Development principles for Ohio cities

The following is an article by Samuel R. Staley, Ph.D. is a co-founder and senior fellow at the Buckeye Institute. He directed the Urban Futures Program at Reason Public Policy Institute, the research division of the Reason Foundation in Los Angeles from 1997 to 2002 where he also served as Deputy Director of RPPI. An Ohio native and resident, he is the author of several books.

While this was written in 2003, the principles are valid today, especially #2 when it comes to Toledo's economic development approach.

Five Development Principles for Ohio Cities

Local regions in Ohio are faced with 21st-century challenges that fundamentally question both the logic of existing economies and the ways we approach economic development policy. Citizens and local policymakers must take a fresh look at how the economy repositions itself in an information-driven, globally competitive world market and what, if anything, public policy can do to influence these shifts.

There are five key observations and principles that would be helpful to include in any discussion of local economic development policy:

1. Focus on the achievable. Any elected official's first inclination is to create and implement a positive program for change. Unfortunately, reality, political and economic, often gets in the way of grand plans, and elected officials need to factor this into their policy recommendations. Cities must focus on what they can achieve, not on visions, hopes, or aspirations that are no longer within reach or impossible to achieve under the best of circumstances. While vision can provide a general context, it cannot provide a workable action plan. Thus, a practical key to successful economic development policy is the ability of local leaders to be realistic in their expectations and in the programs they create to achieve them.

2. Private-sector participation will be key. In the late 20th century, many elected officials believed that government could create jobs by investing directly in projects, or seeding projects that would create a catalyst for long-term investment and growth. Most of these plans have achieved results far below expectations.

Over the past two decades, economic development specialists have recognized that good projects almost always have a significant private-sector component because entrepreneurs have a better grasp of market conditions and the long-term viability of certain kinds of projects. In short, the private sector does a better job of leading and managing projects and leveraging public dollars than does the public sector investing on its own.

Nowhere is this more evident than in downtown revitalization efforts. Downtowns across the nation continue to struggle despite significant public subsidies. Downtowns that in fact have revitalized are those that recognize long-term growth depends on creating a viable market and a business climate in which private investors and entrepreneurs could thrive. More often than not, this requires local officials to recognize that downtowns are boutique markets and serve a specific niche; they no longer serve the historical role of economic engines for regional economies.

3. Providing core services efficiently is paramount to long-term success. Local governments must not lose sight of their core competencies - the services and products local governments provide that no one else can (or will) provide. These core competencies include local infrastructure, certain kinds of regional planning, law enforcement, criminal justice, the quality of public education and other services. To ignore these core services risks compromising economic development in the short and long run.

4. Private investors create sustainable economies. Government investment does not create long-term job growth. Certain types of investments, such as road and sewer infrastructure, help lay a broad-based foundation for private investment. Their job creation and impact on local wages, however, are relatively small. Public works projects may provide a short-term infusion of cash that increases the number of jobs in the short run but they don't provide a foundation for sustained investment.

The vast majority of jobs come from local small businesses starting up, expanding and diversifying over time. Local officials rarely can pick and choose among those private businesses to determine which will be successful. Indeed, the history of economic development is rife with examples of companies that became successful as a by-product of their efforts in their core competencies. Wealth creation, from a public official's perspective, is largely a spontaneous process where the logic and rationale of the success of a particular business can be determined only in retrospect.

5. Leadership requires focus, drive and simplicity. Sometimes, policymakers tend to take a shotgun approach to economic development policy that captures the following philosophy: try as many ideas as you can and hope two or three have an impact. This approach tends to diffuse accountability in the process, and often sets in motion initiatives that work at cross-purposes. A more effective strategy has been for local leaders to identify two or three key areas and goals, and then develop a timed, phased action plan to achieve them. The results are easier to measure, and implementation is clearly and more likely to succeed.

Ohio cities should strive for programs that are focused, market-driven and provide a basic foundation for private investment and wealth-creation. That is what generates tangible results in the long run.