Forget Old Assumptions About Economic Development

Cleveland Plain Dealer - May 20, 2002

by Amy Hanauer, in The Cleveland Plain Dealer 

The departure of economic development director Chris Warren has left
Cleveland with big shoes to fill. We must consider carefully the skill,
philosophy, vision and commitment that a new director should bring to
our city.

The economy of the Cleveland metropolitan area drives the economy of
Northeast Ohio region and the entire state. People, skills, infrastructure
and potential are all more densely packed around the northern parts of
the crooked river than they are anywhere else in Ohio. So the choice we
make affects Twinsburg as well as Tremont, Columbus as well as

We can approach economic development with a conventional or highroad
strategy. The first will do little to solve the major ills afflicting Cleveland and Ohio.
The second could transform us into a higher-wage, higher-skill, more vibrant and
more equitable region. Conventional economic development strategy gives firms
all the power. 

The thinking goes like this:
“Cleveland needs jobs and tax revenue and has little to offer potential
employers. We must grant extensive tax abatements to any company willing
to locate here and we can’t demand good jobs, commitment to our community
or environmental consciousness in return. If we seek value in return for our
abatement, we have no hope of landing this firm.”

The trouble with this view is it leads to government subsidies of lowpaying, inefficient
firms with shallow roots and deep vulnerability to globalization. Rewarding such
firms may actually help drive out higher paying, more efficient employers, who are
more likely to thrive in the global economy.

A high-road strategy recognizes that cities can better attract firms by
having skilled workers, other businesses to work with and good
infrastructure. This makes it counterproductive to sap the tax base and
the public schools that are funded from it. It instead encourages
investment in infrastructure, education and other public goods. Though it
is harder requiring collaboration with neighboring cities, pressure on
state and federal policymakers and commitment to our best employers a
high-road approach is worth extra effort.

Unusual partners often unite behind high-road development. Cities and
inner-ring suburbs, workers and environmentalists, central city people of
color and working-class whites, organized labor and urban-based
business owners: These groups don’t always agree, but they should all
support this new approach. Why?

It’s metropolitan locating employment and production in cities and innerring
suburbs where people, skills and infrastructure are already densely packed.
This combats poverty by placing jobs closer to lowincome people who need them.

It’s green reducing sprawl by emphasizing downtown and inner-ring
development and renovation over ex-urban development of park, farm
and forest land. It rewards environmentally conscious firms that use
green technologies and produce goods in sustainable ways.

It promotes quality emphasizing high-quality, high-wage, high-skill, high
value-added jobs over the opposite. These jobs are better for workers.

Plus, firms providing them are more committed to the community,
because they’ve spent resources training their high-skill work force.

It’s efficient targeting subsidies and tax dollars carefully, instead of
wasting precious resources on bad business and sprawl. Putting
infrastructure demands where infrastructure already exists is also
efficient. This approach is good government and good for the economy.

It’s sustainable thinking about the future, focusing on retention and
upgrading, seeking to cooperate instead of compete with neighbors. At
its best, it can promote good jobs that will survive the next decade and
the next generation.

Cleveland has turned toward the high road with a living wage bill that
refuses development aid to low-roaders, a new commitment to education that
will upgrade our work force and renewed attention to the
lakefront and other public goods. Progressive economic development
leadership at the city level will further propel us toward the high-wage,
high-skill, sustainable, green city we all desire. Starting here, starting
now, Cleveland must close off the low road and help pave the high road.

Hanauer is executive director of Policy Matters Ohio, an Ohio-based
research institute.

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