Throughout history, it is as economies rise that all other forms of development: social, cultural and academic, are given the opportunity to rise as well. Thus economic development is really the development of the whole of the society, and without it all the others languish, like abandoned cars on the road of history. For Rick Weddle, the president and CEO of the Metro Orlando Economic Development Commission, this understanding is his driving force as he serves at the director level of the largest organization in the region dedicated to attracting business to this area.
Factors Impacting Economic Development
The things that affect economies are changing rapidly, inevitably and irrevocably. Of course it changes at different rates in different places. It is like Mark Twain said, “When the end of the world comes, I want to be in Cincinnati. It is always 10 years behind the times.”
Some of those changes are things like globalization, which have long story arcs. And as with most major changes, how globalization happens is being reconsidered. Almost 33 percent of the manufacturing that was off-shored a few decades ago is being re-shored now, because of advances in technology and for security reasons.
Another major change is that one of the defining elements in my whole economic development career has been energy crises and shortages. Now we have more than we need; we have the same resources, but technology has made those resources more accessible, more diverse and therefore more affordable. It has changed global economics, the U.S. has become an energy exporter, while Russia’s economy is teetering as prices drop.
Other Factors Driving Change
Science is also changing radically; how science is done, where science takes place, the role of amateur science. Originally science was the domain of the bright and the inquisitive. Then we came to the place where science was institutionalized and moved to the university. Now, thanks largely to the information revolution, the circle is coming back to the individual and groups that are linked beyond the institutions. So there is a changing structure of science in those cases where intense infrastructure isn’t required.
Think about the impact of one third of the world’s population moving into the free market system. That is an increase of potential workers, and eventually potential consumer markets by one third; that has been the story arch of the last 25 years. Now it is about talent and people, the battle is no longer for ‘cheap,’ but for ‘good.’ We don’t want to be in the battle for cheap.
Also, cyber security will probably be the biggest issue as we move into the future. The ‘Manchurian Candidate’ isn’t a presidential hopeful, it is lines of code hidden inside a program. That is why Deloitte moved its 1,000 job project here. One of their primary customers is the government, national, state and local, and the government wants the work done on American soil, by Americans.
Different Approach, Different Results
With incentives you can ‘buy down’ or ‘buy up.’ Traditional incentives assist companies in buying down their project. If you move here, we will do this to reduce the costs of your project, tax incentives, etc. The other is to ‘buy up.’
‘Buying up’ means we increase the desirability of our location. We improve our talent pipeline by investing in our schools and universities; smarter, healthier, more productive people will attract jobs. We build better roads and infrastructure; this will attract companies. Things that make a location more desirable will attract employers.
For example, why if China and India have commensurate talent pipelines – meaning educated, hard-working people – are the manufacturing jobs going to China? It is because India’s infrastructure hardly exists, it is totally archaic, but China has one of the best in the world. India’s IT infrastructure, with fiber optic cable, is great, so in that arena they flourish.
Where Does the Future Lie?
My belief is that ‘buying up’ is the better play. When you buy down, the benefits are more limited. When we buy up, we are investing in capacity and capability, which has a ripple effect throughout the region. When we invest in ourselves it increases our sticky knowhow, it increases our overall value proposition.
Independent data analytics suggest that investing strategically in assets which improve your value proposition pay greater economic dividends than any of the tax abatement programs that are currently being offered. So is it an either/or proposition? No, at this juncture it is still both/and, but this is where we should be moving.
The evidence points to the conclusion that a better trained workforce, investment in quality infrastructure, generates greater opportunity for higher economic output. If at this time we are 90 percent buying down and 10 percent buying up in our economic development strategy, I would propose a forced march to reverse that direction. When we do it becomes a great opportunity to approach businesses and say, ‘Come now and reap the benefit of this shift, enjoy the incentives and grow as the investments in buying up increase.’