Knowledge economy trumps ‘buffalo hunt’

by

Published: March 10,2003

The recession of the early 21st century has hastened the collapse of low-wage, low-skill manufacturing upon which so many Southern communities depended, concludes the report State of the South, Shadows in the Sunbelt Revisited.

“The ‘buffalo hunt’ of industry chasing is increasingly shortsighted in the knowledge economy,” states the report by the non-profit organization MDC Inc. based in Chapel Hill, N.C. “Without serious intervention, many communities will be competitive for nothing more than exporting their young people.”

The study’s top recommendation is that Southern states refocus the agencies responsible for economic development to pursue a broader, more strategic approach. “State governments should not measure success simply by the number of new jobs, but also in terms of higher incomes for people and improved competitiveness of regions within the states,” the report says.

“There is a great deal of emphasis in the report on regionalism, on cooperation and on eliminating competition between communities,” said former Gov. William Winter, who chaired the panel that prepared the report. “We are now competing not with other local entities, but on a world stage. Regional collaboration and cooperation is going to be absolutely essential if we are going to compete successfully.”

The report recommends recruiting of new industry be targeted towards sectors that provide the most opportunity for growing the state’s economy.

“…to the extent that incentives remain in play, they should be targeted, scaled and focused on building long-term capacity of communities and regions,” the report said. “They should encourage business clusters and regional collaboration.”

Winter said states can no longer rely on the type of general recruiting done in the past.

“Recruiting must be specially targeted,” Winter said. “I think it is proper for us to identify industries that have the capacity to make a substantial difference in our economic development. It is probably wise for us to continue to provide certain economic incentives to those industries. But we can’t do it across the board. The industry we get must be high-wage industry that has the capacity to create substantial new jobs. We can’t just throw money at any industry that comes along.”

Robert J. “Bob” Rohrlack Jr., executive director of Mississippi Development Authority (MDA), agrees on the need to more tightly focus economic incentives.

“The strategy on incentives, business clustering and regional collaborations that the study talks about is exactly what we are doing within MDA,” Rohrlack said. “We have the clusters study results, and we have presented them to the public. We are now integrating them into our marketing strategies. These are clusters that we have researched for years determining which have the broadest and best appropriations coming from the state. The four primary clusters are information technology, plastics and polymers, automotive and lumber products.”

Another study recommendation is promoting entrepreneurship to create jobs and economic development.

Rohrlack said incubators in the state aggressively promote entrepreneurship.

“We work closely with incubators in the state,” Rohrlack said. “We are wanting to see more and more incubators come in the state because we know it is a great idea and wonderful long-term strategy. That’s how you build your own economy so you are not totally dependent on the effects from the national or global economy.”

“We must look to our own entrepreneurs — the people who are already here — for development,” Winter said. “And we have many of them. Some of the most successful industries in this state have been developed by local citizens without a lot of economic incentives. These are people who live here and who aren’t going to move away. I’m talking about folks like Billy Howard in Laurel, Fred Carl in Greenwood and Hartley Peavey in Meridian. These are examples of very successful, homegrown entrepreneurs. That is the best kind of industry to support.”

Pete Walley, director of long-range planning for Mississippi, believes the state needs to do more to help entrepreneurs.

“Entrepreneurship is one of our best opportunities to grow the economy in the next 20 to 30 years,” Walley said. “But in Mississippi we have no incentives for entrepreneurs. And we don’t have very much of a willingness from leaders to consider public policy for entrepreneurship.”

The State of the South report echoes the conclusions of several other recent regional and state studies that give recommendations about how to improve the state’s economy. Walley is struck by the commonality of the recommendations.

“We’re clearly getting strong signals on the issues we should be focusing on,” Walley said. “What’s difficult out of those recommendations, and where the rub comes in on the state level, is turning those general recommendations into specific actions. I think that it our weak suit particularly in Mississippi, but perhaps in the South as a whole. The leadership does not want to consider anything but what we have tried in the past. There is no willingness to try new ideas.

“Witness the $300 million the state spent to lure Nissan here. The mindset is that we can buy our way out of economic problems by going on what the State of the South report calls a ‘buffalo hunt’. The report clearly says there are diminishing returns from incentives for industrial recruitment. We are going to pay more and more for fewer jobs. The report recommends refocusing state agencies responsible for economic development to pursue a broader and more strategic growth. That tells me that we need to recognize that economic development is much more inclusive than just recruiting industry.”

Winter agrees it will take a lot of work implement the recommendations of the report.

“They don’t just file a report like this and expect it to be picked up on immediately,” Winter said. “There has to be a lot of salesmanship behind it. I know there are those in state government who agree with the strategies outlined in this report, and I believe they will move to implement it. It is a matter of an intensive effort in educating people about the new strategies that are recommended.”

Closing the gaps in income equity for state residents is another issue important to the state’s economy. Winter says it isn’t possible to have true progress in the state if there is a widening gap between the “haves” and the “have nots”.

“We are going to have to look to our own resources to an increasing extent to build the kind of physical and social infrastructure that will enable us to provide the means for creating a desirable standard of living for everyone,” Winter said. “There must be emphasis on eliminating the inequities that still exist including inequities based on the difference in capacity of communities, and the differences based on racial inequities. There must be a recognition that we are all in this together, and we have to have some common goals that all of us clearly understand so we can work toward achieving them.”

It is also critical that there be continuous support for education to create a competitive workforce.

“States and the region as a whole must understand that unless all people are prepared to be productive in today’s economy, our economic progress will be severely limited,” Winter said.

Walley thinks it is important that the state start to focus as many resources on community development, workforce training and support of existing industry and business as it does on industrial recruitment. He advocates more resou
rces for promoting entrepreneurship, and major changes in the way universities are linked to economic development.

One recommendation can be taken out of Georgia’s book. The state decided to take university research and focus on action items that would benefit the state in terms of job c

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