We just reviewed Regions Matter (OECD, November 2009). It’s chalk full of bits and bobs we’d picked up (and learned ourselves) while studying, conducting research, or providing technical assistance to stakeholders in regions, but offers a difference level of coherence than we’ve seen in some time.  We thought we might share.

Key Policy Messages about Regional Economies and Development (the “Big Picture”)

• The intent of regional policies is evolving: they are increasingly about fueling growth and not just limiting (or reducing) disparities.
• There is no consistent relationship between urban concentration and economic performance – simply concentrating resources in a place does not necessarily lead to growth.
• Public policy matters in maximizing the potential of assets in regions.
• Leading and lagging regions are both important – when lagging regions improve, they make important contributions to growth and equity, opportunity.
• The use of productive assets (labor, capital, technology) are correlated with growth, but no single factor explains improved performance in a region. It is the interaction and interdependence of key assets that matters (suggesting flexible and integrated policy approaches).
• Investment and governance are important dimensions of regional innovation and change, but there is no blueprint for these. Policy should be developed in the context of the specific assets a particular region offers.
• Research- and technology-driven innovation is highly concentrated, but public policy can impact growth and capacity in regions with assets in emerging fields.
• Innovation policy is not just about inventing the next new technology, but also about its adoption or application. Different regions have different innovation assets and can and should develop these based on their unique capacities. Some regions will invent; others will deploy or scale.
• Innovation capacity is moving East (to Asia, where there are high concentrations of skilled labor and dense supplier networks). This mean regions in OECD countries must be mindful of how they develop knowledge capital that allows them to compete.
• Rural regions offer innovation potential but in different ways – social innovation around environmental issues, better public services (on which most rural areas are highly dependent), and new cooperative arrangements for living, working, and managing communities hold promise.
• Sustainable urban growth is widely recognized as a key policy priority.
• Regional policy is difficult to manage at the national level. It would benefit from coordination and multi-year co-financing.
• Learning, knowledge-sharing, monitoring and evaluation need to be coordinated across levels of government.

What turns places with concentrations of assets into agglomeration economies? (from Krugman, 1991)

• The sharing of unique, place-based facilities (labs, universities, creative space, etc.)
• Gains from producing complementary products in a wider array of facilities
• Gains from a wider array of suppliers (and supply chain connectivity)
• Deeply and broadly skilled labor reduces risk of adjusting to market shocks
• Matching mechanisms (connecting workers and jobs, suppliers and purchasers, distributers with buyers and sellers, etc.)
• Learning mechanisms based on the generation, diffusion, accumulation of knowledge and the systems that cultivate and disseminate it.

Results of OECD Growth Model Analysis

• Human capital and innovation positively influence regional growth (as traditional growth theories suggest).
• Elements from new economic geography theories (e.g. agglomeration economies) are also relevant and reveal a spatial connection to growth.
• Infrastructure is a necessary but not sufficient condition for growth – it is only relevant if human capital and innovation are also present.

Time also matters in regional development efforts…

• Infrastructure and human capital shifts require three years to positively influence growth
• Innovation is even longer-term, netting positive effects after five years.

Governance in Regions

Regional development depends on efficient governance. Accountable and credible leadership is important, but it looks different than a generation ago:

• It’s network-based, not organization based.
• It’s championed by collaborative leaders, not individual heroes.
• It’s more likely to be university or public sector-based than private sector based (and that’s okay, as the attention of private sector leaders is now often global, not local).
• It manifests in shared public-private ventures that can take a variety of forms.

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Promising Practices in Regional Economic Development: Northeast Ohio

Last week, I attended an event focused on the importance of regional planning, partnerships between government, workforce, education, and economic development, and how encouraging entrepreneurship in regions can help spur economic growth and prevent further population loss.

My own organization, Corporation for a Skilled Workforce (CSW), has initiated or has involvement in several regional strategies in Michigan, Arizona, and across the country. Though CSW is not working in Northeast Ohio, this region won notoriety in its efforts to transform the region into a global economic competitor. We can learn from this example.

Regional Strategic Planning

In 2003, philanthropic and corporate leaders committed themselves to building a strategy from the ground up. I was living in Cleveland at the time and took part in the focus groups called Voices and Choices that informed the region’s efforts.

Moving to Action

Advance Northeast Ohio, the region’s economic action plan was launched in 2007 and creates a common vision for more than 80 partner organizations, institutions and leaders from business, philanthropy, and government. The 16-county partnership is committed to collaborating and implementing strategies that help create jobs, increase incomes, and reduce poverty, collectively strengthening the region.

Clear Priorities

The partnership has identified four clear priorities to guide its work:

• Business Growth and Attraction
• Talent Development
• Racial and Economic Inclusion
• Government Collaboration and Efficiency

Regional Investors

A regional funders collaborative, The Fund for Our Economic Future, emerged to support the region’s effort, and demonstrates how corporate and philanthropic partners can invest in a common vision.  Of the over $60million raised, most of the resources have been granted to regional economic development organizations that work to start, accelerate, attract, and grow companies in the region.

Tracking Progress

To monitor progress, partners, assisted by George Erickcek of the Upjohn Institute, created a community economic dashboard which is now updated annually by Cleveland State University. The dashboard is an index, tracking indicators in the following nine areas:

• Skilled Workforce and Research & Development (R&D)
• Legacy of Place
• Urban Assimilation
• Racial Inclusion and Income Equality
• Locational Amenities
• Technology Commercialization
• Urban/Metro Structure
• Individual Entrepreneurship
• Business Dynamics

Award Winning Practices

Jumpstart is northeast Ohio’s venture development organization that invests in early stage businesses and ideas. Through the end of 2008, it invested in 34 companies, which have raised more than $100 million in growth capital. The program was recently recognized for Excellence in Urban or Suburban Economic Development by the U.S. Economic Development Administration.*(See footnote)

Community engagement, regional action guided by strategy and clear priorities, consistent investment, and innovative practices—these are key ingredients in a recipe for regional transformation.

* Other finalists in the same category: Composites Kansas (WIRED Initiative, Wichita, Kansas); Conway Development Corporation (Conway, Arkansas); Los Angeles County Economic Development Corporation (Los Angeles, California).

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