Is Economic Development Too Trendy?

We spend a lot of time in our line of work reading reports, publications and articles that detail the trends and opportunities for provincial, national and international economic growth and trying to connect these findings with what is possible and realistic in a community at any given time.

What concerns me the most about the discussion that emerges is the degree to which some economic development professionals across Canada and the United States have tried to formularize economic development, as if this line of work could ever be seen as a one size fits all or trendy. Just think about the number of communities that have argued for incentive programs to attract industry, attract a post secondary campus, develop a technology research park or implement an industry cluster strategy.

A recent article in the Washington Post entitled Industry Clusters: The Modern Day Snake Oil brings home this discussion. The article talks about how the formula for clusters is always the same – pick a hot industry, build a technology park next to a university or college, provide incentives to relocate, add some venture capital money and watch the magic happen. The problem is that the magic never seems to happen and a recent survey out of Norway seems to bear this out.

The author goes on to state that if we are focused on building a knowledge economy then the prerequisite for success has to be people. Towns and cities need to concern themselves with their ability to attract and retain knowledgeable people who have the motivation and ability to start ventures. To ensure that they succeed at this effort they need to be connected to one another by information sharing networks and have an open-mindedness to foreign cultures, changes and new ideas. Nothing new to those of us that have listened to Richard Florida over the last decade, but ask yourself, do you have the kind of community that “these” knowledge workers want to live in?

What was also telling was the idea that companies that are “regionally-minded”, maintaining ties only with players within the same cluster, are four times less likely to innovate than those firms that are globally connected. This has big implications for cities and towns trying to stimulate job growth and investment.

In recent years we have spent a lot of time talking to our clients about the value that small business brings to the long term success of a communities, the need for more support for entrepreneurs, the importance of business mentors and communication networks, and the merit in quality of place over quality of life. Getting to know your business community and in particular its entrepreneurs is harder work than investment attraction, but is in my mind at least likely to pay bigger dividends to a community over the longer term.