| David A. Sampson Assistant Secretary of Commerce for Economic Development, Council on Competitiveness National Summit on Innovation:
“Innovate America - The Regional Perspective” at the Capital Hilton, Washington, DC Friday, April 22, 2005 | | Introduced by Deborah Wince-Smith, President, Council on CompetitivenessIntro:Good afternoon, and thank you, Deborah, for that kind introduction. I appreciate the invitation to be with you today. The Council on Competitiveness is one of our nation’s leading think tanks on competitiveness, innovation and regional economic growth, and we at the Commerce Department are proud of the extensive collaboration we have had with the Council. Your discussions here today represent the capstone of six regional competitiveness summits that the Council, in partnership with the U.S. Department of Commerce, initiated to advance economic growth in regions across America. Over the last two years, summits were held in St. Louis, Missouri; Albuquerque, New Mexico; Cleveland, Ohio; Wilmington, Delaware; Grand Rapids, Michigan; and Spokane, Washington. I strongly believe that the Council’s work, along with the partnerships that have been created, will produce a new model for reinvigorating regional economies throughout our nation.As we meet today, I am pleased to say that the American economy is strong and getting stronger. Over 3 million jobs have been created since May 2003; that’s 22 consecutive months of job gains. 110,000 jobs were created in March. Our national unemployment rate is 5.2 percent. At 5.2 percent, the unemployment rate is well below the average of the 1970s, 1980s and 1990s.The President and the Administration recognize that this economic growth has not reached all parts of our country. There are areas experiencing high levels of unemployment and poverty that deserve – that need – development assistance, and the President is committed to providing that assistance.We also believe that while the federal government has a significant role in supporting community and economic development initiatives, there is no reason why the federal delivery system of these important resources should be disjointed, duplicative, and overly complex. There has got to be a better way – and that’s why we believe that the President’s Strengthening America’s Communities initiative is critical to the economic health and well-being of those communities that need assistance the most. I am pleased to report that the Strengthening America’s Communities Advisory Committee—a group of national, regional and local economic and community development leaders—held its first meeting a week ago in Fresno, California to begin their deliberations for providing advice and recommendations to Secretary Gutierrez on the implementation of this innovative initiative. Two more meetings will take place before the end of May—one in Kansas City, Missouri on May 12 and 13, and one soon thereafter at a yet-to-be-determined location on the East Coast. We will keep you posted on the activities of the Committee through the initiative’s website, but, for now, let me provide you a short overview on this important initiative.As the 21st Century economy emerges, we cannot expect to meet its challenges with yesterday’s tools for economic growth. Over the last 40-plus years, the federal government has spent over $100 billion dollars on anti-poverty programs. Certainly, our programs to assist our citizens have played an important role in providing individuals in need necessary services, not to mention a sense of dignity. But the federal government’s record regarding community-based anti-poverty programs is mixed. The Progressive Policy Institute, the Government Accountability Office (GAO), the Organization for Economic Cooperation and Development (OECD), Federal Reserve Chairman Alan Greenspan, and, in fact, the Council on Competitiveness in its December 2004 “Innovate America” report, have all called for some form of consolidation of duplicative development programs. Clearly, the Administration is not the only group who thinks we can and should do better. The President’s Strengthening America’s Communities Initiative would take 18 of the 35 federal community and economic development programs – principally the direct grant programs – and consolidate their funding into a single, new grant program called Strengthening America’s Communities. The goal of this consolidation is to greatly ease access to the federal system. For distressed communities with limited resources and expertise, the President’s plan reduces the number of federal bureaucracies they need to deal with from 18 to 1. I think that’s important. The federal government should not require communities already short on resources to devote a large proportion of those resources to negotiate a maze of federal bureaucracies. The President and this Administration are committed to targeting federal assistance toward those areas most in need. Clearly, the challenge of substantially reducing poverty and helping communities transition to 21st Century economies cannot be taken lightly. Those communities that face the biggest challenges should receive the most assistance from the federal government. But we as the government can’t do it alone. Yes, the government is an important part of equation, but not the only part.The President believes that the goal of federal community and economic development programs should be to create the conditions for economic growth, more and better jobs, and livable communities, thereby reducing a community’s reliance on perpetual federal assistance.The challenge in building growing, vibrant economies is that reliance on government and philanthropic resources to get the job done is an inadequate approach. The real opportunity is to engage the much larger resources of the private sector to change economic opportunities for our most distressed communities and citizens. The fundamental issues and opportunities in distressed communities demand a strategy that optimizes innovation, competitiveness, and private sector engagement.We want more resources to flow to the most distressed communities, so the challenge is to target and focus government resources to attract and leverage the power of private markets to renew communities.The communities that have made the most progress over the past decade have had leaders who have made it their priority to remove barriers to economic growth and attract new private sector investment which creates jobs and produces new tax revenue. They have promoted a culture of enterprise to foster innovation, new business formations and attract new investment, bringing once abandoned property back into productive use as employment centers and revenue generators.The next generation of community and economic development and revitalization must embrace the lessons learned from communities and regions that are succeeding. That is what the Strengthening America’s Communities Initiative does.Competitiveness in the 21st Century The President’s proposal to update the federal economic and community development portfolio is but one example of rethinking economic development in the 21st century. The growing consensus among economic development researchers and policy analysts is that competitiveness and innovation drive economic growth in the 21st century. Why do we need to rethink mid-20th century economic growth strategies? The emergence of a worldwide economy is transforming the economic landscape. Intensified global competition is forcing U.S. businesses to find ways to reduce their costs while continuing to produce high quality products and services. These challenges are significant, tempting many to favor a retreat from participation in a worldwide economy. But economic retreat within the borders of the United States would put our nation at risk. We would miss the enormous economic opportunities offered by active engagement with the other 95% of the world’s population. Instead of retreating, we must find new sources of competitive advantage by reshaping our strategies for economic growth. Secondly, we need to rethink the spatial context of economic development. The geography of the 21st century economy and the geography of our political boundaries are fundamentally misaligned. Economic development policy is mostly the province of state and local governments, with the goals of these policies focused entirely within their own jurisdictional lines. But the regions of the 21st century economy do not respect these political boundaries. In fact, regions that share common ground in the new economy invariably spill across the borders of cities, counties and sometimes states. (Drabenstott, The Main Street Economist, Center for the Study of Rural America, Federal Reserve Bank of Kansas City, December 2004). In discussing the spatial context of 21st century economic development, we need to wrestle with the reality that the innovative capacity to respond regionally to global challenges is not evenly distributed. Further, clear ground rules for defining what a region is are yet to emerge. But certainly regions are more expansive than the administrative boundaries laid down a century ago. Third, the drivers of economic growth in the 21st century center on the vigorous pursuit of a competitive edge in a global market. The critical path for success will be in seeking “Regional Competitive Advantage,” which requires the identification of: regional assets of physical, scientific and intellectual infrastructure; market opportunities; and a strategy for exploiting those market opportunities.The development of Regional Competitive Advantage is driven by the private sector, but the public sector does play a major role in a successful strategy. Regions will require: Effective governance by key players in higher education, government, business, and non-profits. Innovative capacity that looks beyond the “economy that is” to the “economy that can be.” This is a new frontier, as many regions must take an economic journey from sole reliance on a commodities-based economy to a knowledge-driven economy. And innovation, the fuel for that journey, is scarce in far too many regions. The third component of a Rural Competitive Advantage is the development of a world-class entrepreneurial climate. “If innovation is the fuel of 21st century economic growth, then entrepreneurs are the engine of 21st century economic growth. (Drabenstott, Fresno SACI Advisory Committee Meeting). Building regional competitive advantage probably means focusing less on recruiting companies from other communities and more on growing your own entrepreneurs. Current research indicates that entrepreneurs can be “made,” given the right education, tax policy and capital. The fourth and final pillar for 21st century competitiveness and economic development strategies involves enlightened and aligned public policy that creates an environment that helps regions develop Regional Competitive Advantages. This involves three key ingredients: First, the need for “soft infrastructure,” ---knowledge. If knowledge drives the 21st century economy, we have a lot of thinking to do. For example, how do we integrate higher education and primary education into our policies for economic growth? Second, growing leadership capacity and developing “social capital” to inspire and drive transformation into a new economy; And third, a re-ordering of priorities in economic development strategies to focus on a new “pyramid of economic development” involving governance, innovation and entrepreneurship.This Administration is grateful for the Council on Competitiveness’ leadership in addressing the challenges and opportunities facing the American economy in the 21st century. We appreciate your work in key regions throughout the country over the past two years leading to today’s event, and we look forward to the insights that emerge from today’s deliberations, especially as they lead to initiatives to build Regional Competitive Advantage across our nation. Thank you very much for the opportunity to be with you today.
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