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Driving Regional Economic Growth:
Opportunities for Cook County
Presentation to the Economic Development
Foundations Working Group
August 31, 2011 Robert Weissbourd
It’s One Economy
Agenda
“Metro-Economics”
Opportunities for Cook County
Key Lessons and Next Steps
Discussion
Economic Development: Markets
Empowerment
Origins: From “Equity” to … “Equity”
Economic Development: Assets
Civil Rights
Putting the Economics in Economic Development
Poverty and Economic Development“… poverty has no causes. Only prosperity has causes. Analogically, heat is a result of active processes; it has causes. But cold is not the result of any processes; it is only the absence of heat. Just so, the great cold of poverty and economic stagnation is merely the absence of economic development. It can be overcome only if the relevant economic processes are in motion.”
-- Jane Jacobs
Photo from Shelf-Basin Interactions
Neighborhoods are Nested in Larger Systems Which Drive the Flows of People and Capital
ECONOMICSYSTEMS
POLITICALSYSTEMSSOCIAL
SYSTEMS
Labor Markets
Business Markets
Housing Markets
Capital Markets
Consumer Markets
GovernmentServicesInfrastructure
PublicGoodsGovernance
Social Capital
Civic Networks
Neighborhoods arise from the interaction of regional economic, social and political systems with physical place.
• Employment networks• Entrepreneurial opportunities• Business, real estate investment• Expanded products and services• Competitive, healthy communities
• Undervalued, underutilized assets
Poverty Productivity
Connectedness
Isolation
LIC economic development reconnects poorer people and places to the economic mainstream.
Market Failure in Lower Income Communities
The Pieces of Economic Development …
Education
Infrastructure
Business Development
Sustainabilit
y
Housing
Workforce Training
Strategic economic development designs and delivers the programs to create a whole greater than the sum of the parts.
Succeed or Fail “In Context” of Each Other
EducationBusiness Development
SustainabilityHousing
Workforce Training
Infrastructure
Why Metros?Economic Geography and Place-Based Development
The Goal is Economic Growth
Goal is economic development - that is inclusive and sustainable. Metros are the means, not the ends
The Goal is Economic Growth
Economic Growth Flows from Market Activity
The outputs we care about – jobs, income, assets, sustainability – are primarily a function of the complex interaction of housing, labor, business and other market systems, enabled and shaped by government and civic sector activity
Goal is to improve performance of these systems
Why Metros?Economic Geography and Place-Based Development
The Goal is Economic Growth
Economic Growth Flows from Market Activity
Major Market Systems Operate at the Metro Level
System performance is function of interactions of people and firms in context of characteristics of place – “on the ground.”
Key geography of many of these systems and interactions is metropolitan region. (Metro includes, but is more than sum of, its neighborhoods. Best neighborhood development deploys people and assets into metro economy, improving both.)
Indeed, one of main reasons for very existence of cities is the agglomeration benefits of concentrating economic activity – an effect of place on market performance.
Why Metros?Economic Geography and Place-Based Development
The Goal is Economic Growth
Economic Growth Flows from Market Activity
Major Market Systems Operate at the Metro Level
Improving Metro Economic Performance Entails Customized Analysis and Deliberate Activity
System and environmental characteristics, opportunities and challenges “on the ground” vary by place.
Particularly in the knowledge economy, increasing returns and imperfect competition are giving rise to specialization and divergence. It is more important than ever to be deliberate and strategic, as the economy no longer “takes care of itself.”
Why Metros?Economic Geography and Place-Based Development
The Goal is Economic Growth
Economic Growth Flows from Market Activity
Major Market Systems Operate at the Metro Level
Improving Metro Economic Performance Entails Customized Analysis and Deliberate Activity
Why Metros?Economic Geography and Place-Based Development
Economic growth entails strengthening metro economies, and that requires deliberate, ground-up, tailored activity.
It’s One Economy
Agenda
“Metro-Economics”
Opportunities for Cook County
Key Lessons and Next Steps
Discussion
Service Exports
75%U
.S. Air Cargo Weight
79%
Airline Boardings
92%
Population
66%
Graduate D
egrees
75%
Venture Capital Funding
94%
Patents
78%
Wind +
Solar Energy Em
ployment
76%
Top 100 Metros Share of U.S. Total
Sources: Brookings analysis of US Census Bureau, FAA, BLS, NIH, NSF, and BEA data; Brookings, ExportNation, 2010 (2008 data); Forthcoming research from Brookings and Battelle
Gross Product
73%
How Metro Economies Grow
Metro economy = total value of goods and services produced in the region
Growth is inherently business sector growth (number, size and profitability of firms)
Business sector grows through firm creation, growth and location decisions (retention and attraction)
Firm creation, growth and location depend upon increases in efficiency and productivity (of firm and system, including product innovation)
Core Question: What attributes of the region increase efficiency and productivity, leading to business sector growth?
Economic Geography
Institutional Economics
What is it About Place that Affects Economic Performance?
New Growth Theory
Economic Geography
Institutional EconomicsNew
Growth Theory
Act Comprehensively – The Whole is Greater than the Sum of the Parts.
Develop Institutional Capacity and Intentionality.
Customize.
Keys to Influencing Economic Performance
Key Systems (Market processes – housing, labor, etc.; production dynamics – clusters, value chains, etc.; innovation dynamics - knowledge creation, networks, commercialization, etc.)
Local (Regional) Enabling Environment(Government regulation, tax and public goods, including
particularly infrastructure and education; civic institutions; qualities of place, including the natural environment; etc.)
Inputs to Production(Human capital; real estate; capital; natural and knowledge resources; etc.)
Economic Outputs(Businesses – gross regional product, profits; households – wages, other income, etc.)
Macro/Global Context & Trends
What Drives Inclusive and SustainableEconomic Growth?
Leverage Points
for Sustainable and Inclusive
Prosperity
Leverage Points
Leverage Points
for Sustainable and Inclusive
Prosperity
EnhanceRegional
Concentrations
Leverage Points
Leverage Points
for Sustainable and Inclusive
Prosperity
EnhanceRegional
Concentrations Deploy
Human CapitalAligned with
Job Pools
Leverage Points
Leverage Points
for Sustainable and Inclusive
Prosperity
EnhanceRegional
Concentrations Deploy
Human CapitalAligned with
Job Pools
DevelopInnovation-
EnablingInfrastructure
Leverage Points
Leverage Points
for Sustainable and Inclusive
Prosperity
EnhanceRegional
Concentrations Deploy
Human CapitalAligned with
Job Pools
DevelopInnovation-
EnablingInfrastructure
Increase Spatial
Efficiency
Leverage Points
Leverage Points
for Sustainable and Inclusive
Prosperity
EnhanceRegional
Concentrations Deploy
Human CapitalAligned with
Job Pools
DevelopInnovation-
EnablingInfrastructure
Increase Spatial
Efficiency
Create EffectivePublic & Civic
Culture & Institutions
Leverage Points
Global, Knowledge Economy
Specialization and Dynamism
Build on Your Assets
Coordinated, Cross-Sectoral, Flexible, Adaptive, Open,
Information-Rich, Inclusive,
Entrepreneurial
Compete on Value-Added
(not low-cost)
Intentionality
Economic Development
in the Next Economy
Metropolitan Business Planning: A New Way of Doing Business
Grounded in Economics and Business
Comprehensive, Actionable Strategies
An Ongoing Enterprise
Enables “New Federalism”
Northeast Ohio
Minneapolis-St. PaulPuget Sound
Source: Brookings Institution
Pilot Metro
Business Planning Regions
It’s One Economy
Agenda
“Metro-Economics”
Opportunities for Cook County
Key Lessons and Next Steps
Discussion
It’s One Economy
Agenda
“Metro-Economics”
Opportunities for Cook CountyOverall Regional Performance
By Leverage Point:
Definition and Practice
Regional Status
Exploring Roles for Cook County
Strong Assets
Switzerla
nd
Chicago M
SAPoland
Belgium
Sweden
Saudi Arabia
Taiw
an
Norway
0
100
200
300
400
500
600
Chicago Region's GRP in Context
GDP
in B
illio
ns o
f USD
Source: International Monetary Fund
If the Chicago MSA were a nation, it would have the 20th largest economy
1980
1983
1986
1989
1992
1995
1998
2001
2004
2007
0.90
0.92
0.94
0.96
0.98
1.00
1.02
1.04
Ratio of Chicago area per capita GRP growth to U.S.,
1980-2009
Losing Momentum
Source: Moody’s Analytics; MCIC
-5%
0%
5%
10%
15%
20%
25%
30%
23.2%
6.3%
Cumulative Job Growth, 1992-2008
U.S. Chicago MSA
Source: National Establishment Time Series
“Strong Balance Sheet, but Poor Income Statement”
Excelerate Labs
18h Street
Development
Corporation
Lake County
Partners
IL Clean Energy Community FoundationWill County Center
for Economic
Development
Metro Chicago
Healthcare Council
UIC Center for
Urban Economic
Development
Chicago
Manufacturing
Renaissance Council
Workforce Boards of Metro Chicago
Chicago Biomedical
Consortium
Apparel Industry Board
Metro Economic Growth Alliance
Back of the Yards
Neighborhood Council
Chicago Council on
Science and
Technology
Illinois Manufacturing
Extension Center
Greater SW Development Corporation
Choose DuPage
Clean Economy Network
Alliance
for
Illinois
Manufacturin
g
iBio
CMAP
CEDA
Chicago Workforce
Investment Council
Chicagoland Entrepreneurial
Center
World
Business
Chicago
The Delta
Institute
Chicago Southland EDC
DCEO
Chicago Jobs Council
Illinois
Medical
District
Global Midwest Alliance
DeKalb County
EDC NanoBusiness
Alliance
McHenry
County EDC
Center for
Nanoscale
Materials Illinois Venture
Capital
Association
Chicago Technology
Park
Chicago Council
on Global Affairs
Chicago Southland
Chamber
of
Commerce
Illinois Technology Association
Chicago
Convention &
Tourism Bureau
Illinois S
cience
& Technology
Coalition
Chicagoland
Chamber
of
Commerce
Lots of ED Activity; Little Coordination
Source: Regional Economy Initiative, Metropolis Strategies and RW Ventures.
Enhance Regional Concentrations: Industries, Occupations and Functions
What is it? How the firms and related institutions in the production side of
the economy interact and concentrate, or “cluster,” influencing their efficiency and productivity
Aspects to consider include: Current concentrations and their geography Areas of high growth potential What shared inputs, activities, infrastructure and other factors
contribute to efficiency/productivity of targeted clusters Extent to which clusters have already self-identified and
organizedStrategies might include:
Provide co-location opportunities (e.g., business parks) Strengthen institutional and network infrastructure Cluster-specific training, R&D, infrastructure, finance, etc. Cluster-specific innovation/entrepreneurship Attraction of complementary firms
Regional Status: Strong but Underperforming
Diverse economy, with complementary specializations, in both conventional and functional clusters
Many of the biggest clusters are growing more slowly than their national peers
Strengths in logistics, business services, food processing, metal/machinery manuf., health care/life sciences, …
Several groups are pursuing cluster studies, but few comprehensive, business driven cluster strategies are underway.-25000 -20000 -15000 -10000 -5000 0 5000
0
0.2
0.4
0.6
0.8
1
1.2
1.4Transportation & Warehousing
FIRE & Business Services
Consumer IndustriesHealth & Welfare
Durable Goods Mfg
Headquarters
Utilities
Construction
Tourism
Information & Media
Nondurable Goods Mfg
Local Share - Chicago Competitiveness, 2010
Loca
tion
Quo
tient
, 201
0
*Size of bubble represents 2010 Gross OutputSources: MCIC; Regional Economy Initiative, Metropolis Strategies and RW Ventures.
Exploring Roles for Cook County
In Its Own Businesses Support business formation and growth in County
supply chains (e.g. Evergreen Cooperative Initiative…) Strengthen green buildings cluster by retrofitting
County buildings, driving demand for energy efficient products and services
In Its Economic Development Programming Target programs (e.g., WIA, CDBG) to support the
region’s most promising clusters, such as Freight and Logistics
Through New Initiatives and Partnerships Lead organization and development activities in Health
& Medical clusterPreliminary and Illustrative: For Discussion Purposes Only
Deploy High Human Capital Alignedwith Job Pools
What is it? Linked, mutually reinforcing human capital and job pools Efficient labor market deployment Opportunity and mobility
Aspects to consider include: Concentrations and growth prospects (both skills and occupations) Alignment of human capital and job market Quality of education/training systems (K thru lifelong learning) Attraction/retention record and factors Labor market efficiency
Strategies might include: Increase demand-side focus of workforce development Increase access, reduce transaction costs in labor market Establish career pathways, apprenticeships, etc. to foster
economic mobility Target and link production, attraction, retention of
workers and firms
Slightly above average in percent of knowledge workers
Attracting talent from around the world (as indicated by flow of high skilled immigrants)
52% of all Illinois jobs are “middle skill,” but in 2008 there was a 9% shortfall in workers with the skills to fill them
Production of human capital is mixed – world class universities, uneven community colleges, many failing elementary and high schools
HC development system fragmented and not sufficiently employer driven
Regional Status: Bifurcated
Sources: Brookings Top 100 Metros Metrics; Illinois’ Forgotten Middle-Skills Jobs, The Workforce Alliance, 2008; Graph based on data from U.S. Census Bureau, American Community Survey, 2005-2009 Estimates.
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Percent of Population with At Least Each Level of Education
Cook County
City of Chicago
Suburban Cook
MSA
Illinois
USA
Exploring Roles for Cook County
In Its Own Businesses Use the County’s human capital system to model skill
certifications, job ladders, mobility (focusing on healthcare and criminal justice)
In Its Economic Development Programming Tailor workforce development and prisoner reentry
programs to be more employer/market driven, and tie to needs of high-growth clusters (e.g., freight and logistics)
Through New Initiatives and Partnerships Consolidated County-City workforce investment
management
Preliminary and Illustrative: For Discussion Purposes Only
Develop Innovation-Enabling Infrastructure
What is it? New products, services and business models – the only long
term driver of overall growth
Aspects to consider include: Overall “ecosystem” – supporting institutions and networks Performance at particular stages (R&D, commercialization,
entrepreneurship) Cluster-specific innovation dynamics/opportunities Public-sector enablers/constraints Availability of stage-appropriate finance
Strategies might include: Strengthen regional R&D capacity (education, facilities, funding) Catalyze commercialization of knowledge through research-
industry linkages Foster entrepreneurship through capital access, technical
assistance, mentorship Develop rich networks supporting interdisciplinary cross-
fertilization and deal formation Support cluster-based innovation
Average levels of business churn and low numbers of high impact firms
Limited innovation networks, ecosystem, culture (but emerging, particularly in IT/digital)
Regional Status: Underperforming, but Improving
0.5
1.0
1.5
2.0
2.5
3.0
Total Patents Granted Index, U.S. v. Illinois
U.S. IL
Source: U.S. Patent & Trademark Office
NJ NC CO PA IL WA TX NY MA CA $-
$500,000,000
$1,000,000,000
$1,500,000,000
$2,000,000,000
$2,500,000,000
$192,231,200
$575,407,500
Venture Capital Investments by State ($M)
20092010
Source: PWC MoneyTree
World class research universities and R&D centers, but limited commercialization
Uneven capital access for entrepreneurs (e.g. low SBA lending)
Sources: Regional Economy Initiative by Metropolis Strategies and RW Ventures; Brookings Top 100 Metros Metrics.
Exploring Roles for Cook County
In Its Own Businesses Develop key innovations related to County
operations: digitalization of patient records; next gen. computer-based property assessment; hospital interpretive services; paperless permitting and electronic plan reviews
In Its Economic Development Programming EDA innovation grants?
Through New Initiatives and Partnerships Work with other stakeholders to create R&D centers
(e.g., patient records, foreclosure management, etc.)
Preliminary and Illustrative: For Discussion Purposes Only
What is it? The geographic arrangement of households and firms –
producers, suppliers and consumers – within the region determines transportation costs for people and businesses, and influences agglomeration benefits
Aspects to consider include: Public policies re: land use/zoning, infrastructure, etc. Degree of housing-jobs mismatch Access to transit, commuting times, etc. Spatial concentrations of firms, occupations, functions, etc.
Strategies might include: Focusing development in infrastructure-rich areas Transit-oriented and mixed-use/mixed-income development Affordable housing programs (inclusionary zoning, etc.) Avoid segregation and concentration of poverty Travel pricing strategies (e.g., congestion pricing)
Increase Spatial Efficiency
Housing sprawl and lack of transit investment have led to the 4th longest commutes to and from work, mostly by car
The metro area is the 3rd most congested in the nation, costing the region $7.3 billion annually in wasted time and fuel
Housing Costs as Percent of Income
Housing + Transportation Costs as Percent of Income
Regional Status: Dense Nodes, but Stuck in Traffic
79% of Northeastern Illinoisans have access to transit, BUT only 24% can use transit to access their jobs
The Chicago region is the 3rd most segregated of the top 100 metros
Lack of funding for needed infrastructure improvements
Sources: Housing and Transportation Affordability Index by CNT; Brookings Top 100 Metros Metrics.
Exploring Roles for Cook County
In Its Own Businesses Provide employer assisted housing near large centers of County employment Incent alternative modes of transportation (providing
employees with transit benefits, free and secure bike parking, etc.)
In Its Economic Development Programming Promote spatial efficiency through Building and Zoning
activities Use NSP, HOME and other funds to support transit oriented
development and otherwise encourage spatial efficiency Through New Initiatives and Partnerships
Coordinate with regional affordable housing initiatives
Preliminary and Illustrative: For Discussion Purposes Only
Create Effective Public & Civic Culture & Institutions
What is it? The institutional environment, made up of governments,
private and civic associations, enables and influences the efficiency of economic activity
Aspects to consider include: Degree of horizontal and vertical fragmentation Tax/value proposition Governance: cross-sectoral partnerships; broader institutional capacity
and culture; transparency, openness, responsiveness Information: availability and use of data for economic development
Strategies might include: Inter-jurisdictional coordination/cooperation, including consolidation and
shared services Revenue sharing Strategic engagement of citizens, private and civic sectors (particularly
program-specific, such as community policing) E-government Open data/data-sharing initiatives Permit/license fast-tracking Special-purpose entities
Regional Status: “C”Government Coordination:
1,226 units of government within theseven-county metro area.
More governments per capita than 2/3rds of major metros
Lack of public trustTax & Regulation/Value Proposition
Complex, multi-faceted tax and regulatory systems. Value proposition uneven Illinois taxes fewer services than 46 other states and
has a sales tax rate higher than 46 other states.Governance
Uneven – selectively cross sector, open and inclusive; often top-down and “who you know”
Information Sharing The region is improving but still lags other metros in
transparency and public data.
Sources: “The Economic Impacts of GOTO2040,” RW Ventures, 2010; Brookings Top 100 Metros Metrics; “Public Finance Issues in the Chicago Metropolitan Area,” CMAP, 2009.
Exploring Roles for Cook County In Its Own Businesses
Act as model of transparent government, including data sharing Implement Government 2.0 practices to increase efficiency
and encourage citizen engagement Lower the sales tax rate and expand the tax base to include
many services Improve and make more transparent the value provided for
taxes Ensure sensible and consistent regulations and minimal
bureaucracy In Its Economic Development Programming
Pool funding within County programs and across other agencies for performance-based competitive grants
Through New Initiatives and Partnerships Convene, participate with other governmental, private and
civic actors in regional economic planning Promote shared services agreements
Preliminary and Illustrative: For Discussion Purposes Only
It’s One Economy
Agenda
“Metro-Economics”
Opportunities for Cook County
Key Lessons and Next Steps
Discussion
High Road Development
Low-wageRegulation
Subsidies
Low Road High Road
Good Infrastructure
SkilledWorkers
Key LessonsUndertake “high road” development
Build from your assetsCompete on value-added, not just low costTailor tax-value proposition
Be intentionalCustomized, integrated, tailored to local opportunitiesMetropolitan Business Planning
Act in contextDesign for whole greater than the sum of its partsAllow economics to dictate the geographyAlign equity goals with economic developmentUnderstand spectrum from social service to economic growth
“Metros are the solution, not the problem”Federal and state governments should invest in metros.
Next StepsOpportunities for
the Region (with County “lens”)
Roles for the County
Market Assessment Inventory assets and opportunities
Evaluate Cook government programs and competencies
Strategy Identification Identify high potential strategies integrating key market leverage points
Target strategies best suited to County business, programs,
capacities
Program/Product/Policy Development
Coordinate and create initiatives to implement
strategies
Reorient existing programs, create new ones, coordinate to implement selected strategies
Institutional Capacity Building
Regional business planning/execution (gen.
and project specific)
•Convene, participate in RBP•“Governance for the next
economy”
Preliminary and Illustrative: For Discussion Purposes Only
Discussion
Driving Regional Economic Growth:
Opportunities for Cook County
Presentation to the Economic Development
Foundations Working Group
August 31, 2011 Robert Weissbourd