Greg Wise Professor and Community Development Specialist

1. Economic Development Today: A Role for Local Government Greg Wise Professor and Community Development Specialist Center for Community and Economic Development University of Wisconsin-Extension Local Government and Economic Development, Really? Re-Energizing Your Local Government Education Programming October 22, 2014

2. What is economic development? • Is there a distinction between business development, economic development, and community development? • How are they related?

3. What is economic development?

4. Growth versus development • Growth or Development? • more businesses, more jobs • economic sustainability • Growth or Development? • expanding tax base • services and revenues in balance • Growth or Development? • any growth is good • growth that promotes a community’s values • Growth or Development? • bigger is better • better is better

5. Community Capitals Framework Source: Cornelia Flora, Jan Flora, Susan Fey, Mary Emery

6. Economic development authority • Counties and Towns • administrative home rule authority to address legislatively conferred responsibilities • specifically authorized by statute and reasonably implied from them • Chapter 59.57 County Economic & Industrial Development • Cities and Villages (and Towns exercising Village powers) • home rule authority to determine their local affairs • Chapter 66 sections specifically addressing: public utilities; planning, housing and transportation; development; housing authorities; urban redevelopment and renewal

7. Economic development authority • Comprehensive Planning Law • affects every general purpose local unit of government • specifically includes an economic development element • Public/Private (nongovernmental) Non-profit Entities • IRS 501 entities • Business Organizations and Promotional Associations • Chambers of Commerce and tourism groups • For-profit Development Enterprises • private development businesses

8. Eras of economic development Source: Mark Drabenstott, Kansas City Federal Reserve Bank and Rural Policy Research Institute (RUPRI)

9. The “new normal” economic development Traditional Model New Model Industrial Recruitment Attraction Expansion Retention Small Business Startups Entrepreneurship • The relative amount of attention given to the three major ingredients is reversed • The nature of the three ingredients themselves fundamentally change from narrowly conceived approaches to broadly defined strategies • Traditional Model: Local and Competitive / New Model: Regional and Cooperative Source: Adapted from Brian Dabson, Rural Policy Research Institute (RUPRI)

10. Asset-based community development Two solutions, two paths: Needs-driven Capacity-focused Discover community capacity and assets Opportunities take advantage of local knowledge and skills Self-help responses are empowering Resources of local communities are built and taught for this and future opportunities • Focus on community needs, deficiencies, problems • Problems attract experts and services as an solution • Service responses lead to dependency on outside expertise • A cycle of dependence results Source: Kretzmann and McKnight

11. Regions or clusters? Clusters Regional Economic Development Organizations • Renewable Energy Manufacturing • Agriculture, Dairy, and Food Processing • Software Development • Medical Device Manufacturing • FIRE (Financial Services, Insurance & Real Estate) Sources: Wisconsin Economic Development Corporation; UW-Extension Center for Community & Economic Development

12. Community or Economic Development • 75% of Americans under 28 believe a “cool city is more important than a good job” (Ryan) • Young people “insist they need to live in places that offer stimulating, creative environments” (Florida) • Young people want: a place to raise a family; safe streets; affordability; good schools; and scenic beauty (Andresen) Sources: Rebecca Ryan; Richard Florida; Will Andresen

13. What does the evidence say? • Economies with higher rates of entrepreneurial activity are stronger and more competitive—70% of economic growth comes from entrepreneurial activity • Each year 7 to 8% of all jobs are lost; they’re replaced in the following ways: • 55%of new jobs come from expansion of existing firms; • 45%of new jobs come from new business startups; and • 1%of new jobs come from business relocations • 35% of the Fortune 500 companies are displaced every 3 to 4 years • Firms of fewer than 20 employees generate the majority of new jobs • Entrepreneurial growth companies account for a significant percentage of new job creation and are the catalysts for cluster-driven economic development • Rural communities have more entrepreneurial activity • Metropolitan places have stronger sales and more income Sources: Global Entrepreneurship Monitor Project; National Governor’s Association; Public Forum Institute; Goetz

14. Establishments by employment size Wisconsin, 2013 Stage 3— 1.0% Stage 4—0.2% 6.6% 3.1% 11.8% 90.3% 28% 59% Resident — stand-alone businesses in the area or businesses with headquarters in the same state Nonresident — businesses that are located in the area but headquartered in a different state Noncommercial — public institutions and nonprofit organizations Stages —classifications of businesses by the number of persons they employ Source: YourEconomy.org, Edward Lowe Foundation

15. Wisconsin establishments versus jobs • Percent of Resident Establishments by Stage, 2013 • Resident — stand-alone businesses in the area or businesses with headquarters in the same state • 90.2% of establishments are resident • 78.0% of jobs are resident Source: YourEconomy.org, Edward Lowe Foundation

16. Wisconsin establishments versus jobs • Percent of Resident Establishments & Jobs by Size, 2013 • Resident — stand-alone businesses in the area or businesses with headquarters in the same state • 90.2% of establishments are resident • 78.0% of jobs are resident Source: YourEconomy.org, Edward Lowe Foundation

17. Wisconsin establishments versus jobs • Percent of Resident Establishments & Jobs by Size, 2013 • Resident — stand-alone businesses in the area or businesses with headquarters in the same state • 90.2% of establishments are resident • 78.0% of jobs are resident Source: YourEconomy.org, Edward Lowe Foundation

18. Growth or decline in establishments • Percent Growth of Establishments, 1995-2013 Percent Change Resident — stand-alone businesses in the area or businesses with headquarters in the same state Nonresident — businesses that are located in the area but headquartered in a different state Noncommercial — public institutions and nonprofit organizations Source: YourEconomy.org, Edward Lowe Foundation

19. Growth or decline in jobs • Percent Growth of Jobs, 1995-2013 Resident — stand-alone businesses in the area or businesses with headquarters in the same state Nonresident — businesses that are located in the area but headquartered in a different state Noncommercial — public institutions and nonprofit organizations Percent Change Source: YourEconomy.org, Edward Lowe Foundation

20. Growth or decline in jobs • Percent Growth of Jobs, 1995-2013 Resident — stand-alone businesses in the area or businesses with headquarters in the same state Nonresident — businesses that are located in the area but headquartered in a different state Noncommercial — public institutions and nonprofit organizations Percent Change Source: YourEconomy.org, Edward Lowe Foundation

21. Growth or decline in jobs • Percent Growth of Jobs, 1995-2013 Resident — stand-alone businesses in the area or businesses with headquarters in the same state Nonresident — businesses that are located in the area but headquartered in a different state Noncommercial — public institutions and nonprofit organizations Percent Change Source: YourEconomy.org, Edward Lowe Foundation

22. Resident establishments by stage 1995-2013 Establishments Total establishments increased 32%; high of 411,206 in 2010 Self-employed increased 36.5%; high of 168,211 in 2010 Stage 1 increased 34.5%; high of 204,514 in 2010 Stage 2 increased 11.6%; high of 38,370 in 2013 Stage 3 & 4 increased 22.3%; high of 3,673 in 2012 1995 2000 2005 2010 2013 Source: YourEconomy.org, Edward Lowe Foundation

23. Resident jobs by stage 1995-2013 Establishments Total jobs increased 19% Self-employed increased 36.5%; high of 168,211 in 2010 Stage 1 increased 22.9%; high of 618,776 in 2008 Stage 2 increased 14%; high of 967,880 in 2006 Stage 3 increased 20.7%; high of 563,154 in 2012 Stage 4 increased 20.2%; high of 495,275 in 2013 1995 2000 2005 2010 2013 Source: YourEconomy.org, Edward Lowe Foundation

24. Establishments by Employment Size (2008) Percent of Establishments: Self-employed – Stage 1 Number of Establishments: Stage 3 and 4 Source: YourEconomy.org, Edward Lowe Foundation

25. Community Capitals Framework Source: Cornelia Flora, Jan Flora, Susan Fey, Mary Emery

26. Community Capitals Natural Capital: Air, soils, water (quantity and quality), landscape, biodiversity, scenery Cultural Capital: Values, language, rituals, tradition, dress, heritage, celebration Human Capital: Self-esteem, education, skills, health, creativity, youth, diverse groups Social Capital: Leadership, groups, bridging networks, bonding networks, trust, norms of reciprocity Political Capital: Inclusion, voice, power, responsiveness, efficacy Financial Capital: Income, wealth, security, credit, investment Built Capital: Water systems, sewers, utilities, health systems, transportation, housing Source: Cornelia Flora, Jan Flora, Susan Fey, Mary Emery

27. CCF andQuality of Life Indicators • Natural…environment, recreation and leisure • Cultural…arts and culture, community • Human…education, health, home, learning • Social…community, learning, safety, self-sufficiency • Bonding & Bridging • Political…community, safety • Financial…home, self-sufficiency, work • Built…home, environment, recreation and leisure

28. The private sector creates jobs! • But the public sector influences the conditions! • regulatory reform • reducing the tax burden • adequate infrastructure • necessary public services • a skilled, reliable workforce • a support network

29. A prescription for business development • Create climate and culture in which business (entrepreneurs and entrepreneurship) can flourish • 3 organizing principles: • community-driven • regionally-orientated • entrepreneur-focused • Dabson is challenging us to start with community development in order to be effective at economic and business development Source: Brian Dabson, Rural Policy Research Institute (RUPRI)

30. Keys to successful programs • Business development follows economic development follows community development • Build on community assets • Encourage broad community collaboration • Think and act regionally

31. Roles for economic development players • Economic developer • support the community by selling the business development opportunity to a prospect • propose a deal to decision makers • Elected and appointed officials • create a community that is conducive to business development • make an informed decision about a development opportunity

32. Roles for extension educators • Change agent—evidenced-based researcher–educator—facilitator • Leadership and organizational development • Applied research and best practices • Awareness building • Engaging all interests

33. Necessary pre-conditions for sustainable CD • Is the whole community engaged? • Does the community know what they want? • Does the community know what they have? • Is the community working on the foundation for their desired future? • Is the community ready and willing to make sometimes challenging decisions? • Has the community enabled others to build on those efforts?

34. Discussion