| | Remarks of U.S. Assistant Secretary of Commerce For Economic Development David A. Sampson Abilene Civic Leaders Meeting Monday, September 30, 2002 | Back |
| Thank you Representative Hunter for the kind introduction. It is a great pleasure
to be with you all in Abilene today, a place that for me, has a very special
place in my heart.
I had the honor of traveling down here this weekend with another Texan, Commerce
Secretary Don Evans. Secretary Evans and I participated in the opening ceremony
of the Franz Weis Industrial Training Center, just down the road a piece at
the Midland College Advanced Technology Center. The Commerce Department's Economic
Development Administration - EDA - provided a $900,000 investment to assist
in the construction of the state-of-the-art technology facility in March of
this year. The Advanced Technology Center houses computers, electronics, automotive
technology, and welding and machining equipment, as well as, two medical simulation
labs for high school and college use.
I'm proud to say that EDA has a proud history of working in the Abilene community
as well, working closely with the West Central Texas Economic Development District.
In fact, EDA assistance helped build a maintenance and repair facility to attract
American Eagle to Abilene.
We meet here today amidst a difficult time in our country's history. We've
been going through a difficult period. A painful time. But, we have weathered
difficult times before. Our economy has survived two world wars, a depression,
and 9 recessions. And ours is still the most dynamic economy in the world.
Our system is the envy of the world. Free markets, free people, and a quality
of life that this world has never seen before. And the fundamentals of our current
economy are just as strong as our system. We have virtually all the fundamentals
that any economist ... or entrepreneur ... would hope for. We have: low inflation
... low interest rates ... increasing productivity ... a highly innovative culture
... a ready labor force.
The fact is, this Administration inherited a recession. Stock values were already
plunging. Unemployment was rising. The patient needed a shot in the arm ...
and quickly. That's just what the President prescribed.
Most economists - both on the left and the right - and I expect most of you
in the room - are convinced that the President's tax cut last fall was perfectly
timed. It put money back in the hands of the people who earned it, stimulating
demand and production.
The stimulus bill enacted in March helped those who lost jobs. And it's encouraging
businesses to invest, with its provisions for accelerated depreciation. This
has a ripple effect on the economy by creating opportunities for the providers
of goods and services.
At the President's direction, we're going after over-regulation in a serious
way. As you well know, regulations are a hidden cost on small business. So now,
before any part of the government puts a new regulation in place, it's going
to have to go through a rigorous analysis that measures its impact on small
business. Without these checks, potential economic development is considerably
hobbled - and that seriously concerns this administration, and, from a selfish
perspective, the actions of the agency I direct.
You've no doubt heard it said before, but it's important to reiterate the President's
domestic economic development philosophy that he won't be satisfied until every
American who wants a job can find a job, and all Americans have economic security.
To that end, let me share with you today EDA's plans for development of strong
regional economies.
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.
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.
Fortunately they can draw on what we already know about promoting sustained
regional economic growth and prosperity. EDA funded research done by ICF International
in 1998, which has identified four basic rules for economic development in the
21st century.
Rule number one: Think regionally to compete globally.
Competing in the global market requires the resources of all businesses, academic
institutions, and communities within a region. That is today's reality. More
and more, certain regions tend to have specialized knowledge and capacity that
is of a scale and form that distinguishes them from other areas.
Industry no longer cares about political boundaries - except when they're a
barrier to business. What they do care about is competitive advantages. And
that's where EDA and all of us in economic development come into play. We must
cooperate regionally, think regionally to avoid fragmentation of resources,
and build a strong economic platform for growth.
So thinking regional should be the key point of departure for defining economic
development needs and goals.
Rule number two: industry clusters drive regional performance.
Industry clusters are groupings of industries, suppliers and supporting institutions
within a region that export to national and global markets. They are a set of
industries that have a lot in common in terms of technology, worker skills,
finance, and logistical inputs. As a result, they tend to congregate near one
another, sharing innovative practices and economies of scale.
Industrial clusters are very important to a region because while they typically
account for only 25% of the employment base, their economic multipliers account
for much of the balance of the region's employment. This makes them the driving
force of economic development.
Rule number three: Economic input-advantage fuels cluster competition.
The rise in competitive clusters is due to the ability of regions to provide
them with distinctive sources of economic input advantage - for example: adequate
financing, available infrastructure, advanced communications, and most importantly,
a skilled workforce. In other words, clusters won't come to, or expand in, regions
that fail to provide at least one input advantage.
Finally, rule number four: Collaboration achieves economic advantage.
If industrial clusters are the center of action in the global economy, how do
they become, and how do they remain, competitive? By collaborating. Citizen
leaders, both public and private, must agree on a long-term development strategy
that creates a competitive climate.
They need to agree on the investments in regional assets ... education ... research
... physical infrastructure ... institutions for collaboration and quality of
life over time. Only with such a strategy in place, will you attract the private
investment and employment that leads to a high and rising standard of living.
Only then will you build a "platform for economic growth."
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 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.
As business and community leaders, your efforts in this regard will make a huge
difference for the future of Abilene, for the state of Texas, and the entire
country.
I 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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