The Latest in Economic Development

This week’s blog discusses free online education, the economic impact of hosting a Super Bowl, a new ILO report, and the difficult passage from education to employment. Comment below or send to common@nlc.org.

Get the last edition of “The Latest in Economic Development.”

I don’t always agree with Tom Friedman, but when I do, it’s when he’s optimistic about free online education sites like Coursera and Udacity. Simply put, these sites have blown up. Friedman notes that last May, 300,000 students were taking 38 courses through Coursera; today, the site has 2.4 million students taking 214 courses from 33 universities. Friedman likes to imagine how these education platforms could change foreign aid, but in an economic development context, I’m thinking about how they could change workforce development.  Nothing can match on-the-job, in-person work experience, but think about how a student could learn – for free – the underlying features of, or how to operate, advanced manufacturing machinery before he or she steps on the factory floor. Right now, many of the courses offered online are purely theoretical, but this is the internet; there’s plenty of room to add more applied subjects. And, as a current Coursera user, if the student is completely committed to the curriculum, these courses do work.

The Super Bowl is this weekend. What’s it worth to the host city, in this case New Orleans? Reuters reports that “officials have estimated the economic impact of the Super Bowl on New Orleans at $434 million, outstripping a projected $238 million for the annual Mardi Gras festival the following week.” But the city has also put up big money in preparation: $350 million on the airport, $95 million on the convention center, and $300 million on the Superdome, where the game will be played. Of course, there are a number of skeptics who dispute the Super Bowl boost. CBS News reports that actual economic activity rarely meets rosy pre-game predictions, mostly due to how the forecasts are formulated. For New Orleans though, Super Bowl weekend is about more than the dollars that will flow into the city. It’s another bright spot on the long road back from the devastation that Katrina brought to this tourist-dependent destination.

Unfortunately, the International Labor Organization released a report last week that predicts a rise in global unemployment and a worsening of the “skills mismatch.” While many (including NLC) are still debating whether the data bare out a true skills mismatch in the US, the ILO uses global data to state its case. The story goes that in the crisis, many workers lost their jobs in industries that were contracting, so the chance of being employed in the same industry was slim. Being forced to switch to a new industry or sector inevitably led to a situation where the worker’s skill set was not suitable to find new employment. Another reason for persistent unemployment is that investment has not returned to pre-crisis levels. The report explains: “The indecision of policymakers in several countries has led to uncertainty about future conditions and reinforced corporate tendencies to increase cash holdings or pay dividends rather than expand capacity and hire new workers.” Get the full report here.

McKinsey has been studying the passage from education to employment – why employers are finding it difficult to find graduates with adequate preparedness for the workplace. Keep in mind that McKinsey tracked global data, but certain themes emerge, such as a disconnect between what education providers think they are offering, what students think they are getting out of education, and what employers are seeing in applicants and new hires. For example, 72% of education providers believe “new graduates are ready to work,” while only 42% of employers and 45% of youth feel this way. Also, “39% of education providers believe the main reason students drop out is that the course study is too difficult, but only 9% of youth say this is the case (they are more apt to blame affordability).” Get the full report here.

Japanese Localities Build Growth on Arts and Culture

Editor’s Note: This is the third in a series of blog posts on Jim Brooks’ trip to Japan with the The Council of Local Authorities for International Relations (CLAIR) Fellowship.

The Tate. The Getty. The Guggenheim. MoMa. These are household names and as such are among the most prestigious museums of modern art in the world. Breaking into this august company is a tremendous challenge. But for sheer inventiveness and audacity, a grade of A+ goes to the remarkable Chichu Art Museum in Japan’s Kagawa Prefecture overlooking the Seto Inland Sea – Japan’s first national park.

The CLAIR delegation in Tokyo

The CLAIR delegation in Tokyo

The region already boasts a small “garden museum” on the grounds of the studio use by Isama Noguchi, a pioneering sculptor and creator of earthworks, gardens and plazas. His major works are in Paris, Tokyo, Hiroshima, Fort Worth and Venice. Another gem, the Genichiro Inokuma Museum of Contemporary Art in Marugame City places an extensive collection of his work in a facility designed by famed architect Yochiro Taniguchi, known for his work at the Metropolitan Museum of Art (MoMa). Also of interest is Taniguchi’s design of the Higashiyama Kaii Setouchi Art Museum at the foot of the Seto Ohashi Bridge.

The Chichu is genuinely a world class facility. The building itself is a work of art and a product of architect Tadao Ando, who also designed the sister gallery the Lee Ufan. The galleries of the Chichu are housed within a hill, leaving the land’s natural beauty unscathed. Artworks are bathed in natural light from skylights yielding brightness or shadow as each minute of the day passes. On display are works by Walter De Maria (Time/Timeless/No Time), James Turrell (including Open Field), and five water lily works by Claude Monet, the acquisition of which pre-dated the creation of the museum.

For the state and local government leaders of Kagawa Prefecture, Takamatsu and Marugame cities and other localities, economic prosperity is tied to a mix of economic assets including high quality modern art, scenic and historic places, and a spiritual and emotional connection to the shrines and temples set among the natural landscape of the island of Shikoku.

During 2013, the prefecture will host an international arts festival, the Setouchi Triennale providing a 108-day festival across three seasons using multiple venues dotting the Inland Sea islands and the museums on the main island of Shikoku. More than 170 artists from 16 countries will display works during the festival period.

Art at the Lee Ufan Museum

Art at the Lee Ufan Museum

Some important strategic partners already are involved beyond the government entities. The Fukutake Foundation has, for example, helped to underwrite both the Chichu and the Lee Ufan museums on Naoshima island and launched the original arts festival in 2010.

Other scenic, historic or spiritual attractions include Ritsurin Gardens, the Zenigata sculpture at Kotohiki Park and the Zentsuji Temple. In fact, 88 temples and shrines dot Shikoku. A formal pilgrimage road, known as the Shikoku Henro, is in various stages of development.

The state and local leaders who have presented these strategies have a solid vision and are not afraid to experiment with some non-traditional approaches. The commitment, imagination and world class assets will likely reap significant economic rewards.

Global Outreach by Japanese Cities

Editor’s Note: This is the second in a series of blog posts on Jim Brooks’ trip to Japan with the The Council of Local Authorities for International Relations (CLAIR) Fellowship.

The Japanese local government perspective on global outreach is a simple one. They believe that the key to economic prosperity is a greater focus on promotion of an international network with and among cities.

The Japanese outward focus began during the post-World War II period. In 1955, the cities of Nagasaki and St. Paul, Minnesota established the first US-Japan sister city. There are now over 1,600 sister city affiliations all over Japan.

What began as alliances of friendship and community have expanded to include other humanitarian purposes as well as economic and commercial relationships. The network of relationships has expanded to such an extent that in 1988, the Council of Local Authorities for International Relations (CLAIR) was established by and for municipalities. CLAIR coordinates globalization efforts for municipalities through its seven country offices worldwide. The work of CLAIR supports international exchanges among local leaders, promotes improved foreign language education in Japan, and supports the building of a true multicultural society.

CLAIR is funded by local governments and its technical staff is drawn from the ranks of top professionals in cities all over Japan. These staff members accept a tour of duty in one of the overseas offices helping to ensure that the network of global contacts rests with city hall staff as well as with national government diplomats.

What is most remarkable is that during the period since the year 2000, when local government was experiencing a decrease in the number of employees and reductions in their salaries, the number of global affiliations by Japanese cities continued to increase; particularly ties to the higher growth economies of the Republic of Korea and China.

In recent years, the Japanese have established a focus on acquiring and sharing specialized expertise and conducting training between and among local authorities. In the economic field, local governments also are supporting efforts to triple the present number of foreign tourists to 18 million by 2016. They also are supporting export sales of local specialty products outside Japan.

The Latest in Economic Development

The Latest in Economic Development is back after a holiday hiatus and we’re kicking the year off with a look at a new program in NYC, the Bay Area’s food truck related growth, Phoenix’s economic recovery, and a round-up of the new city rankings.

Have thoughts or pieces to add? Comment below or email me at mcconnell@nlc.org.

Businesses in New York City get a new way to interface with government.

As part of a city-wide effort to provide more business services online, New York City’s Department of Consumer Affairs (DCA) launched a new live chat to help answer questions about regulations. According to Crain’s New York Business, business owners who sign in to the system are greeted by a DCA staff person and asked, “How can Consumer Affairs help you today?” in a Google Chat type format. In addition to the new online chat system, the city hopes to have 80% of applications for business permits and licenses online by the close of 2013.

Food trucks are in high demand, but they’re not the only businesses profiting from the mobile food craze.

According to Ben Worthen in The Wall Street Journal, the addition of an estimated 250 food trucks in the Bay Area has generated demand for other local businesses like vehicle customizers and logo makers.

Recovery is good, but will cities repeat past mistakes?

The Phoenix region was one of the hardest hit by the recession and is now experiencing a quicker than average recovery. However, Richard Shearer and Shyamali Maya Choudhury caution in The New Republic, Phoenix and other similar regions’ recoveries are driven by the same consumption industries like hospitality, retail, construction and real estate that “sunk their economies” in the first place. Further, these regions must move  “from a growth model focused inward and characterized by consumption to one that is globally engaged and driven by production and innovation.”

Not to be outdone by all Golden Globes, the new year brings a sort-of “best dressed list” for the economic development crowd.

Forbes released its “America’s New Tech Hot Spots” using research from the Praxis Strategy Group.  According to the ranking, which measures growth in science, technology, engineering and mathematics-related (STEM) jobs,  traditional tech hot spots have remained flat or lost STEM employment while “…double-digit rate expansions of tech employment have occurred in lower-density metro areas such as Austin, Texas; Raleigh, North Carolina; Columbus, Ohio; Houston and Salt Lake City.” The Washington, DC region came out on top in the rankings.

While San Jose, California was slighted in the aforementioned “America’s New Tech Hot Spots,” it took top billing in The Milken Institute’s Best Performing Cities, which uses a variety of weighted metrics (job growth, wage growth, concentration of tech companies, etc.). The Austin and Raleigh metropolitan areas captured the second and third spots.

Ideas and Inspiration from Japan

If you scan the news headlines of the major Japanese print and television media outlets and compare them to any other large, rich and democratic country, you won’t find many differences. For example, the latest stories include the grounding of the Boeing fleet of 787 Dreamliners, an ongoing dispute with China, and the public relations campaign on Facebook and Twitter by the newly elected Prime Minister Shinzo Abe and his colleagues in the Liberal Democratic Party (LDP). Dig a bit deeper into topics of economic growth and one discovers the political struggles for advantage in a battle over government economic stimulus and the allowable rate of inflation tolerable by the central bank.

But of course Japan, as a country and as a society, is not America nor is it any part of what has traditionally been thought of as “The West.” Japan’s long history and unique culture, along with its global isolation well into the 19th century, makes it a country as different as anyplace an American is likely to visit.

Into this ancient culture I and eight other U.S. and Canadian state and local government representatives will arrive as members of the annual CLAIR Fellowship delegation on January 20. And though it may be 160 years since Commodore Matthew Perry’s “Black Fleet” sailed into Tokyo Bay and breached the Japanese isolation, for this crop of Fellows Japan remains terra incognita.

The Council of Local Authorities for International Relations (CLAIR) Fellowship will take our delegation to Tokyo and its region and also to several stops in Kagawa Prefecture. The focus is on comparative governance and also on local innovations and best practices which may be shared across national borders.

Whether in seminars or formal lectures, in government buildings or impromptu tea houses, the Fellowship is about learning, appreciating, respecting, understanding and sharing all that we see, hear and experience in Japan. The CitiesSpeak BlogSpot provides one opportunity to share this experience. More than a travelogue, the posts are intended to offer some insight or perhaps share an epiphany.

It’s an exciting and stimulating adventure on which we are about to embark. Without trepidation I am prepared to embrace the sentiments of the Japanese expression, “If you do not enter the tiger’s cave you will never catch its cub.” Perhaps during my travels, I will discover the true subtleties embedded in this phrase.

2013: A Pivotal Year in Ending Veteran Homelessness

The holiday decorations are put away, the resolutions have been made (maybe even broken by now?), and 2013 is underway. This is a critical year in our nation’s efforts to end veteran homelessness. In late 2009 and early 2010, the federal government rolled out their plan to end veteran homelessness by 2015. We are now more than half way through that timeline and if we are to achieve that goal, the involvement of elected officials and municipal staff is critical.

One of the more important actions that officials can take is using their positions to bring attention to what is happening to end homelessness and encouraging the public and private sectors to work together. As part of the annual homeless point-in-time count in Baltimore, Maryland, staff in the Mayor’s Office of Human Services are recruiting other city departments for volunteers, as well as asking for supplies such as pens, clipboards, flashlights, and safety vests. In addition, Mayor Stephanie Rawlings-Blake is speaking at a community briefing to generate media coverage and raise awareness about efforts to count the homeless, as well as the ongoing efforts to end homelessness in the city.

To help cities begin each year with a renewed understanding of what they need to do to end homelessness in their area, the U.S. Department of Housing and Urban Development (HUD) requires communities that receive homeless assistance resources to determine critical baselines of information each January. First, communities much report how many units of housing and shelter space are available for people who are homeless. Second, a community-wide count of the homeless living in shelters as well as those living on the streets is required.

Nationally, this information is compiled and analyzed with the results coming out late in each calendar year. The report on 2012 was released last month and it showed that progress is being made. In a previous blog post, it was noted that homelessness among veterans has dropped 7.2% since January 2011 and by 17.2% since January 2009. This progress is good to see, but it is not enough. At this rate, we will have homeless veterans well beyond 2015.

All communities that receive homeless assistance resources are required to do an annual point-in-time count. However, a growing number of cities, including Baltimore, are integrating innovative strategies into their point-in-time count efforts to ensure that the homeless who are the most likely to die on the streets are the first in line to receive assistance such as housing vouchers. By using a vulnerability index to help prioritize those most in need while also doing their annual point-in-time count, cities are able to more effectively use the limited resources that are available and ensure those resources have the largest human and fiscal impact.

Using the vulnerability index fine-tunes a strategy known as “Housing First.” For years, research and anecdotal evidence has shown the benefits of addressing homelessness through the Housing First model. By placing people directly into housing with supportive services there are fewer homeless as well as larger financial savings. In Albuquerque, New Mexico, Mayor Richard J. Berry has called this strategy “the smart way of doing the right thing.” HUD is so supportive of this innovation that they have featured it in their quarterly publication Evidence Matters.

Back in Baltimore, Gabby Knighton, Outreach Coordinator for Homeless Service Programs says that “incorporating the vulnerability index into our annual point-in-time count is critical. This enables us to identify our chronic and most vulnerable homeless individuals so that we can connect them with permanent housing. By doing this, we are preventing people from dying on the streets and keeping people from rotating through our courts, jails, and emergency rooms, consuming valuable public resources.”

As a city leader, you can do something to help.

Help raise awareness about efforts already underway in your city. Is your city engaged with the 100,000 Homes Campaign and using tools like the vulnerability index? Find out by seeing what cities are engaged, and contact the Campaign to find out how they can help your own city’s work.

We can do this, but it will take more than wishful thinking and good intentions. It requires action.

So add one more item to your list of resolutions. Resolve to make 2013 the year your city made the most progress yet toward ending homelessness.

What is Economic Gardening and Why Does it Matter?

Economic Gardening, which first started in 1987 in Littleton, Colo., is increasingly being put forth as a mainstream strategy to grow local economies. Yet, it’s still a concept that is largely unfamiliar to many people.

Want to learn more about economic gardening? Sign-up for NLC’s webinar on January 22nd.

It’s An Economic Development Strategy

In short, it’s targeted support for companies that are already in your community, to help them grow.

According to the Edward Lowe Foundation, economic gardening is often referred to as a “grow from within”  strategy. In contrast to traditional business assistance, economic gardening focuses on strategic growth challenges, such as developing new markets, refining business models and gaining access to competitive intelligence.

The strategy centers on providing market research to so-called second stage companies – growth-oriented businesses with external market potential that have moved beyond the startup stage. Typically, second stage companies employ 10-99 people and bring in at least $1 million in revenue each year. Chris Gibbons, who pioneered the program in Littleton, described the economic gardening process to a local Denver news blog:

” We do market research, competitor intelligence, industry trend work, search engine optimization and Graphic Information System mapping, and a lot of tools that big companies have. If you’re a company of 5,000 to 10,000 people, you probably have that stuff in-house. But if you’re a company of twenty, thirty people, you’re doing good just to make and sell and get it out the door. You don’t have the excess people to go and do that sophisticated stuff, and that’s what we do for them.”

For more on second-stage companies, check out You Know You’re a Second Stage Company When… (isn’t small business humor the best!)

To Help Generate Jobs and Revenue

Adding jobs is a primary priority for most cities. However, there are only so many large economic attraction deals each year and lots of communities vying for them. Further, as detailed in the New York Times , the use of  the large incentive packages to attract companies continues to be controversial, especially as the public calls for greater transparency and accountability with public funds.

Given the challenge of attracting new companies, economic gardening provides tools for communities looking to support companies that are already in their backyard. And research suggests that these second stage companies can be big job generators because of their capacity to grow.

But It’s No Silver Bullet

Any economic development program should be rooted in a long-term strategy based on a community’s strengths and weaknesses.  While economic gardening is an appealing idea, as with any economic development tool, it’s no silver bullet.

To date, there is not much data available on the effectiveness of programs. According to Chris Gibbons “ the program has helped entrepreneurs double the job base in Littleton from 15,000 to 30,000 and triple the retail sales tax from $6 million to $21 million over the past 20 years.” Additionally, according to an economic impact analysis of Florida’s pilot economic gardening program, GrowFL, companies who participated in the program created an average of 5.2 net new jobs per company.

Challenges with economic gardening include overcoming a lack of trust in the resources a city can bring to the table, building awareness about programs, and actually identifying second stage companies.

This is echoed by Doug Bene, Economic Development Manager for the city of Longmont, CO, who oversees the city’s economic gardening program. According to Bene, a challenge is finding and engaging with second stage companies who may not be involved with the city beyond the permit and zoning processes, and further convincing business owners that the city has something of value to offer them.

These challenges are common with many government-led business assistance programs. Working with trusted partners, like the chambers of commerce, universities, SBDCs or trade groups can help overcome some of these barriers.

Also, an economic gardening program is not a quick fix. According to Gibbons, “It is important for cities to understand that economic gardening is not a quick answer to a plant shutting down. It is not a fad diet, it is a lifestyle change. You cannot expect silver bullet solutions to sudden economic woes. Economic gardening takes time to put into place and time to reach a critical mass of growing companies.”

Still want to learn more about economic gardening?  Attend NLC’s upcoming webinar. Here are the details:

NLC Economic Gardening Webinar

Tuesday, January 22, 2013

2:30– 3:30 p.m.

Speakers:

  • Penny Lewandowski, Vice President, Entrepreneurship & Strategic Direction, The Edward Lowe Foundation
  • Kara Palmer Smith, Director, Business Development, GrowFL Program Director, Economic Development Council of Tallahassee/ Leon County, Inc.

Have comments or questions? Post below or email me at mcconnell@nlc.org.