Remarks of SANDY K. BARUAH, ASSISTANT SECRETARY OF COMMERCE FOR ECONOMIC DEVELOPMENT, NATIONAL ASSOCIATION OF REGIONAL COUNCILS, WASHINGTON, DC

MONDAY, FEBRUARY 6, 2006

(As Prepared for Delivery)

Thank you, Judge Thompson, for that kind introduction. EDA is looking forward to working closely with you as NARC’s incoming President, and I would like to congratulate you on your new role.

And, speaking of NARC news, EDA is going to miss Bob Sokolowski as he retires as NARC’s Executive Director. EDA sees NARC as the best of the development organizations, and this is largely attributable to Bob’s service at NARC’s helm.

Bob is the epitome of professionalism, and we have been extremely impressed with his “quiet effectiveness” in helping to shift the way that economic development practitioners, government officials and private sector leaders think about economic development.

Bob has built NARC into the preeminent alliance for fostering regional collaboration, and one of the nation’s leading policy advocate for regional approaches with federal and state governments.

Bob also led NARC’s role in building an important partnership with EDA and others to disseminate useful information on cutting edge ideas and practices in economic development. We’re very proud of this “Information Dissemination Partnership,” which has so far produced, among other things:

14 episodes of the showcase Economic Development Today television show, featuring America’s leading economic development practitioners, thinkers, and leaders from government and the private sector. Participants in the show have included Mississippi Governor Haley Barbour, former Commerce Secretary Donald Evans, Secretary of the Interior Gale Norton, former Michigan Governor John Engler, Assistant Secretary of Labor for Employment and Training Emily DeRocco, and Council on Competitiveness President Deborah Wince-Smith to name just a few.

With NARC’s help, we’ve moved EDA’s communication and outreach into the 21st century. Bob, thank you. Your successor has big shoes to fill.

While I could go on about Bob, let me turn to why we are all here today. As we meet here today, we have good reason to be optimistic about the environment in which we do our jobs. The U.S. economy is sound, and all the evidence shows that President Bush’s policies are working. The economy is growing and creating good jobs for America’s workers.

The American economy has grown for 11 consecutive quarters. Last year's growth rate of 3.5 % demonstrates that, despite the challenges of record-breaking hurricanes and high energy costs, the American economy is strong, growing and resilient.

Businesses are thriving, investing, and hiring. The economy created 193,000 jobs in January, and the unemployment rate fell to 4.7%, what many economists consider full employment. The economy has created over 2 million jobs in the last year, and nearly 5 million since May 2003 – more than Japan and the European Union combined.

But, while the economy is strong, we cannot be complacent. As you heard in last week’s State of the Union Address, the President has a strong vision for strengthening the economy, and I am proud to be a member of the President’s team advancing his vision.

Under my stewardship of EDA, we will build on our past successes and focus even more strongly on the principles that support a healthy and growing national economy. I believe these principles are:

Innovation. Innovation is our country’s – in fact, any country’s – only sustainable competitive advantage. Increases in innovation –the fuel for economic growth – attribute some 50% of U.S. annual GDP growth.

Innovation drives productivity, and a nation’s productivity directly impacts its economic growth and overall standard of living. Groundbreaking ideas generated by innovative minds have paid enormous dividends – improving the lives and livelihoods of generations of Americans.

As the speed of innovation increases and innovation becomes more global, our economy will grow even more, and the standard of living will increase – as long as we pursue the right innovation strategies. EDA is committed to supporting innovation, especially in those areas where America’s prosperity has not been fully realized.

In last week’s State of the Union Address to Congress, President Bush announced the American Competitiveness Initiative, and outlined what he believes is the right strategy for America to remain the world’s leading innovator. This ambitious strategy commits $5.9 billion in FY 2007, and more than $136 billion over 10 years, to increase investments in research and development, strengthen education, and encourage innovation and entrepreneurship.

Entrepreneurship. If innovation is the fuel for economic growth, then entrepreneurs are engine. Entrepreneurship is in our blood as Americans. While the Jefferson Starship sang that “we built this city on rock and roll” but in reality our cities were built by entrepreneurs both large and small.

Small businesses create nearly three quarter of all new jobs in the United States, and produce 50% of the Gross Domestic Product. Additionally, small business manufacturers constitute over 98% of our nation’s manufacturing enterprises, employ 12 million people and supply more than 50% of the value-added U.S. manufacturing. I never forget that jobs are created by entrepreneurs, not government.

And

Regional Competitiveness: The topic of Regional Competitiveness could not be nearer and dearer to my heart. Regional competitiveness is a key factor in building our current economic strength and creating good jobs, and these types of initiatives need to be much more widespread. This is, and will continue to be, a key focus for EDA investments and activities in 2006 and beyond.

Regional competitiveness is about collaboration. In our interconnected world, our competition is not next door. Our geographic neighbors are our strength, not our competitors. Regional competitiveness is simply the Tom Friedman, The World is Flat, 21st century version of what we all learned on the school playgrounds of our youth: There is no “I” in T – E – A – M and we are stronger working together than when we stand alone.

We must acknowledge that, in today’s world, where Nike has 900 suppliers and 650,000 workers spread over 50 countries, where IBM laptops are made by a Chinese company, where your mid-life crisis BMW roadster is built in South Carolina, and a Blackberry allows you to be just as connected walking down the streets of Oaxaca, Mexico as you are walking down the Magnificent Mile in Chicago – we are interconnected.

So, how do we build regional competitiveness? We build it through the vigorous pursuit of a competitive edge in a global market. The critical path for success will mean seeking “Regional Competitive Advantage.”

To understand and capitalize on our Regional Competitive Advantages, regions need effective governance – governance, not government, an important distinction. Government is official public bodies representing distinct constituents. Governance is the process and at times informal structure of how governments, institutions and the private sector come together and work together towards common goals.

Building effective regional governance is a challenge, as it requires:

• A sense of “place,” as communities begin to identify themselves with a larger economic region;

• Engagement by higher education;

• An entrepreneurial culture;

• Collaboration and cooperation among regional leaders;

• Financial investment from multiple institutions;

• Strong leadership, organizational, and economic infrastructure; and

• Educational and training programs that serve the region’s goals.

The people in this room, as the leaders of Regional Councils across the nation, play a crucial role in building systems for regional governance. This is a role that will become increasingly important as more communities begin to think regionally as a first step towards competitiveness.

President Bush is committed to building regional competitiveness, which is a key component of his American Competitiveness Initiative. As part of the American Competitiveness Initiative, the President’s 2007 budget proposal includes a $50 million increase for EDA, and the creation of a new “Regional Development Account” within EDA that will combine its existing three primary programs: Public Works, Economic Adjustment and Technical Assistance. This will allow simplified access to EDA development programs and better support holistic development planning.

These proposed improvements to EDA are based upon a few key principles, which are to:

• Move the nation along the regional development continuum, acknowledging regions are the critical nexus for economic growth;

• Support innovation and entrepreneurship as critical components to achieving sustained economic prosperity and leverage the private sector;

And

• Streamline and simplify the federal delivery system for economic development resources, easing the burden on America’s communities and minimizing administrative costs.

We’re excited about an increased focus on what we believe we’ve already been doing, and doing well. It will be good for NARC’s membership, good for the taxpayer, and good for America’s communities. We look forward to working closely with you on this new and improved EDA program.

I would like to once again thank Bob Sokolowski for his friendship, his great success at NARC and wish him continued success and enjoyment in his well-deserved retirement.

Thank you again for the invitation to be with you today, and I look forward to your questions and comments.