Time for home: lessons learned from the US
I have spent the last three weeks in Cleveland, Pittsburgh, Philadelphia and Providence exploring how those cities have responded to economic decline and indeed economic opportunity.
I have been fascinated by the levels of collaboration, the role of anchor institutions, the scale of foundation resource, and the ability to raise and redistribute taxation as means of enabling that response. While I have seen lots of good work in those localities, I have also been amazed by the scale of the remaining challenge, particularly in terms of addressing inequality.
I’ve also spent time in New York and Washington DC engaging with key economic development-focused think tanks, and leading thinkers on local economies.
Here are the key lessons learned from these discussions around economic development policy in the United States:
- Locally focused economic development is the domain of the few and removed from the business growth and inward investment approaches of the majority
- Social responsibility is on the rise with businesses moving beyond painting community buildings to real investment in place. The nuance being that it is largely for marketing and corporate purposes
- Leadership is crucial to the rejuvenation of local economies, whether that be through mayoral governance, foundations, anchor institutions, or collaborative networks of socially focused organisations
- If improvement is to continue, it cannot just be city leaders which are the drivers of change; their employees, partner organisations and communities need to buy into their approach
- Economic growth is divisive and inequality rife. Policy needs to enhance opportunity for all communities
- State and city governments in the US have far more power, resource and flexibility than their UK counterparts; with economic development seen as an industry and a key part of their remit
- Inward investment is still the core economic development vehicle with states and in many cases places within states competing for the investment buck through trying to out-do each other on tax breaks. This economic showboating is in some cases leading to the bankruptcy of city governments
- Entrepreneurship and innovation is ripe. Individuals and businesses are creating products and ideas and local partners are investing in supporting the development of those ideas; risks are being taken and local economies are benefiting
- Places have far greater opportunity to benefit from redistributive taxation policies. Redistribution is supporting major economic development projects and community grant programmes
- Philanthropic capital through foundations is a major source of economic development and in many ways stimulates collaboration
- Anchor institutions play a key role in city economies, particularly in the places I visited, and there is a real concerted effort to maximise their impact for the local economy – particularly through their procurement practices
- Cooperative ownership of business works, but there needs to be a realism as to the scale at which this can be effective and the capital required to develop cooperatives
- Maximising the benefits of procurement is viewed as a massive area of opportunity, but like most economic interventions is not effectively measured in terms of its impact upon place and people
- There is a big opportunity to convert businesses into alternative forms of delivery such as social enterprises and cooperatives, particularly as owners reach retirement, and use this as a way of addressing unemployment.
There is much the UK can learn from the United States and as I have found, vice versa, particularly around measurement and evidencing the effectiveness of a local economic approach. Local economic development is perhaps more pronounced in the US given the scale of inequality in the north east of the country; yet is dominated by vehicles and resource local authorities in the UK simply do not have access to, largely in the form of foundations.
We need a new progressive form of local economic development in the UK which balances place, economy, and people and I will outline the shape of this in a wider publication about my trip which will be published in September.
The original article can be read on the NewStart website here.