Perspectives Online

You decide: Can we instill economic development?


Dr. Mike Walden is a William Neal Reynolds Professor and extension economist in the Department of Agricultural and Resource Economics of the College of Agriculture and Life Sciences.
His You Decide column is provided every two weeks by the Department of Communication Services. Earlier You Decide columns are available on the Web at http://www.cals.ncsu.edu/agcomm/writing/walden/decide.htm
Photo by Daniel Kim

At my presentations and workshops to various groups around North Carolina, I'm frequently asked how good-paying jobs can be created in our region. It's a question vital to the entire state, but especially for rural counties struggling with the transition from the 20th century's traditional economy to the 21st century's education- and technology-oriented economy.

How do I answer? First, I honestly say I don't have a magic formula for economic development. I don't know anyone who does. One lesson I've learned as a professional economist for 27 years is that millions of people make business decisions daily, and it's impossible to consistently predict their outcome. However, I do recommend a general economic development strategy. It's a set of six ideas. I've coined the term INSTILL to describe these ideas.

.1. INvest in human and physical capital. Business executives say the two most important elements for attracting jobs are quality of the workforce (human capital) and quality of roads, public utilities and other infrastructure (physical capital). Good-paying jobs require well-trained workers, and roads still move products and people to and from workplaces and markets.

Rural counties, however, face a chicken-and-egg dilemma for skilled workers. Skilled workers are needed to attract good jobs. But often, well-educated workers leave rural counties for high-paying jobs in metropolitan counties. So the counties need the workers to attract the jobs, but they need the jobs to keep the workers! This dilemma isn't easily solved.

.2. Sell the county and region. In today's increasingly competitive environment, counties and regions must actively advertise their assets to potential business investors. Information about the local workforce, schools, infrastructure, market proximity, cost of living, natural amenities and retail and healthcare establishments should be placed on the Web and other access points.

Additionally, data on available land and available commercial and industrial space, and their costs, should be advertised so potential investors across the country and world can easily match their needs to potential supply. Also, it's crucial to keep this information absolutely up-to-date. Investors are turned off by obsolete information.

.3. Go with Trends. Many trends affect our economy, including the increasing importance of education, the replacement of human labor with machines and technology, the increasing importance of services and the increase in world trade. Although some would like to see these trends stopped or turned back, it won't happen. The trends are too big even for a region or a state. They will continue. The best course is to accept the trends and look for the opportunities they present.

.4. Think Individually: Economic development is the result of the individual decisions of many, many entrepreneurs. Localities can make it easier for business entrepreneurs to invest by streamlining necessary regulations and paperwork. Keep all forms and paperwork on the Web for easy access and filing.

.5. Emphasize Location. A unique feature of any county or region, which no other county or region can copy, is its location. Identify your location's benefits — such as nearness to city shopping, state parks, resorts and sports venues — then highlight them.

.6. Think Large. Markets today are global. This implies two tactics for local economic development. First, existing companies should consider foreign markets for sales of their products and services. For example, Asia will have 1.5 billion middle-class consumers within 15 years. Second, foreign-owned companies can be candidates for location in your county or region.

The INSTILL strategy is no guarantee of successful economic development, but it does provide a framework for approaching the issue.

You decide if there's a better way.

By Dr. Mike Walden
North Carolina Cooperative Extension