Globalization, Planning and Local Economic Development

Andrew Beer, Terry L. Clower

• Publisher: Routledge
• Year: 2019
• ISBN:
  9781317609704
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

This textbook looks at economic development at the local, community or regional scale. It provides students with a comprehensive introduction to contemporary thinking about locally-based economic development, how growth can be planned and how that development can be realized.

Globalization, Planning and Local Economic Development: • Provides students with a thorough understanding of current debates around local and regional development and how that body of work can assist them in helping communities grow;
• Equips students with a 'toolkit' of strategies that enable them to both plan for development and deliver that development through their professional lives;
• Offers a roadmap for economic development that helps students make sense of place-based development by providing a 'meta narrative' of how regions grow and how those processes can be enhanced. This integrating perspective will be organized around the concept of competitiveness and how that concept can be understood and operationalized in various ways;
• Introduces students to a range of techniques essential to success in economic development planning.

In addition to a wealth of case studies and pedagogical features in the book, this text is also complemented by online resources.

In offering a full toolkit of economic development knowledge, techniques and strategies, this text will thoroughly prepare students for a career in urban planning, transport planning, human geography, applied economic analysis, geographic information systems, or work as an economic development practitioner.

1 Introduction

This chapter:

• ► Addresses why cities, regions and communities need to take active measures to plan for their future economy;
• ► Reviews the arguments that both support and oppose efforts to develop locally or regionally;
• ► Argues there is now a substantial body of evidence on what is effective, and what is not effective, in local economic development;
• ► Notes the range of strategies potentially available to encourage growth locally and that the globalization of the economy has generated new opportunities for many communities, and that this should provide a further spur for action.

WE ALL LIVE, work and enjoy ourselves in a city, a town, a village or a region. Increasingly these places are confronted by social, technological, demographic and political developments that have transformed their economic base and raised questions about the ongoing prosperity of many. In many cities and communities the established economic order has been challenged by a suite of changes, including the shift amongst economically advanced nations from a reliance upon manufacturing employment to jobs based on sendees; the rise of China as an economic and technological superpower; the global economic crisis in 2007-2008 and the resulting legacy of sluggish growth in many regions and communities; the liberalization of trade between nations; growing questions of environmental sustainability at the regional and global scales; and the aging of the workforce.

Governments have struggled to find strategies to ensure the prosperity of all parts of the nation in the face of change that is beyond their control. Increasingly there has been a fracturing of economic well-being and growth at the national scale, with some places adjusting to the new economic opportunities more rapidly than others. This has meant that as individuals, our quality of life and economic prospects are now more influenced than in the past by the prosperity and physical resources offered by the places in which we live. Indeed, Richard Florida (2008) has argued that the rise of the creative economy means that where you live is now one of the most important decisions in your life: shaping your job opportunities, lifetime earnings and the quality of your environment. Localities with strong economies, good infrastructure and burgeoning industries are more likely to offer their residents high levels of amenity, rising incomes and secure employment. By contrast, cities, communities and towns suffering from the decline of important employment sectors are less likely to attract investment, they find it more difficult to develop and sustain appropriate infrastructure and they are more likely to lose population and influence when compared with more prosperous regions.

Places – cities, regions, towns and other, smaller, settlements – therefore matter (OECD 2009). They are important to the individual, the household, the community and – as will be argued later – the nation as a whole. There are no truly wealthy nations comprised entirely of poor regions and towns and, as the OECD (2012a p 15) observes, ‘very underdeveloped regions can often impose high costs on national budgets.’ This book sets out to shed light on three things: first, it examines why governments, communities, elected officials and professional staff in town planning, city management and national, state and local governments need to pay close attention to the economies of their regions, towns and cities. Second, Globalization, Planning and Local Development sets out to provide the concepts and knowledge needed to successfully navigate current thinking around growth and how and why these economic drivers are shaping the prospects of regions and cities. Third, and perhaps most importantly, in this book we document the strategies and actions available to communities and regions as they plan for a better future.

■ 1.1 Planning for economic development

Communities across the globe are confronted by a fundamental question: why should we plan for economic development when national governments already give the issue a great deal of attention, and we know that globalization means many of the decisions affecting growth are taken outside the region, and commonly in other countries? Surely, given the fundamental dynamics of the economy, comparable development would take place locally if no action was taken?

These are critical challenges and it is important to acknowledge that some communities and local governments do not prioritize economic growth and instead emphasize other issues, such as meeting social needs, ensuring the protection of the environment or building a sense of community. While each of these other aspects of social and economic well-being is important, and deserving of local action, engaging with questions of economic development at the city, region or community level is crucial for four major reasons:

• • First, economic development empowers a community to shape its future. It provides greater choice with respect to pathways for future development, it can enable the emergence of a better-educated and more skilled population and it can provide the resources needed to reduce adverse impacts on the environment, while continuing to enjoy greater prosperity.
• • Second, the processes of economic globalization have made localities more, not less, important. Decision makers based in New York, London, Berlin or Shanghai will have little knowledge of the conditions and opportunities in America’s Midwest, central Europe or rural New Zealand in respect of potentially hosting a new factory, or attracting additional investment in an existing plant. Those making such critical choices are unlikely to have detailed insight into individual cities or regions. Part of the challenge of economic development in the 21st century, therefore, is for communities to raise their profile globally in order to attract investments, secure new markets and become a known destination for tourism and other activities. Academics have referred to this as the process of ‘glocalization’: a simultaneous refocusing on both global networks and individual localities, with both crucial to the prospects for growth.
• •Third, community-based economic development has become more important as the economy has changed – especially in developed nations. This has meant the conditions needed to foster growth have become more complex. Countries such as the United States, Canada, the United Kingdom, Australia, France and Germany now rely upon services – such as tourism, retailing, business services, education, Research and Development, et cetera – to generate the major share of employment and household income. Both manufacturing and agriculture remain important parts of the economy, but they too have transformed, relying heavily on more technologically sophisticated and knowledge-intensive production systems than previously. Development at the local level now depends on the provision of a sophisticated array of infrastructure – transport, telecommunications, et cetera – as well as access to an appropriately skilled workforce, specialist suppliers and high-quality resources. The sheer complexity of our contemporary economy demands coordination at the city or regional scale in order to ensure that appropriate investments are made in the first instance, and then used to their full potential.
• •Fourth, the failure to plan and take steps to secure growth can result in missed opportunities and sluggish performance for the local economy. In addition, cities, regions and communities that do not develop economically are likely to be confronted by adverse outcomes – including their potential demise. Economic globalization has reduced the willingness and capacity of national governments to support regions or cities in decline, and communities can quickly discover they have been left behind economically. This results in a raft of problems including entrenched long-term unemployment, a declining tax base, a shrinking workforce, poor access to infrastructure, a loss of skilled workers and young people, and limited visibility amongst key private sector and government decision makers.

There is not a universal consensus on the importance of local action to secure development. At the global scale, some have argued that a focus on national development alone is not only sufficient, but also the most productive strategy for ensuring prosperity (World Bank 2009). Those who advocate for this position would discourage central governments and local communities alike from investing in local growth, arguing that market processes alone will guarantee development and ensure resources are used wisely. It is their view that community or government action promoting the growth of particular places does so at the cost of aggregate national growth. That is, the time, effort and money put into achieving growth at the city or community scale could be more usefully employed elsewhere. In addition, it is argued that such strategies have a poor track record of success. Economic activity, the World Bank (2009) contends, is inevitably ‘lumpy’ and governments should therefore focus on the ‘spatially blind provision of essential public services and balanced regulation of land, labor and product markets.’ (Gill 2010 p 3) Academic researchers have also been critical of local and regional development efforts, with Freebairn (2003) arguing that regional policies reduce competitiveness by discouraging industry from establishing in the most productive locations.

Locally based economic development efforts have been criticized for encouraging communities, cities or governments to invest in infrastructure for which there is either uncertain or limited demand (Daley and Lancy 2011). Others have noted that locally based economic development efforts often exhibit perverse effects, including facilitating ‘rent seeking’ behavior as firms seek locations that offer the most favorable subsidies (Malecki 1999) and become ‘footloose’ – moving as one set of incentives expires and others become available elsewhere. There is clear evidence of such game playing in the US, the UK, Australia and other nations (Beer et al. 2003). At a more fundamental level, Glaeser (2012) has argued that the major metropolitan regions now dominate economic growth, both at a national and a global scale, and in consequence there should be a focus on facilitating their role as engines of growth rather than distributing employment and productive capacity more broadly.

A second group of researchers and institutions has responded to this argument by assembling a substantial body of evidence that suggests that locally and regionally based growth is essential for national well-being. The OECD examined the growth of regions across the developed world over a ten-year period (OECD 2010, 2012a and b) and concluded that spatially blind policies – of the type advocated by the World Bank – are a necessary, but not sufficient, condition for growth, and that such policies are likely to have unintended negative consequences (Garcilazo et al. 2010). The research (2010) observed that across the nations within the OECD, regions with lower rates of growth accounted for 44 percent of aggregate growth between 1995 and 2005 and that fewer than half the metropolitan regions in the OECD had growth rates higher than their national average. In part, these arguments presented by the OECD (2009) set out to reverse conventional interpretations of regional growth processes and outcomes. In their view, the persistence of growth and income disparities between more developed and less developed regions did not reflect a failure of regional policy per se, but instead highlighted the potential for future growth in less developed regions. From this perspective, if failure was evident, it was in the type of regional policies and programs implemented by governments. Growth, the OECD (2009) argued, results not from the simple application of increased investment in infrastructure or research and development (R&D), but instead ‘the key appears to be how assets are used, how different actors interact and how synergies are exploited.’ (OECD 2009 p 3) In short, one of the world’s leading authorities on economic development proposed that growth is achieved through positive interactions between factors such as infrastructure provision, educational attainments, innovation and the promotion of an entrepreneurial culture. Critically, such synergies are best planned for at the local, city or community scale.

The body of work produced by the OECD (2009, 2010) can be interpreted in a number of ways, but it has two clear implications for this book and its audience. First, generating growth locally is important for economic prosperity and well-being, not only in the immediate region, but also nationally. If a nation is to grow in the 21st century, in large measure it will need to do so from the community level up. This was a point appreciated by Lord Heseltine in his development of a strategy for economic growth in the UK. He argued that encouraging growth at the local level is central to securing a prosperous future and that this is best achieved by devolving power, responsibility and resources to the regions so that they can shape their own future (Heseltine 2012). Second, truly integrated local development is only possible at the local level, and while central governments and nationwide programs can assist with the process through grants, networks and information sharing, cities, regions and communities are fundamental to success.

■ 1.2 New models of thinking about local economic development

Over recent decades our understanding of how economies grow has expanded greatly. There is now more published work and more robust evidence on the drivers of economic growth than at any time in the past. This new knowledge should inform the growth strategies of cities, regions and communities globally.

Twenty to thirty years ago the economic foundations of most developed nations were still undergoing a process of transition as they left behind their reliance on manufacturing industries and moved to post-industrial economies. The way we thought about economic development and its determinants was often constrained by a lingering focus on manufacturing as the most significant part of the productive economy, and models of economic development that were restricted by poor data and limited theorization. We have now moved on considerably in our understanding of the processes driving economic development and how to achieve it locally. We better understand how the creation and dispersion of knowledge shapes the prospects for growth, what types of technology are likely to have positive spillovers into other industries and the importance of transport infrastructure in encouraging growth.

Green Leigh and Blakely (2013) identified five phases of economic development in the USA, which they summarized as:

• • Phase 1. Industrial recruitment commencing in the 1930s and continuing into the 21st century.
• • Phase 2. Business retention and incubation was added to the portfolio of activities for some economic development agencies from the 1960s. From the 1960s economic development evolved to embrace the expansion of business-rela...