In the past, economic development initiatives have generally focused on aggregate output as a primary metric of success. The Brookings Institute however has issued a study explaining that growth alone is not the answer to a sustainable local economy. The report, "Remaking Economic Development: The Markets and Civics of Continuous Growth and Prosperity” places an emphasis on the need to broaden the goals to include the productivity of workers and citizens, not just the firms, and economic inclusion, raising standards of living for all.
Author Amy Liu, director of the Brookings' Metropolitan Policy Program, establishes five action principles to achieving lasting economic prosperity:
1. Set the right goals—expand the scope and metrics of economic development to reflect a more foundational and holistic understanding of how to expand the economy and opportunity.
2. Grow from within—prioritize established and emerging firms and industries, invest in the ecosystems of innovation, trade, talent, infrastructure, and governance to support globally competitive firms and enable small businesses to start and grow in the market.
3. Boost trade—facilitate export growth and trade with other markets in the United States and abroad in ways that deepen regional industry specializations and bring in new income and investment.
4. Invest in people and skills— incorporate skills development of workers as a priority for economic development and employers so that improving human capacities results in meaningful work and income gains.
5. Connect place—catalyze economic place making and work at multiple geographic levels to connect local communities to regional jobs, housing, and opportunity.
Liu explains that the market and civics of the economy need to function efficiently and in concert in order to attain the complementary goals of economic development:
Indeed, aggregate growth matters. But more growth isn’t always better growth. Firm gains are not the same as worker gains. Ignoring the plight of workers who are under- and unemployed limits future growth.
The challenge of economic development is to embrace that lesson—fully and urgently.
To be fair, many state and regional leaders want more than growth for growth’s sake. They want to grow good jobs, connect young adults and workers to those jobs, and keep their industries competitive. This is hard, long-term work. It requires blending programs, working across systems, forging new partnerships, and working with both long-term goals and shorter-term metrics for success. Yet the existing structures and missions of organizations and programs make this important work nearly impossible.
Liu also calls on other leaders, not just economic development professionals, such as elected officials, employers, workforce, and education leaders, and other civic and nonprofit executives to step up and advocate for a sustainable economy that benefits the whole of society.
The power of getting together to promote economic development is to do what markets alone cannot do: influence growth through action and investments. The purpose of economic development should be to put a regional economy on a trajectory of higher growth (growth) by increasing the productivity of firms and workers (prosperity) that raises standards of living for all (inclusion). This brand of economic development can lead to deep prosperity—growth that is robust, shared, and enduring.
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