Equitable Economic Equitable Economic Development Theoretical and Development Theoretical and

Applied ImpactApplied ImpactOctober 14October 14thth 2006 2006

Presentation for the 13Presentation for the 13thth Annual Critical Geography Mini Conference Annual Critical Geography Mini Conference Department of Geography at The Ohio State UniversityDepartment of Geography at The Ohio State University

Denis Rhoden Jr.Denis Rhoden Jr.AssociateAssociate

Kirwan Institute for the Study of Race and EthnicityKirwan Institute for the Study of Race and EthnicityThe Ohio State UniversityThe Ohio State University

http://http://www.kirwaninstitute.orgwww.kirwaninstitute.org//rhoden.8@osu.edu rhoden.8@osu.edu

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Today’s PresentationToday’s Presentation

►Why is equitable economic Why is equitable economic development important in the global development important in the global context?context?

►Equitable economic development Equitable economic development initiatives initiatives

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Regional Economic Regional Economic DevelopmentDevelopment

► Richardson (1979) defines efficiency and equity in the Richardson (1979) defines efficiency and equity in the regional context as: regional context as: EfficiencyEfficiency maximizing growth, assuming the optimization of maximizing growth, assuming the optimization of

resource allocation over time. resource allocation over time. EquityEquity refers to the reduction of disparities in income, refers to the reduction of disparities in income,

wealth, and growth rates.wealth, and growth rates.

► Richardson’s Equity definition does not account for other Richardson’s Equity definition does not account for other potential intraregional inequities that may exist or result potential intraregional inequities that may exist or result from disparity across class, race, gender, or other from disparity across class, race, gender, or other categories. categories.

► Richardson (1979) argues for the promotion of Richardson (1979) argues for the promotion of “generative” growth, which views interregional “generative” growth, which views interregional development not as a zero-sum game but as the development not as a zero-sum game but as the foundation for national economic growth. foundation for national economic growth.

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Equity As A Market Equity As A Market Basis For ChangeBasis For Change

► Intervention on efficiency grounds alone may not Intervention on efficiency grounds alone may not achieve equity goals.achieve equity goals.

► In fact, interventions that pursue equity grounds is In fact, interventions that pursue equity grounds is more likely to accomplish both efficiency and equity more likely to accomplish both efficiency and equity objectives than is intervention on efficiency grounds objectives than is intervention on efficiency grounds alone.alone. May be especially true in poverty-stricken regions ill-May be especially true in poverty-stricken regions ill-

equipped to resolve market failures as regional growth equipped to resolve market failures as regional growth processes fail to conform to the standard neoclassical processes fail to conform to the standard neoclassical models.models.

► The appropriate strategy for improving interregional The appropriate strategy for improving interregional efficiency and equity depends on the nature of why efficiency and equity depends on the nature of why groups or geographies divergence and the benefits groups or geographies divergence and the benefits and costs of diverting growth to need areas. and costs of diverting growth to need areas.

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Reducing Volatility; Achieving Reducing Volatility; Achieving Inclusion & IntegrationInclusion & Integration

► The nation is being challenged to be a more The nation is being challenged to be a more nimble global competitor as policy and nimble global competitor as policy and physical infrastructure changes much more physical infrastructure changes much more slowly. slowly. Bernanke’s comments encourage policymakers Bernanke’s comments encourage policymakers

to pursue strategies that meet two conditions:to pursue strategies that meet two conditions:►““The benefits of global economic integration are The benefits of global economic integration are

sufficiently widely shared,” and sufficiently widely shared,” and ►““Displaced workers get the necessary training to take Displaced workers get the necessary training to take

advantage of new opportunities.”advantage of new opportunities.”

Source: Andrews L Edmund “Fed Chief Sees Faster Pace for Globalization” New York Times Source: Andrews L Edmund “Fed Chief Sees Faster Pace for Globalization” New York Times August 25, 2006.August 25, 2006.

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The Perspective of Equitable The Perspective of Equitable Economic DevelopmentEconomic Development

►Equitable economic development is a Equitable economic development is a policy and strategy focus aimed at policy and strategy focus aimed at correcting policy mismatches resulting correcting policy mismatches resulting in the inequitable distribution and/or in the inequitable distribution and/or access to opportunity.access to opportunity. In spatial terms (e.g. neighborhoods, In spatial terms (e.g. neighborhoods,

cities, counties) andcities, counties) and For groups as well (e.g. African American, For groups as well (e.g. African American,

rural) disconnected from opportunity.rural) disconnected from opportunity.

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Capital and Asset DisparityCapital and Asset Disparity

►Geographic differences in the Geographic differences in the ability to put assets to work - - > ability to put assets to work - - > Capital does not impact the same Capital does not impact the same assets the same way across space.assets the same way across space. Largely episodic and geographically Largely episodic and geographically

fragmentedfragmented►Easier access to creditEasier access to credit►Tax IncentivesTax Incentives►Many MoreMany More

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Noted Concerns of Existing ParadigmNoted Concerns of Existing Paradigm

►Hyper Competitive Policy Structure:Hyper Competitive Policy Structure: ‘‘Zero-sum game’: A gain is offset by Zero-sum game’: A gain is offset by

another group’s lossanother group’s loss►Jobs traveling across taxable boundariesJobs traveling across taxable boundaries►Inefficient use of subsidy to meet concerns Inefficient use of subsidy to meet concerns

within a typically short political life-spanwithin a typically short political life-span

Very few incentive programs allow for Very few incentive programs allow for broader wealth redistribution to reduce broader wealth redistribution to reduce inequityinequity

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Racial Disparity Weakens Racial Disparity Weakens Collaborative AdvantageCollaborative Advantage

►Traditional economic development Traditional economic development lacks the geographic scale to impact lacks the geographic scale to impact issues of inequityissues of inequity Inequities harm everyone–inner city, rural Inequities harm everyone–inner city, rural

and first-ring suburbs face similar decline, and first-ring suburbs face similar decline, yet few policy solutions exist to reduce yet few policy solutions exist to reduce problems from common sources (i.e. land problems from common sources (i.e. land use management, infrastructure use management, infrastructure investment, education). investment, education).

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Why Equitable Why Equitable Economic Development?Economic Development?

► Equitable outcomes in economic development Equitable outcomes in economic development are equally concerned with the ability to access are equally concerned with the ability to access and the existence of opportunities and the existence of opportunities The public and private sectors are being challenged The public and private sectors are being challenged

to think of new ways to pool resources and to think of new ways to pool resources and incrementally create opportunities.incrementally create opportunities.

Local land use and economic development policy, Local land use and economic development policy, arguably the most hypercompetitive policy areas are arguably the most hypercompetitive policy areas are holding hostage the value and opportunities a holding hostage the value and opportunities a regional economic structure provides.regional economic structure provides.►Example: Poaching in economic development are the Example: Poaching in economic development are the

unintended consequence of mismatches in a web of unintended consequence of mismatches in a web of policy impacting the fitness and productivity of assets.policy impacting the fitness and productivity of assets.

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Equitable Economic Equitable Economic Development In PracticeDevelopment In Practice

Equitable Economic

Development Practice Areas

Industry-focused workforce

development

MBE/SBD development

Leveraging and distributing

investments (Pension

fund invest in inner city)

Neighborhood development

Stakeholders and Policymakers focused on these areas…

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Equitable and Efficient PolicyEquitable and Efficient Policy

►Concern about fairness,Concern about fairness, Minority Business Accelerator Minority Business Accelerator

►encouraging productivity in the core, encouraging productivity in the core, andand Land Value Taxation (Pittsburgh and Land Value Taxation (Pittsburgh and

Harrisburg)Harrisburg)

► integrated opportunity distributionintegrated opportunity distribution Integrate economic and workforce Integrate economic and workforce

development policy (US DOL WIRED)development policy (US DOL WIRED)

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Place and Life OutcomesPlace and Life Outcomes► Equitable economic development is intend Equitable economic development is intend

to enhance and distribute prosperity and to enhance and distribute prosperity and reduce barriers to capital for households reduce barriers to capital for households and businessesand businesses Equitable economic development is remedying the Equitable economic development is remedying the

geographic disparity in employment opportunity and geographic disparity in employment opportunity and investment opportunities deprived areasinvestment opportunities deprived areas

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Linked FateLinked Fate►Why should households and firms in Why should households and firms in

inner-ring, outer-ring suburbs, and inner-ring, outer-ring suburbs, and exurbs care about inner-city disparities?exurbs care about inner-city disparities? ‘‘Heralded Firms’ are increasingly being Heralded Firms’ are increasingly being

challenged by smaller firms as scope, not challenged by smaller firms as scope, not scale are drivers in the global economy. scale are drivers in the global economy. ►Regional productivity filters up. As such the wealth Regional productivity filters up. As such the wealth

and vitality of all residents are increasingly and vitality of all residents are increasingly interdependent interdependent

Global competition requires higher Global competition requires higher education and more educated persons. education and more educated persons. ►Education must be a principal driver to enhance Education must be a principal driver to enhance

regional collaborative advantage and to build regional collaborative advantage and to build wealth.wealth.

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