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Development approach needs overhaul

As I See It

The State of the South report issued last year by Chapel Hill, N.C.-based MDC Inc. is a second wake-up call for changes needed in our approach to economic development. The first call was a report issued in 1986 by the same group, Shadows in the Sunbelt.

The conclusion reached in both reports is the same: the South is working extremely hard doing the wrong things. If we don’t change the way we pursue economic development, failure will be the reward for all our dollars and hard work.

Though wealth was unevenly distributed between the wealthy and the poor, the South was enjoying prosperity in the mid-1980s when the first MDC report was issued. However, even in the midst of prosperity, the economic scenario was quietly shifting toward the formation of two Souths, one metropolitan and prosperous, the other rural and facing serious trouble. That trend has continued and gained momentum over the last two decades.

Here’s what happened. The South’s economy was based largely on agriculture and manufacturing. Both of these endeavors have been in decline in recent years and nothing has arisen to take their place.

Agriculture’s problem is primarily one of oversupply and the consequent downward pressure on commodity prices. Though lowering production to ameliorate oversupply seems the obvious answer, our response has been to seek government assistance to support higher prices. And we have thus guaranteed overproduction of agricultural commodities into the future, as far as the eye can see.

As for manufacturing, we are still clinging to the 1940’s strategy for economic development even though the landscape has changed. Throughout the last half of the 20th century our strategy was akin to “buffalo hunting,” meaning that we identified herds of prospects and fired wildly into the midst hoping to hit something we could drag home for supper. Cheap land, cheap labor and government subsidies were our calling cards.

This worked for a time and continuing prosperity seemed likely. Manufacturing became the lifeblood of rural Mississippi, allowing country folk to continue “living on the land” while earning a subsistence livelihood in the nearby plants. But there was a sea of change going on around us that caught us unawares.

The manufacturing operations that located in Mississippi were mostly branch plants for companies located elsewhere. When our cheap land and labor was no longer the prettiest girl at the dance, they turned to others who offered cheaper land and labor. Darla Moore, a South Carolina businesswoman and founder of the Palmetto Institute, described the South’s buffalo hunt strategy as “depending on the kindness of strangers.” In suggesting a strategy for the future, she said, “the region needs to become more self-reliant — to develop its own businesses based on its own assets. And that requires more support for entrepreneurship.”

What should we do? Unfortunately, there are no quick fixes. We must shift our focus from attracting jobs to developing ourselves. Mac Holladay, who served as head of economic development in three Southern states, mused, “If we had put the vast majority of our economic development resources into incubators, small business services, export training and existing business assistance — instead of recruitment and overseas offices — it might have made a big difference.” That pretty much says it all. Invest in ourselves rather than hope for a helping hand from strangers.

Specifically, the State of the South report lists recommendations for improvement in several broad areas. Some of those recommendations include:

• Refocus state economic development efforts toward investments that will provide higher incomes for workers rather than merely provide more subsistence level jobs.

• Prioritize spending to provide for better education, widely accessible job training and necessary infrastructure enhancements.

• Stop using “buckshot” government incentives to attract any type of jobs and adopt a comprehensive economic development strategy that will capitalize on our unique resources.

• Promote regional collaboration to link rural and metropolitan areas to enhance overall competitiveness and discourage competition between counties and towns.

Elected officials almost universally have a short-term horizon based on their need to show results from one election to the next. This tendency works against formulating a comprehensive, long-term strategic plan for economic development.

Former Gov. Kirk Fordice was visionary in creating a standing committee composed of both government officials and representatives from private industry to recommend long-term economic strategy for the state.

Unfortunately, this group has become inactive and their meaningful work largely ignored. This group, or another similar group, needs to be re-energized and continue their work for the good of the state. Otherwise we seem destined to flounder under the burden of shortsightedness and continue down the road to everlasting poverty.

Thought for the Moment — We must get the message out to every household, and every poor household, that the only road out of poverty runs by the schoolhouse. Discrimination is not limited to race. The line that separates the well educated from the poorly educated is the harshest fault line of all. — former Gov. William F. Winter

Joe D. Jones, CPA, is publisher of the Mississippi Business Journal. Contact him at cpajones@msbusiness.com.


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