration (Jane Jacobs)
      • Theory of the “Creative Class” (Richard Florida)
    • Consumer demands
  • Wealth creation versus job creation
  • “Market Failure”
    • Location – spatial mismatch
    • Equitable distribution
alternatives
ALTERNATIVES
  • Triage concept (remember M*A*S*H)
    • “Walking wounded”
    • Critically injured
    • Beyond hope
alternatives strengths and opportunities
ALTERNATIVESStrengths and Opportunities

Continue to do what you do best

  • Ag (crops and livestock) and Oil & Gas
  • Diversify and differentiate
  • Capture more of the value added
    • Intermediate vs final demand
    • New markets (niche, international)
    • Quality, branding and marketing
  • Become more efficient
  • Pooling of resources – cooperative
  • Be Opportunistic in “appropriating” cluster language
alternative strengths and opportunities
ALTERNATIVEStrengths and Opportunities
  • Understand your comparative advantage
  • Differentiate between export industries and population-serving industries
    • Retail is NOT economic development
      • Retail and personal services follow population and income growth
      • Conserve scarce resources for export industry development
        • Resist notion that bidding wars are “business as usual
        • Use information resources and indirect incentives
        • Understand leakage, displacement and import substitution
    • Stimulate population growth
      • Quality of place
        • Enhance natural amenities
        • Market them through tourism and residential relocation
      • Quality of life
        • Cheap land, low crime, low cost of living
        • Market to equity rich-city weary snowbirds
        • Upgrade services (e.g., cure problems like medically-underserved)
alternatives strengths and opportunities1
ALTERNATIVESStrengths and Opportunities

Footloose industries

Business as a virtual platform

Place still matters

  • Proximity to final consumer
    • I have deployed lots of IT – I just don’t have any knowledge worth transmitting across the globe at the speed of light
    • Knowledge vs Information-based economy
  • Quality of life and quality of place
  • Green Economy & Tradability of Skills
alternatives strengths and opportunities2
ALTERNATIVESStrengths and Opportunities

Grow your own

  • World class education
    • Foundation
    • Entrepreneurship
    • Stewardship
  • Access to capital (angels, micro-lenders, conventional)
    • Information broker and networking
    • Business plan development (see Dot Com Flame-outs)
    • Tech assistance
      • SCORE, ag extension, MEP, SBDC
      • Incubator, industrial park and exit strategy
  • Scale and expectations
    • IT as enabling rather than as a cluster

(There are no low tech industries, only low tech firms)

― Get the infrastructure right

alternatives addressing weaknesses
ALTERNATIVESAddressing Weaknesses
  • Base closure and abandoned factories
    • Resources and best practices
    • Recovery, renovation (speed essential)
    • Market spade-ready, finish-out ready
  • Cooperation
    • Rather than competition (bury the hatchet, ford the river Mr. Rhoden presentation)
    • Get a piece of the action
alternatives when life gives you lemons make lemonade
ALTERNATIVESWhen life gives you lemons, make lemonade

Reversing cluster logic

  • Absence of legacy industry as barrier (Twin Cities)
    • Incremental change rather than breakthroughs
    • Risk-aversion and protectionism
  • Too much is disadvantage
    • Degradation of quality of place & quality of life
      • San Jose, CA migration to Austin, TX
    • Dispersion of vulnerable critical infrastructure
      • Gulf Coast refining vs Arkansas, Oklahoma or inland Texas
alternatives addressing weaknesses1
ALTERNATIVESAddressing Weaknesses

Public good argument

  • Function of government is to fill gaps where market forces fail
  • Market forces will “take care of” the metro and suburban areas
  • With substantial comparative advantage, they can’t make the “but for” argument to justify financial incentives
  • Rural areas (and inner-city ones) need larger allocations in order to level the playing field
  • Rural areas and inner-cities have a greater need for wealth creation and jobs
  • Productive use of human resources in rural areas and inner-cities achievements decrease “drag” on the system.
measuring success
Measuring Success

Efficiency, ROI and net job creation are not the only measure

Equitable distribution of cost and benefits

Earmarked funds

  • USDA
    • and HUD
    • and EPA
  • DoD (dual-use) and Homeland Security
  • NSF and Department of Education
  • NIH and HHS

Special programs

  • Enterprise and Empowerment Zones
  • Community Redevelopment Act

Reduced vulnerability

  • Diversification of the economic base
  • Dispersion of critical infrastructure
  • Retention of jobs relative to expected loss
  • Stemming the brain drain
    • Expanding the knowledge base
    • Nimble to respond to changing demands
    • Innovation and entrepreneurship are the foundations of wealth creation
marc anderberg

Getting Down to Business: Applied Cluster Theory

  • Economic Development As a Triage Activity (in 2007)
  • Job Chains and Churning
  • Megatrends: An Environ-mental Scan of the Forces Sculpting Texas’ Eco-nomic Landscape (in 2007)
  • Becoming and Employer of Choice: Talent Recruitment and Retention During the Coming Skills Shortage
  • Technology Workers in the New Texas Economy
  • Infusing Strategic Planning with Local Wisdom
  • Bridging the Digital Divide: Under-representation of Women and Minorities in Technology-Intensive Occupations
  • The Emerging Biotechnology Industry
  • The Study of Emerging Occupations
Marc Anderberg
  • Email

marc.anderberg@twc.state.tx.us

  • Phone

(512) 491-4803

  • Mail

Marc Anderberg

Director of Applied Research

TWC – LMCI

9001 N. IH-35, Suite 103A

Austin, TX 76753h