| | Remarks by U.S. Assistant Secretary of Commerce for Economic Development Texas Workforce Commission Conference September 4, 2002 | Back |
| Thank you Commissioner O'Mahoney for that kind introduction. Chair Rath, good to see you. Thank you for your invitation. Your dedication to workforce development is admirable. I especially want to recognize Cheryl Fuller, Executive Director TCWEC. I owe my appointment for good or ill to her. She made me look good and appears that I know what I am doing. It's a pleasure to be back in Texas today and to see so many familiar and friendly faces. It is hot and humid, but its still good to breath Texan air. Thanks for inviting me.I am not a prophet, and no economist I know of has 20/20 foresight. So, no one can easily predict new sources of economic growth. But 20th century economic success stories demonstrate what happens when government invests in human resources development, creates the right business environment and trusts the business sense and entrepreneurial spirit of its people. This combination will lead to unpredictable and spectacular results.That having been said, I fully recognize that we meet at a time of great national concern. Potential further terrorist attacks, trouble in the Middle East, a weakened economy, and corporate credibility issues have shaken our confidence. To be sure, many Americans are uncertain about the future and President Bush understands that. But, ladies and gentlemen, as President Bush recently said, "The foundation for economic growth is strong in America."
As you know, President Bush has led the way in creating a new ethic of responsibility in America's corporate community. I was honored last month to join the President in the East Room as he signed legislation that exposes and punishes acts of corruption, moves corporate accounting out of the shadows, and protects small investors and pension holders. The President unveiled tough new criminal penalties and enforcement provisions to punish those who refuse to play by the rules and threaten to undermine the integrity of our financial markets. Make no mistakes, the American free enterprise system has not failed, some corporate leaders failed our system and let down workers and investors. Today, thanks to the President's leadership and bipartisan congressional support we have added safeguards in place.I believe, as I know all of you believe that development of strong regional economies is absolutely key to rebuilding confidence and prosperity for all our citizens. We simply must press forward.
There are mixed signs that the economy is beginning to recover.
As President Bush has said at the Waco Economic Summit last month, the 1st 3 quarters of his administration were marked by recession. The last 3 quarters have shown growth. The trend is moving in the right direction, but we must do more to ensure strong growth and that every American who wants a job can get one. The President has proposed an aggressive strategy to ensure economic and Homeland security, but Congress and specifically the Senate need to act. And so, caution remains the watchword in Washington concerning the recovery. As we all know, positive growth figures mean little to Americans out of work - who are trying to support their families and pay their mortgages. To that end, 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. We practice what we preach. My colleagues and counterparts at DOL, Assistant Secretary Emily DiRocco and I, as well as our staffs travel, collaborate and work together around the country to link work force development and economic development strategies. I recently had the opportunity to visit with Dick Thornburg, former U.S. Attorney General, former Governor of Pennsylvania and current chairman of the State Science and Technology Institute. He provided an excellent historical context for our consideration regarding economic development strategies in the 21st century. Thornburg stated: "In the last two decades of the 20th century the U.S. economy was transformed in a way and at a speed that few could have anticipated. The 19th century's long-term transition from an agrarian based economy to a manufacturing based economy was replicated in an accelerated transition from a manufacturing based economy to a technology-based economy. While traditional agriculture and manufacturing will always be important economic sectors in our economy, today's new economic growth is being driven far more by technology and its influence on traditional economic sectors than ever could have been foreseen." I think he's right on the money about that.
He went on to say: "While this change is a product of national, indeed international forces at work, it manifests itself community by community. No master plan or industrial policy directed out of Washington, DC could effectively stimulate these new opportunities for economic growth and future-oriented jobs. Nor should it attempt to do so." Again, he's right on target. Economic development doesn't get done in Washington. It gets done in regional market places throughout our nation. Governor Thornburg concluded: "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 just to compete, but to thrive in the new economy."
Nothing less than our national and global economic security are at stake. While we cannot predict what the next "hot" industry will be, we do know that innovation and the imbedding of technology in core industries and manufacturing processes will drive the next regional economic engines of growth.
The competitiveness of U.S. companies and a high standard of living for American workers can only be maintained if the productivity of industry and the workforce is higher than our competitors. And that means anywhere in the world.
In today's economy, innovation drives productivity, and productivity drives prosperity. Only if technological advances are implemented in the work place will productivity increase and be maintained. Only if the workforce is skilled enough will the new technologies be effectively used.
Skills and education will be a dominant, if not decisive, factor in our ability to compete in the global economy. Just as the President said that "no child should be left behind" in getting a good education, no worker should be left behind in having the skills necessary to find a good job in the 21st Century workplace. Having the best skilled workforce is as crucial to our economic growth and the kind of society we will have, as technology itself. The President has said that a better-educated workforce means America is more productive and that means more jobs and higher paychecks. This Administration is committed to developing closer linkages between workforce development and economic development. Let me explain.
Economic development is the intentional process of finding, sustaining, and capitalizing on locational advantage to create wealth and minimize poverty. When the private sector invests in new plant and equipment productivity tends to rise, and the demand goes up for higher-skill, higher-wage jobs.
Workforce development is the intentional process of strengthening the local talent pool of workers to match private sector investments in technology, capital, and product improvement. The main goal of workforce development is to connect job seekers with job providers, and then to connect both job seekers and employers with ongoing education and training programs.
Now this may seem self-evident. But all too often ... people forget about how these two processes work hand-in-hand. And as a result, money is wasted on development projects that cannot thrive in the market place, training dollars are misdirected on skills and occupations where there is no demand, and people remain unemployed. Over the past three decades federal agencies have invested hundreds of billions of dollars to help states and communities create jobs and economic opportunity. According to a 1996 study by the National Academy of Public Administration annual federal government support for economic development totaled over six billion dollars per year, including out lays, tax subsidies and the cost of loans and loan guarantees. No doubt that number is larger today. Given the war on terrorism and the priorities that national security and homeland security will have on the federal budget I believe the time has come for a reassessment of the federal role and its investment of resources. We must ask: What is the appropriate role of the federal government in promoting economic and workforce development? A number of think tanks, including the National Academy of Public Administration, have looked at this question over the years, some of the research has been sponsored in part by the DOC/EDA. President Bush has said, "The role of government is to create conditions in which jobs are created, in which people can find work."
There will continue to be 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 unfilled they lead to disappointment, disillusionment and erosion of credibility.
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. President Bush and I believe it is important for government to promote a favorable business environment to enable all Americans to participate more fully in the American dream and national prosperity.
Indeed, the success of the next stage of welfare reform will increase the demands placed on economic development, especially in distressed communities. The premise of the Workforce Investment Act and the Welfare to Work program is that states and local communities design and lead efforts to train people on welfare to get jobs and train the existing workforce for jobs that are being created. A successful workforce development program should promote a career ladder through continuous skill up-grade. The success of welfare reform will depend on several factors, one of which is whether jobs are available in places accessible to former welfare recipients.
The difficulty lies not in the goals of federal government activities, but in our expectations of what can actually be achieved. We need to acknowledge that federal investment in economic development can have only a marginal direct impact on national productivity and economic opportunity. Its impact is dwarfed by other federal policies and programs that focus on national economic conditions and on providing the legal and regulatory parameters within which private sector activities take place, for example, tax, trade and corporate governance policy.
A second reason why federal economic development programs have a limited impact is that market forces, rather than the decisions of government officials, are the primary force driving both the overall rate of economic growth in our 10.4 trillion dollar economy and also 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 public institutions, 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 or work force development systems.
When the market place bypasses certain geographic areas or when regional economies are experiencing structural economic change, economic development programs can help build a more favorable business climate to attract private capital investment by encouraging new partnerships and new institutions to respond to these market opportunities. This will minimize the risk and maximize the return on investment.
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.
First they must mobilize a broad based and well-conceived effort to increase economic opportunity. Second 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.
To increase overall wealth and to help communities improve economic conditions, the federal effort must be designed and managed more efficiently. That's why I have proposed the most comprehensive restructuring of EDA in it's 36 year history. 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. (Learn, leverage, link) = the 3 "L's"All of us in economic and workforce development can draw on what we already know about promoting sustained regional economic growth and prosperity. DOC/EDA funded research in 1998 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.
Rule number two: industry clusters drive regional performance.Industrial 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. You need to have a solid grasp of the clusters in your region and their work force development needs in order to promote their efficiency and growth.
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 develop, or expand in, regions that fail to provide at least one input advantage - whether for design, production, or distribution.
Finally, rule number four: Collaboration achieves economic advantage.
If regions 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 ...workforce development... and quality of life over time. With such a strategy in place, you will attract private investment and employment. And you will 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.
I hope I have conveyed how important the Bush Administration believes it is to link economic development and workforce development efforts. You, as leaders of the nation’s workforce development system have a critical role to play. We must transform the system from a culture of compliance to a culture of performance. And leadership is the key - you are the key. When you return home, insist on infusing a leadership culture in your organization. "The Four E's of leadership:"
- The personal Energy to welcome and deal with the speed of change
- The ability to create an atmosphere that Energizes others
- The Edge to make tough decisions
- The ability to Execute
Let me end by saying the pattern for economic development success seems clear, invest in human resource development, create a favorable environment for entrepreneurship, and let the markets do their work - the rest will follow.
THANK YOU. |
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