BALL STATE UNIVERSITY EDUCATION REDEFINED Introduction to Economic Development Indiana Economic...

BALL STATE UNIVERSITY EDUCATION REDEFINED


Introduction to Economic

Development

Indiana Economic Development CourseJanuary 12, 2015

Presented by: Dick Heupel, CEcD

Building Better Communities, Ball State University



What is Economic Development?

What is your definition?



What is Economic Development?• Common measures

Job Creation Business attraction Business Retention/

Expansion New Business Development Standard of Living Tourism Development

Quality of Life Infrastructure Development Increasing the Tax Base Agribusiness Development Education Workforce Development




AEDC Definition:

The process of creating wealth through the mobilization of human, financial, capital, physical

and natural resources to generate marketable goodsand services. The economic developer’s role is to

influence the process for the benefit of the community through expansion of job opportunities

and the tax base.




IEDC Definition:

Economic development can be defined as a program, group of policies, or activity that seeks to improve

the economic well being and quality of life for a community by creating and/or retaining

jobs that facilitate and provide a stable tax base.




David Dodson’s Definition:

Economic development is a process by which a community creates,

retains, and reinvests wealth and improves the quality of life.



A Community Economy: The Leaky Bucketfrom Small Town Magazine



Purpose?

…..?????…..increased standard of living…..prosperity…..increase in per capita income…..increased wealth…..?????



Business Development Strategies

The “Big 3”• Existing business expansion• New business attraction• New business start-ups


BALL STATE UNIVERSITY EDUCATION REDEFINEDExisting Business Expansion

Existing Business Expansion

• Best opportunity to influence decision-makers– You already have the contacts!

• Biggest contributors to the economy• Aggressively promote investment incentives• Protect your home court• Best resource for new business attraction



New Business Attraction

• Necessary component• Gets all the press• Highly competitive/Low batting average• Highly sensitivity to business cycles• Requires significant infrastructure

– Water, sewer, roads, drainage, power, creative incentives


BALL STATE UNIVERSITY EDUCATION REDEFINEDA Word on Incentives

A Word on Incentives

• Business Property tax abatements:– Require approval of fiscal body– Apply to limited categories of property– Temporary– Can come with ‘strings’ at fiscal body’s will– Can be rescinded


BALL STATE UNIVERSITY EDUCATION REDEFINEDA Word (or two) on Incentives

A Word (or two) on Incentives

• Residential tax abatements:– Require NO approval from anyone– Apply to total real estate and improvements– Permanent– Come with no ‘strings’ – Cannot be rescinded


BALL STATE UNIVERSITY EDUCATION REDEFINEDA Word (or three) on Incentives

A Word (or three) on Incentives

• Residential property owners are the overwhelming net beneficiaries of property tax abatements:– Homestead exemption– Mortgage exemption– Property tax rate ‘circuit breakers’



New Business Start-ups

• Long-term project• Largest potential returns• Not well integrated into culture, education• Requires risk capital, business counseling, range of

support services, tolerance to failure• Patience



Changing Economic Dynamics

• Shrinking % of workforce employed in manufacturing – Technology integration

• Higher productivity and output– Post-secondary technical skills and certificates

• All net growth is in service sectors– Not just burger-flipping: healthcare, financial

services, professional services• Personal income gap

– Midwestern rural areas suffering



19691971

19731975

19771979

19811983

19851987

19891991

19931995

19971999

20011999

20012003

20052007

20092011

20130.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

Percent of Workforce in Manufacturing 1969-2013

US

Indiana

Source: U.S. Bureau of Economic Analysis - Total full-time and part-time employment by SIC and NAICS



U.S. Industrial Output

Source: Board of Governors of the U.S. Federal Reserve



Source: Center for Business and Economic Research Ball State University



Source: Center for Business and Economic Research, Ball State University

Tradable and non-tradable jobs: Indiana



19651967

19691971

19731975

19771979

19811983

19851987

19891991

19931995

19971999

20012003

20052007

20092011

201384

86

88

90

92

94

96

98

100

Indiana Per Capita Personal Incomeas a percent of U.S. 1965-2013

Source: U.S. Bureau of Economic Analysis –SA-04 Per capita personal income by state



Education Matters



Diversified Strategies

• Recreation (Visitor attraction)– Fairs, festivals, shows, demonstrations, competitions

• Retail and services analyses– Feeds all three business development strategies

• Residential attraction– Q of L: for retirees, talent, entrepreneurs, i.e.



Diversified Strategies

• Residential attraction– “Talent is the single most important element in local

economic development.”– “Quality of place is a primary factor in a community’s ability

to attract and retain talent.”– Contributing residents: an ultimate goal for a community’s

economic development?



What others say“In the knowledge-driven, computer-networked economy of the future, what matters most is being a place where people want to live: a place with great public schools, clean air and water, wonderful recreational opportunities, low crime rates, and a common bond of community pride and unity. These places, the places where people want to live, will also be the places where companies want to locate.”

– Gary Locke, U.S. Ambassador to China; former U.S. Secretary of Commerce; former Governor, State of Washington



What others say“When I grew up, young people moved to the job. Today, young people move to the type of city they want to live in, and then build their life there. Cities, if they want to compete for this young talent, must provide the amenities they want… places like Charlotte, Minneapolis, Denver, and Salt Lake City. Every day, we compete against those cities for jobs and talent...”

– Greg Ballard, Mayor, City of Indianapolis2013 “State of the City” Address



What others say“Factors that tend to drive emerging-industry human- resource evaluations include the number of engineers and technicians within the labor shed, the presence of colleges and universities with matching technical programs, the overall educational level of the local work force, and the presence of other higher technology companies and similar industries in the area.”

– Phil Schneider and Raj Vahra, Deloitte Consulting



What others say“While surely both phenomena occur, we think that the evidence supports the view that industries are responding to the area’s skill distribution more than the view that the skill distribution is responding to the area’s industries mix.”

– Edward Glaeser, economist, Harvard University and Author

Triumph of the City: How our Greatest Invention Makes Us Richer, Smarter, Greener, Healthier, and Happier

Cities, Agglomeration, and Spatial Equilibrium



What others say“Keep your tax incentives and highway interchanges, we will go where the highly-skilled people are. They will go where they want to live.”

– Carly Fiorina, former CEO, Hewlett-Packard and HP Compaq

Former U.S. Senatorial candidate



Changing Dynamics

• Globalization …– Increased competition, more strategic partnerships– Regional competitive advantages become critical– Increased cultural diversity

• Community impacts– Multi-lingual environments – Unfamiliar customs

… is here to stay!



Changing Dynamics

• The Productivity Race– Requires higher investments, higher skills, continuous

improvement, flexible environments • The Innovation Race

– Shortened product life cycles– Six Sigma, TQM Network, TIN, …– Can be a distinct competitive advantage

• Apple Corporation• Starbucks• Indiana• Your community?



Changing Dynamics

• To Excel, Communities and Regions Must Embrace and Create Change– Establish a solid reputation as a resource to prospective investors– Identify, articulate, and exploit globally competitive regional

advantages• BE CREATIVE• BE BOLD



Changing Dynamics

“A community does not change how it thinks about the world and leave its institutions as they are. The rewards for inventing a new institution able to overcome the new limit to progress are huge. The leaders in this process are inevitably the richest and most powerful communities. They are also the ones most willing to make wrenching changes to their dominant institution.”

Davidson, Ron (2011). The Fourth Economy: Inventing Western Civilization



Who’s on the Team?• Regional Planning

Commissions/Councils• Arts organizations• Local governments (mostly)• Chambers of Commerce• Convention Visitors Bureaus • Economic and community

development organizations• Small Business Development

Centers (SBDCs)

• Workforce Investment Boards• Utilities• Colleges and Universities• Lifelong learning centers • Special Authorities

– Redevelopment Commissions– Airport/Port Authorities– Foreign Trade Zones

• Economic Development Districts



Why Team Approach?

• Multiple organizations share top-level goals

• Maximize resources– People = leadership – Duplication = waste

• Maximize individual specialty– Don’t be all things to all people



Keys to Success• Engage stakeholders

• Create a shared vision of the future

• Ensure shared ownership of the vision

• Have a plan for how you will help get there

• Openly and honestly identify:– Successes that can be repeated – Lessons learned from experience



Questions?

Ball State University + Economic Development

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