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Remarks of David A. Sampson Assistant Secretary of Commerce for Economic Development National Association of Development Organization's 35th Annual Training Conference
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| Thank you John (Bruner, NADO President) for the kind introduction.
It is a great pleasure to be with you today in Reno.
EDA is proud of its active partnership with NADO and our other economic development
partners. The partnership approach to economic development is key to effectively
and efficiently addressing the economic development challenges facing our nation's
communities.
EDA will continue to build upon its partnerships with private sector firms,
local development officials, Economic Development Districts, University Centers,
community-based organizations, private capital markets, and other local, state,
and federal agencies. We will continue to look for new and innovative ways to
spur economic development.
I have a couple of items of news to report that may be of interest to you,
particularly given NADO's emphasis on the nation's rural communities.
As you know, for some time now EDA has embraced the model of economic development
around existing industry clusters. Many of our friends and partners wonder,
quite legitimately, "How do we apply the cluster development model to rural
areas?" And then, of course, there are others who take this question to
the extreme, begin worrying, and start rumors like, "EDA is focusing on
urban communities and abandoning rural areas." So let me set the record
straight - this is simply not the case. We are every engaged, and believe very
strongly in the value of rural communities. Before moving to Texas, I was raised
in a small town in Indiana. My personal belief is that those who are able to
raise a family in a thriving small-town economy, and enjoy the lifestyle they
want to enjoy, have for themselves a true blessing.
So the first bit of news that I want to report is that we have just released
a new report, with the help of the University of Minnesota, entitled "Rural
Knowledge Clusters: The Challenge of Rural Economic Prosperity." It brings
to the table the idea of focusing on knowledge clusters, instead of just industry
clusters, in rural areas and describes three Minnesota towns as examples.
The second bit of news is that on Thursday of last week I signed off on a $175,000
investment in the collaborative effort between the NADO Research Foundation
and the Environmental Services Research Institute to create a geographic information
system training scholarship program. This program should improve the ability
of our planning partners to analyze their regional economies and help identify
what industry clusters exist in their area while developing their comprehensive
economic development strategies.
Finally, we have also engaged in discussions with some of the country's leading
thinkers on economic development, like Dr. Mark Drabenstatt of the Federal Reserve
Bank's Center for Rural Studies in Kansas City, and Professor Michael Porter
of Harvard Business School, to further advance the latest thought on rural development.
We believe our mission requires us to provide the latest and best information
available on cutting-edge economic development practices across the nation,
in both urban and rural areas, and we will do that.
I believe, as I know all of you believe, that development of strong regional
economies is imperative to rebuilding confidence and prosperity for all our
citizens. We simply must press forward.
Everyone in this room, including me, has our work cut out for us during the
coming months. We must work together in new partnerships and pursue market driven
development strategies to enhance employment opportunities and long-term prosperity.
Americans expect and deserve no less.
EDA has been working hard to maximize the economic impact of our existing resources
to help regions attract engines of economic growth.
In Washington and in our regional offices, we are working hard to generate
more economic impact per dollar of input than any other federal agency involved
in economic development. To accomplish this, EDA has adopted an economic development
strategy based on enhancing regional competitiveness, fostering innovation,
increasing productivity and developing industry clusters.
The goal of economic development is to achieve a high and rising standard of
living. Every EDA investment - indeed every economic development program or
initiative must meet the test of moving local/regional economies to a higher
level, more diverse, or stabilized economy. In other words, our goal is to promote
structural economic change/diversification, to achieve that high and rising
standard of living.
There are four measures to gauge structural economic change/diversification
- all quantifiable. Here I am indebted to Rutgers University for their work
on this topic through an EDA funded research grant.
These measures interpret forces that create an increasingly sophisticated and
technical regional economy. The first measure; economic diversification, is
associated with increased competitiveness and stability and thereby contributes
to structural change.
The second measure, an increase in earnings per worker, enhances individual
well-being and often fosters a positive change in economic structure.
The third measure views the progression of economic stages - movement from
more basic to more skilled industries - as indicative of positive structural
change.
A final measure correlates investments that result in reduced import dependence
with positive structural economic change. Import dependence refers to the ratio
of imported to local jobs.
Reductions in import dependence are normally accompanied by developing stronger
inter-industry linkages, value-added processing, and an increase in multiplier
effects.
These are the indicators, the measures of economic diversification.
So, what strategy must we pursue to promote structural economic change and
diversification?
President Bush has said, "The role of government is to create conditions
in which jobs are created, in which people can find work." Not withstanding
the demands placed on our budget by national and homeland security efforts,
we believe there is a significant federal role in economic development activities.
However, the country needs a smarter federal effort, both in the sense of what
is expected of it and in the sense of how it is designed and managed.
Expectations profoundly influence how we conduct economic development efforts
and when expectations are unfulfilled they lead to disappointment, disillusionment
and erosion of credibility. It's easy to set high and lofty goals for what we
want to accomplish, but unless those goals are quantifiable, and achievable,
our credibility is eroded. None of us in the profession of economic development
can afford that.
One policy goal is to increase the productivity and wealth of the American
economy. After more than a decade of generally successful business efforts to
compete effectively in a global economy, it is still important that public policies
encourage and strengthen American firms to become more productive and profitable.
A second policy goal is to ensure that all communities share in economic opportunity.
Even after a decade of dramatic expansion of the national economy, some communities
still have chronically high unemployment and low incomes. It is important for
government to do what it can to enable all Americans to have the opportunity
to participate more fully in the American dream and national prosperity.
So the difficulty lies not in the goals of federal economic development activities,
but in our expectations of what can actually be achieved.
We must never lose sight of the fact that it is market forces, rather than
the decisions of government officials that are the primary force driving both
the overall rate of economic growth in our 10.4 trillion dollar economy, and
the geographic location of economic activities. Economic development programs
cannot counteract these powerful forces but they can work in tandem with them.
Economic development programs can help private businesses build links with institutions for collaboration, like schools, universities, community colleges and research institutions. They can assure that public infrastructure is available and that public services are provided to attract economic growth. They can help emerging businesses navigate complex regulatory systems. When the market place bypasses certain geographic areas or when regional economies are experiencing structural economic dislocation, economic development programs can help build a more favorable business climate to attract private capital investment. And most of all, economic development can help promote competitiveness, innovation, and increased productivity. Over time these economic development activities can help to influence both the rate and location of economic change. But federal agencies cannot undertake these activities on their own, especially in a highly diverse and decentralized economy. Without a sustained concerted effort by states and communities themselves, federal efforts will have little or no impact. Communities can attain real economic improvement, even if they are currently experiencing economic distress. But first they must mobilize a broad based and well-conceived effort to increase economic competitiveness. This effort must generally be consistent with market forces and take advantage of the opportunities that markets create. Finally this effort must be sustained over many years - perhaps even decades. Helping such communities get started and contributing to their momentum are realistic goals for the federal government. But to increase overall wealth and to help communities improve economic conditions, the federal effort must be designed and managed more efficiently. We must align resources, flatten the organizational structure, and move resources to the field where the interaction with our partners takes place. We must ensure that YOU have access to the best economic development research and market trends available. Economic development programs must help states and localities Learn through better information, enable them to Leverage all available resources, and Link scattered initiatives to serve local needs. I call these, the "The Three "L"s of federal economic development efforts: Learn, Leverage and Link The economic reality of the 21st century economy is that higher levels of private capital investment drive the creation of higher-skill, higher-wage jobs. Therefore, our mission at EDA is to help foster a positive business environment among America's distressed communities - both rural and urban - to attract private capital investment to produce goods and services and increase productivity thereby providing higher-skill, higher-wage job opportunities. The challenge for today's state and local officials and policy makers is to fashion strategies for each state to ensure they are positioned not to just compete, but to thrive in the new economy. In the next generation economy that regions are seeking to build, the hallmark of vitality will be the agility of institutions and their leaders to recognize and to collaborate in the improvement of existing - or creation of new-sources of economic input advantages. Communities that fail to realize this, that fail to come up with a long-term development strategy, will either decline, or they will stagnate. Our job at EDA ... working with you, is to capitalize on this market-based strategy to seize the economic development opportunities of tomorrow. We believe this competition based, regional approach to development works. It's based on solid research and reflects the realities of the global market place. Let me end by saying we see this as a truly unique moment in history for all those involved in promoting economic growth and economic security for America. It is an exciting journey with many opportunities for people willing to embrace the future. And we look forward to taking this journey with you as we work to build long-term economic opportunity for all Americans. THANK YOU. | ||
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