The Power of Knowledge in Building A Strong Wyandot County Presented at Wyandot County Economic Development Conference.

1. The Power of Knowledge in Building A Strong Wyandot CountyPresented atWyandot County Economic Development Conference. Upper Sandusky, OH November 3, 2011___________ Mark Partridge Swank Professor in Rural-Urban Policy The Ohio State University http://aede.osu.edu/programs/Swank/

2. Outline Knowledge is King I will give an economic outlook then a strategic discussion of local economic development • Today’s moral is that the best strategy is using the assets inside your community. • Two community assets I will stress: • Your people and your businesses. • Provide the right incentives, knowledge and skills for them to thrive. • Leverage your colleges and existing institutions such community organizations to create the right local environment.

3. Outline: Knowledge is King • Focus on attracting the right people and less on attracting (“bribing”) outside firms. • “Bribing” outside firms is offering them a better deal than local businesses who don’t threaten to leave. • Trying to lure outside firms with incentives and subsidies is typically ineffective. (Partridge and Olfert, 2011; Goetz et al., 2011). • Make it that outside firms want to come to your great environment for people and businesses. • I am not ruling out good marketing.

4. State employment growth (2006-07) on announced per capita million-dollar facilities (2005) Source: Partridge and Olfert, 2011.

5. Outline: Knowledge is King • People worry that rural areas are doomed. • However, nonfarm rural population is quite stable. Rural areas can prosper even if agriculture or manufacturing is smaller.

7. Outline: Knowledge is King • With this good foundation, your community will have the best chance to thrive. • SIMPLE STRATEGY! Be patient and build from within while leveraging local and regional assets.

8. Today’s Environment is Tough • National economy and state economies are weak. • Wyandot county has survived some fairly severe blows since 2003.

9. Manufacturing Employment Shares Wyandot County is not alone in facing severe manufacturing contraction but this is helping to promote long-term recovery.

10. U.S. Forecast • I use the NABE September Forecast. It reflects the average of 52 economists and does not have an agenda. • http://www.nabe.com/publib/macsum.html • NABE forecasts 1.7% GDP growth in 2011 and 2.3% in 2012 (about 1% lower than their May 2011 forecast.) • A reasonable economic expansion should have > 4% growth for 2 years or so. • IMF’s U.S. forecast is 1.5% and 1.8%. • Also revised down by about 1% since June.

11. US Forecast • NABE sees a very weak labor market • Monthly Nonfarm payrolls are expected to rise 124,100 per month in 2011 and 162,100 per month in 2012. • At sustained monthly rate of at least 200,000+ is needed for a few years. • UR rate will still be 8.5% at end of 2012 • US still 1 million jobs below 2000 level. • Most panelists don’t see labor market recovery to pre-recession levels until 2015 and some don’t see it until 2017.

12. U.S. Forecast • On the positive side, NABE sees • Expansionary monetary policy (?) • Growth in the rest of the world (?) • Business investment and pent-up consumer demand (?) • On the negative side: • Low consumer and business confidence • Uncertainty about future gov’t policies (?) • I add uncertainty whether ‘Washington’ can do anything of consequence. • Tepid housing market (2013 recovery?)

13. U.S. Forecast • Negative Factors continued: • Financial headwinds caused by tight credit conditions and balance sheet restructuring • High federal deficits and the European debt (Greek) crisis weigh on the world economy • In this economic environment, while I do not see a recession, I have difficulties seeing how a President could be reelected.

14. Ohio Context • Ohio has added 1.6% jobs in the last year (as of August) • US added 1%. • Ohio Unemployment rate 9.1% in Aug 2011, 9.9% Aug 2010, and 8.6% in May 2011.

15. Wyandot County’s Forecast • County has fared well in the face of major shocks 10 years ago. • Place of work and place of resident employment data took a major fall 2003-2009. • Place of resident employment growth is up about 3.5% between August 2009 and August 2011 (source, BLS.gov, Local Unemployment Data). Illustrates commuting in the region. • Bear in mind, the data source is a rough estimate.

20. How can Wyandot County successfully compete globally? • 1. Education and entrepreneurship are local forces that promote prosperity. • 2. Become more resilient to shocks. • Ongoing global economic sluggishness. • Wyandot’s manufacturing legacy has produced wealth, but creates huge risk and variability. • As manufacturing has declined in size, this reduces variability and creates opportunities.

21. Why the Race for Knowledge? • Individual earnings significantly rise with knowledge, skills, and education.

22. US Mean Earnings by Educational Attainment, 2009 U.S. Census Bureau, Statistic Abstract of United States, 2012, Table 232, http://www.census.gov/compendia/statab/cats/education.html

23. Why the Race for Knowledge? • This understates an individual’s gain to education as employment rates rise and unemployment rates fall with education. Source: OECD, 2010. • September 2011 UR 25+ ≥ College Grad: 4.2%; UR no high school completion, 14.0%, Source, U.S. BLS, September 2011 Employment Situation Report. • So they are more likely to work, and among those working, they are more likely to earn more. • Educated workers suffer less in downturns in terms of unemployment—more resilient.

24. Why the Race for Knowledge? • Good for people, but what about communities? 3. There are ‘social’ gains from greater education. People who work in areas with more education have higher earnings themselves • (Source: Moretti, 2004). • Knowledge spillovers. 4. Places with a more educated population grow faster in terms of jobs and people. • (Source: Simon and Nardinelli, 2002; Glaeser and Shapiro, 2003)

25. Why the Race for Knowledge? • Summary: Communities with a more educated population are richer, grow faster, have lower unemployment, and have greater resilience to withstand shocks. • What about Wyandot County? • Okay at the high school and Associate’s level, but not above.

27. How Can Wyandot County Win the Race for Knowledge. • Colleges and universities are key for rural economic development, especially community colleges because Associate Degree is underutilized. • Business can count on a capable workforce.

28. How can Wyandot County win race for Knowledge. • Ohio’s colleges and universities can be the clearing house for local rural economic development. • Why—rural communities often lack the critical mass to coordinate their economic development. • Community colleges already work on the regional scale that is necessary for coherent rural economic development. They unify regions. • OSU Extension increasing works in regions.

29. How Wyandot County can win race for Knowledge? • Colleges are also the institutions that create ‘public-private’ partnerships for economic development. • They can spearhead business training and provide incubators. • Ohio’s colleges and universities can coordinate training workshops for local officials from teaching best practice to teaching finance and tax policy. • Coordinate with OSU Extension.

30. How Wyandot County can win race for Knowledge? 21th Century will belong to places that use their knowledge to leverage their assets. • Rural communities should be attractive to knowledge workers • Quality of life, pleasant environment, sustainable development—this is good economics! • Attract return migrants in their 30s after they have seen bright lights.

31. Good Strategies--cont Business retention and expansion is better than tax incentives for outside investment. Building Entrepreneurship • Small businesses and self employment are strongly associated with growth in rural regions. (Goetz and Raupasingha, 2009; Stephans and Partridge, forthcoming 2011 Growth and Change) • They are an internal engine of entrepreneurship. • Small businesses buy locally and they are less likely to move or outsource. • Build a more diverse economy that is resilient to shocks (Partridge and Olfert, 2011). • Innovation comes from small firms.

33. Good Strategies--cont • Promote small business entrepreneurship by: • Business, Retention, and Expansion • Build networks and identifies strengths and weaknesses in a community. OSU Extension is a good source. • Treat all businesses alike. • Government can help build larger lending pools to reduce credit risk. • If you build a good climate for investment, your own businesses will thrive and STAY!

34. Business Retention and Expansion • Take advantage of farm entrepreneurship. Research has found a greater farm share is positively linked to nonfarm entrepreneurship. (Source: Stephens and Partridge, 2011, in print). • Today, farmers are great role models • 1. Tied to land—not outsourcing to China. • 2. Has experience managing medium sized business and has developed entrepreneurship. • 3. Understands futures markets, global markets, exchange rates, knows how to manage capital. • 4. Has financial wealth to invest.

35. Good Strategy: Leverage Regional Strength? Recognize rural-urban interdependencies • In 1950, communities detached from neighbors • 21st Century communities are linked in webs • Growth spreads out a hundred of miles from a city as small as 30,000. • Source: Partridge et al., 2007 • If someone can commute, they shop, utilize health care, participate in service organizations, etc. • Regions share common interests and the gains should be exploited regionally.

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37. Rural-Urban Shared Fates--cont • Economists contend gov’t jurisdictions should reflect common interests. • Economic development • Tax sharing of common economic gain to share costs • Environmental costs and sprawl • Infrastructure is inherently regional

38. Example of Action • Regions that realize they are linked will have a competitive advantage in the global economy. • Lower taxes, better infrastructure, better public services, stronger economic development • Just being a little more competitive will shift capital from around the world at the click of a mouse. • Regionalism is the real sleeping giant for rural communities for sustainability. • Again, a linking force is extension, colleges and universities.

39. What you don’t want to do! • Don’t try to pick the next hot industry. Be sure hot industries/firms want to be in your community. e.g., Seattle 1978 and Microsoft. • Economists say that governments can’t pick winners but losers know how to pick governments. • Don’t follow the latest fads—e.g., green jobs, innovation clusters, biotech, high-tech, alternative energy, etc etc…. • Solar Energy and Wyandot County

40. Reality Check • No Guarantees!! Not all regions will succeed! • Even doing the right things is insufficient when conditions are unfavorable. • Consequences of pursuing bad policies are high costs and it may prolong the ‘misery’ because people will be less likely to adjust by finding better opportunities.

41. No Silver Bullet

42. Future Challenges for Regions • Globalization is likely to increase • Good: more market opportunities successful • Bad: more competition and threat of outsourcing, for which rural areas are vulnerable. • Technological innovations can change a region’s competitive advantage for good and bad—by definition hard to predict. • Budget realities, austerity, and prolonged global sluggishness.

43. Future Challenges for Regions • Energy prices—the specter of high oil prices remain—costs of transportation and production would fundamentally change. • Climate change will alter regional attractiveness for households and firms. • Attractive climates as places to live will shift • Agricultural production patterns will shift • Goal is to make your community a safe haven for these emerging challenges.

44. Conclusions • Build from within your community as the best strategy for success. • Leverage your colleges as a source of educating your populace, retaining and expanding your local businesses, training entrepreneurs, and to be the focal point of regional efforts to promote growth. • Leverage your broader regions to do things you can’t effectively do alone.

45. Conclusions • Fostering local entrepreneurship is much better than hoping an outsider will ‘save’ your community. • Your community has a wealth of good business ideas, including the agriculture community. • No sure plan! • Future challenges are immense—but wise communities can make these manageable or turn them into opportunities.

46. Thank you • Presentation will be posted at The Ohio State University, AED Economics, Swank Program website: • http://aede.osu.edu/programs/Swank/ • (under presentations) 46

47. Appendix Slides

48. Great diversity in rural America: 48

49. 1990/91-2006 North American Population Growth 49 49

50. Conceptualizations of Competitiveness The Porter Diamond Framework (Porter, 1998)