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ROADMAP TO GLOBALIZATION

International Economic Development Council

734 15th Street, NW Suite 900

Washington, DC 20005 202.223.7800

www.iedconline.org

MAY 2009

ROADMAP TO GLOBALIZATION PRIMER

INTERNATIONAL ECONOMIC DEVELOPMENT COUNCIL ECONOMIC DEVELOPMENT RESEARCH PARTNERS PROGRAM

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PRINCIPLE AUTHORS

Anne Berlin

Frankie Clogston

Shari Garmise, Ph.D.

Shari Nourick

Special thanks to Louise Anderson and Nancy Moorman for research and editorial assistance.

International Economic Development Council

734 15th Street, NW Suite 900

Washington, DC 20005 202.223.7800

www.iedconline.org

ROADMAP TO GLOBALIZATION PRIMER


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ECONOMIC DEVELOPMENT RESEARCH PARTNERS Darrell Auterson, CEcD President and CEO York County Economic Development Corporation Ian Bromley, FM MA MBA Chief Executive Creative Sheffield Ronnie Bryant, CEcD President and CEO Charlotte Regional Partnership Steve Budd, FM HLM President Citywide Development Corporation Dennis Burnside President and CEO Burnside Analytics John Chafee President and CEO North Carolina’s Eastern Region Kurt Chilcott, CEcD FM President and CEO CDC Small Business Finance Corporation Denny Coleman, CEcD FM President and CEO Saint Louis County Economic Council JoAnn Crary, CEcD President Saginaw Future Inc. Buzz David, CEcD President and CEO Amarillo Economic Development Corp Gene DePrez Chief Innovation Officer Creative Sheffield

Don Jakeway President and CEO Brooks Development Authority Paul Krutko Chief Development Officer City of San Jose Tom Kucharski, CEcD President and CEO Buffalo Niagara Enterprise Paul Lucy Director, Division of Economic Development North Dakota Department of Commerce Barry Matherly, CEcD Executive Director Lincoln Economic Development Association Tom McCarthy Director State of Delaware Economic Development Office Judy McKinney-Cherry, CEcD New Growth Strategies Sandy Pratt, CEcD Deputy Director Business Services Oklahoma Department of Commerce Robin Roberts Krieger, FM Executive Vice President Greater Oklahoma Chamber of Commerce Roel Spee Global Leader IBM Global Business Services PLI-Global Location Strategies

Bill Sproull President and CEO Richardson Economic Development Partnership Russ Staiger, AICP President and CEO Bismarck-Mandan Development Association John M. Stroud Executive Director Longview Economic Development Corporation Allison Thompson, CEcD Executive Director Cedar Hill Economic Development Corp Marty Vanags CEO Economic Development Council of the Bloomington- Normal Area Rick Weddle, FM HLM President and CEO Research Triangle Foundation of North Carolina Joy S. Wilkins, CEcD Manager, Community Innovation Services Georgia Tech Enterprise Innovation Institute Greg Wingfield, CEO Greater Richmond Partnership



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Introduction Globalization is one of many factors coalescing to cause significant changes to the economy. Energy and other finite resources, environment issues, changing product standards and competition for talent are intersecting with unprecedented market expansion in new and complex ways. How these factors interact locally shapes each community’s unique experience. The Primer on Globalization explained the major forces in play in US communities and made the case for better understanding and adapting to the ongoing challenges and opportunities of an increasingly integrated marketplace. Based on a series of in-depth community and organizational case studies, this Roadmap spotlights successful strategies and provides economic developers with a toolbox for responding to the forces of globalization. Depending on the dynamics at work in a community, these strategies can be adapted and combined to form a visionary action plan. In this environment of economic flux, communities that embrace the actions outlined here will position themselves ahead of the competition as the economy rebounds. Because emerging market players such as China, India and Brazil are likely to take less of a hit to GDP growth than the US, there is no more important time to think strategically about laying the groundwork for long-term global competitiveness. At the core of this Roadmap is an urgent argument to acknowledge that the conditions for business competitiveness are changing radically. Economic developers are uniquely positioned to raise awareness, advocate positive change and connect functional silos to lessen the impacts of this transition on their communities and help them prosper. Ultimately, economic development professionals who can steer their communities in this direction will capture a range of benefits, including more stable and higher-paying jobs; attraction and retention of skilled, creative and entrepreneurial talent; a larger base of competitive small businesses; and improved quality of life for residents. Case Studies Each of the entities examined to develop this Roadmap represents a singular set of geographic, economic, demographic and institutional variables. In turn, each case reflects a different path to success, dependent upon its particular assets and liabilities. What these communities have in common is a head-on approach



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to addressing the economic consequences of globalization; proactive and at points groundbreaking programming and investments are characteristic of the successful strategies. At a fundamental level, however, responding successfully to globalization is grounded in what we already know about good economic development practices: building off economic strengths; developing and sustaining partnerships; maximizing regional assets; strategic marketing and branding; developing the value proposition and strengthening business competitiveness through service provision. It is the goals and targets of these activities which are morphing, and the best practice cases selected embody successful techniques for adapting traditional economic development functions. IEDC conducted four community-wide case analyses and two organizational profiles to capture the range of experiences in terms of the impacts of globalization, size and location-based variables and industry-specific solutions. By casting a wide net, we’ve endeavored to make the Roadmap Strategies applicable to communities of all sizes and situations. Each case is briefly profiled below. Readers can also access the full case documents for additional depth. Greenville and Spartanburg, South Carolina are two neighboring micropolitan areas working together to combine their resources to attract and support FDI. The area serves as a regional hub for the surrounding 10-county Upstate, as well as parts of neighboring North Carolina and Georgia. With a regional population of 450,000, Greenville-Spartanburg lies midway between Charlotte and Atlanta along the 1-85 corridor, with access to the Port of Charleston and both major southeast railroad lines. In recent decades, and at an accelerated clip over the past several years, the area has undergone a dramatic transition from a rural, textile-based economy to an internationally recognized location for advanced manufacturing and automotive technologies. This evolution began with the aggressive recruitment of foreign-based firms, including a major manufacturing facility of the BMW Corporation, to complement and diversify the area’s economic base. Thanks to the region’s location-based assets and the support of state-level workforce training incentives, Greenville and Spartanburg attracted a significant amount of international business and exposure. To capitalize on this spurt of foreign investment to entrench long-term economic vitality, community leaders invested in downtown revitalization and expanded their economic development programs from an exclusive retention/attraction focus to include knowledge-led strategies for entrepreneurial development, start-up/angel capital network creation and workforce development. The final major element in Greenville-Spartanburg’s strategy is a public-private university partnership to help the area emerge as a global knowledge and innovation hub: the Clemson University International Center for Automotive Research, a world-class applied research, testing, training and small business



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incubating facility for the automotive and motorsports industries. The assets fueling Greenville-Spartanburg’s successful transformation include its skilled manufacturing workforce, proximity to the burgeoning southeastern US automotive industry, and cosmopolitan quality of life in a small town atmosphere. Akron sits in northeast Ohio, 40 miles south of Cleveland, with a population of 210,000 within city limits and a combined MSA population of near 700,000. Akron’s economy is enhanced by its location along the Ohio-Erie canal and its proximity to over half of the American market in the Midwest and populous eastern half of the US. Through the expansion of the rubber industry, Akron became the fastest-growing city in America in the first few decades of the 20th century. The city has undergone a considerable transformation in recent years, however, after the rubber industry largely left the city in waves of downsizing, consolidation and offshoring, resulting in a loss of over 15,000 jobs and a population decline of 12 percent between 1980 and 2006. Today, Akron is positioning itself as a global knowledge and innovation hub in polymers and other advanced materials, particularly through the creation of applied university research centers complemented by an array of economic development services including tech transfer/commercialization assistance, small business development support and workforce development. Akron’s drive to remain competitive on the global stage has been spearheaded by its forward-thinking mayor of over 22 years, Don Plusquellic. Limiting delegation visits and international trade show appearances to a set of strategically selected targets, and committing to long-term relationship building, have been the hallmark of Mayor Plusquellic’s global business development strategy. The case profiles two noteworthy components of this strategy: the city’s partnership role in an Israel-based incubator (backed by a $1 million investment of city funds) and its Global Business Accelerator, both of which funnel high-tech, ‘born-global’ (businesses whose market is global from inception) small businesses into Akron. Cambria County, Pennsylvania is a predominantly rural county situated along the Allegheny mountains with a total population of just over 150,000. Like Akron, Cambria is a rustbelt community with a rich industrial heritage. Steel production and coal mining were keystones of the economic base until a wave of plant closures—most notably Bethlehem Steel and US Steel—plunged Cambria into economic decline. Today however, Cambria County is on the forefront of the green jobs trend, having lured Gamesa, the world’s second largest wind energy company, to set up a $50 million wind turbine blade manufacturing facility, a wind energy R&D center and a local wind farm, all based on Cambria’s natural wind-energy resources and skilled manufacturing workforce. To achieve this, Cambria County



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aligned itself with aggressive state-level initiatives to foster FDI and advance the alternative energy sectors to market itself to an international audience. The profile traces the efforts of local and regional economic developers to tap into state programs and resources to put a relatively small community on the radar screen of potential global investors. To a large extent, Cambria County has been effective at recruiting advanced manufacturing jobs in the field of alternative energy thanks to its efforts to serve as facilitator and matchmaker, helping prospective foreign investors take advantage of Pennsylvania’s arsenal of progressive incentives. The county’s competitive assets include the low cost and availability of land, plus its position in the northeastern US, a primary destination for foreign investment. Spokane sits in eastern Washington near the border to Idaho, about 275 miles east of Seattle and 100 miles south of Canada. As the central city serving a surrounding population of 456,000, Spokane is a regional hub for tourists as well as rural residents seeking options for education and medical treatment. As a mid-sized, in-land community without a port or major international airport, Spokane has found it challenging to attract significant foreign investment. The city has chosen increase its integration with the global supply chain by improving its network of multimodal transportation links and building on its relative proximity to Seattle to bill itself as an inexpensive, low-congestion logistics hub for goods bound for the Pacific Rim. In addition, Spokane has capitalized on its location along land-based NAFTA trading routes to further its position as a transportation and logistics hub. Another key to Spokane’s global market integration strategy is extensive trade development assistance to small and medium-sized companies. As the largest major city within 100 miles of the Canadian border between Seattle and Minneapolis, Spokane is well positioned to serve as a gateway to the western provinces of British Columbia and Alberta. This geographic advantage makes Western Canada an ideal international testing ground for the products and services of new-to-export businesses based in and around Spokane. Particularly as economic activity has increased around the Alberta oil sands, Spokane is spearheading an effort to align Inland Northwest businesses in the fields of construction, engineering and environmental services, construction equipment, metalworking and modular housing to take advantage of a massive boom in infrastructure needs. The case showcases how strategic, international relationship-building, connected with sophisticated small business assistance programs, can be an effective path to sustainable prosperity. It also serves as an example of how mid-sized communities can tap locational advantages to capture a portion of global economic activity.



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World Trade Center St. Louis is located in the 18th largest metropolitan area in the US, encompassing 16 counties in Missouri and southwestern Illinois, and home to over 2.8 million people. St. Louis is centrally located in the US and close to other major markets like Chicago but has considerably less traffic congestion. This translates into a strategic advantage for the region as a distribution hub for goods bound for the US market. When big agriculture began to decline and consolidate and manufacturing jobs moved overseas in the early 1990s, St. Louis felt the early brunt of globalization. As part of the city’s response, the St. Louis County Economic Council (SLCEC) acquired a franchise license to operate a World Trade Center. This case traces the internal operations of the Council and World Trade Center to provide insight into adapting to globalization at the organizational level. The World Trade Center St. Louis (WTCSL) is set up as the international division of the SLCEC and is charged with generating global commercial opportunities for the region. This structural configuration—with the WTCSL fully owned and operated from within a public/private economic development organization—allows the SLCEC to deliver a holistic and globally minded set of programs and activities for local businesses. In addition, this arrangement allows the region to tap more effectively into the global network of resources accessible to every World Trade Center, and draws in additional funds through private sector membership dues. The staffing strategies of the WTCSL also provide insight into how organizations are changing internally to deal with the new demands of a global economy. The WTCSL employs a permanent staff versed in global business and trade and also relies on a robust internship program to complement its permanent staff with a flexible research team with the international backgrounds, country-based insight and language skills appropriate to ongoing projects. A final highlight of the case is the recent merger between the WTCSL and the St. Louis Sister Cities Program, which embodies the organization’s efforts to build global economic ties for St. Louis by consolidating disparate international relationships under one roof. This review of the WTCSL’s unique structure reveals an organization poised to help the greater St. Louis region integrate with global markets while achieving increasing efficiencies for international trade development. Invest in Sweden is the national investment promotion agency of this Scandinavian country with a total population of 9 million people—equivalent to the population of New Jersey within a total area a little larger than California. Sweden benefits from resources of timber, hydropower and iron ore, as well as strong life sciences and biotech industries. The nation stands out because of its highly educated population and businesses that, due to the country’s size and



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location, long have had to think outside its borders. These assets have helped position Sweden as one of the top destinations for FDI in Europe. The Invest in Sweden Agency (ISA) has systematically built this FDI pipeline, relying heavily on personal relationships built by its large cadre of part- and full-time consultants engaged in target markets. This global personnel base is composed of local industry specialists who draw on their in-country connections to cultivate leads for inward foreign investment. Internally at ISA, staff keeps close tabs on small and medium-sized Swedish businesses seeking merger and acquisition (M&A) opportunities. The organization recognizes the value of sharing detailed information on domestic businesses that are open to strategic alliances, customized according to a foreign prospect’s requirements. It also has learned the added value of providing data on other variables such as workforce skills, resource flows and venture capital availability. In turn, the ISA has honed its business-to-business matchmaking and expanded its market data-gathering functions. Globally, cross-border M&A has increased in recent years due to major corporate restructuring and industry consolidation, and ISA has tapped into this trend to build Sweden’s reputation as an attractive place for foreign investment. Structurally, ISA represents a best practice in connecting existing local businesses with international investors. The case outlines ISA’s organizational set-up, spotlighting its unique approach to staffing and funding its international offices. The Roadmap to Globalization: Economic Development Strategies All six cases profile combinations of programs and strategies suited to each community’s particular characteristics. Depending on the type of impact from globalization, location factors, size and pre-existing industry base, each of the entities profiled had a unique foundation from which to respond – yet from that group, nearly any US community should be able to find lessons it can adapt and scale to its needs. Perhaps as importantly, the cases provide tangible evidence that responding proactively and aggressively to the challenges of globalization can bear results, and should serve as both creative inspiration as well as a tool for convincing stakeholders to act. Beyond the specific approaches uncovered in the individual cases, our research honed in on six foundational strategies which inform each community’s efforts to adapt economic development activities to the demands of the globalized economy. These strategies constitute IEDC’s Roadmap to Globalization and, taken as a whole, are intended to have a cumulative effect on a community’s ability to react to and take advantage of the global economy. Rather than a



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sequential set of actions, the Roadmap is a series of principles that have proven successful and can be pieced together as appropriate and feasible. To a strong degree, these findings reflect existing knowledge on best practices for economic development, though they are infused with a global twist. The following strategies are explained below with supporting anecdotes from the case research:

1. Creatively leverage existing strengths, activities and allies

2. Synergize ‘going-global’ strategies with existing ED structures and programs

3. Create new relationships and partnerships that enable global reach

4. Position yourself as a knowledge hub

5. Invest in amenities

6. Build capacity for economic development

1. Creatively leverage existing strengths, activities and allies The effects of globalization will continue to take their toll on US communities against the backdrop of the current economic downturn, energy and resource issues, geopolitical turbulence and massive demographic shifts. Undoubtedly, budgets for economic development will continue to face ever-increasing pressures, and economic development professionals must defend their programs and do more with less by taking full advantage of their existing strengths, allies and resource streams. The case communities have distinguished themselves in this regard by uncovering and deploying all these assets to position themselves for continued job creation in competitive niches. For economic developers, this should be a standard practice that is simply expanded to include a wider understanding of assets and creative ways of tapping into them. Effectively leveraging assets is especially important for smaller communities or those away from the coasts or megaregions of economic activity, for whom it may be particularly difficult to attract notice as a destination for FDI. Communities must start by taking stock of assets that can reduce barriers to their visability in foreign markets, such as tapping into ethnic or immigrant communities or proximity to NAFTA trading partners. For the smallest of our case communities, going global has been in large part about aggressively pursuing state investment for workforce training, R&D, and other incentive programs. Other activities at the state and regional level to tie into



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include international trade missions, commercial representatives abroad and marketing campaigns. Committing staff time to building relationships with the appropriate contacts at state and regional agencies can multiply the quantity and quality of programs and services available to a community. These information channels also will keep a community’s needs and value proposition on the map with state and regional EDOs when they deal with prospects or plan international missions. Strategies in action: Cambria County, PA: Cambria County has taken advantage of numerous resources that the state of Pennsylvania offers. For instance, the county’s EDOs work closely with state officials to provide an additional layer of hands-on customer service to foreign businesses. The county also attends foreign press tours organized by the state, partnering to bring attention to the region and reaching a much broader audience than it could on its own. By marketing itself on the shoulders of the state’s progressive alternative energy policies, Cambria County has been able to bring in hundreds of quality jobs and millions of dollars worth of investments. Spokane, WA: While Spokane does significant trade with Asian countries and piggybacks on state-led trade missions there, it conserves its resources to lead its own delegations to the market where it has the greatest comparative advantage geographically: western Canada. Spokane’s International Trade Alliance leads trade missions to the oil sands of Alberta, bringing businesses from the Spokane area as well as the greater Inland Northwest. Spokane is making effective use of scarce funds by focusing its international trade development dollars (in terms of marketing, trade missions and small business export development) on the one foreign market where it has a location-based strategic advantage. 2. Synergize ‘going-global’ strategies with existing ED structures and

programs International strategies like FDI attraction and global market integration for local businesses cannot be separate from wider ED goals and initiatives. Just as a domestic business attraction program should be based on a community’s competitive advantages in certain industries, global FDI targets should be based on the same or similar strengths. Just the same, much of the industry intelligence that informs a strong business retention program can apply to those same businesses’ efforts to develop foreign markets, or to efforts to attract international businesses. The casework reveals that communities that have successfully introduced a global focus have done so



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by complementing existing ED programs and activities with an international component. Aligning economic development with going-global strategies may mean making changes at the organizational level, such as creating an international trade development department or partnering for service delivery with organizations with international business experience. The research and partnership-building involved in these kinds of efforts are, or should be, key skills of most economic development professionals. At the programmatic level, a synergy between traditional economic development services and going-global strategies might entail adding international intelligence to small business and entrepreneurial development initiatives, or adapting existing marketing materials for use in foreign markets. Strategies in action: St. Louis County Economic Council (SLCEC): This case shows how aligning traditional economic development functions with international activities can strengthen existing economic development strategies. By internalizing the World Trade Center franchise functions, the SLCEC is now able to provide a holistic set of services to businesses. The WTCSL supplements SLCEC’s existing programs, such as SME development and business retention, expansion and attraction by giving them a global reach. The WTCSL also complements the region’s business marketing efforts with including international trade missions and delegation visits. Cambria County, PA: This case presents an example of pairing industry growth targets with international attraction efforts. Building on progressive legislation and incentives that support alternative energy development in the state of Pennsylvania, Cambria targeted international companies in the wind energy sector. This synergy between FDI attraction and energy policies is a benchmark for communities looking to double the impact of economic development efforts. 3. Create new relationships and partnerships that enable global reach Working globally means learning to leverage local networks that have a global reach, as well as committing resources to cross-border relationship-building over time. Examples of these networks include bi-national chambers of commerce, sister city relationships, expatriate networks and international exchange programs – academic, cultural, service or professionally oriented. Strategic alliances with international partners are another indispensable tool to create channels for foreign business and investment attraction. These alliances also can reduce barriers to export, help develop international markets for local businesses, and magnify a community’s visibility internationally. One such



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strategy is to cultivate relationships with peer economic development agencies abroad that represent communities with complementary industry clusters and economic interests. EDOs abroad can serve as intermediary organizations between a US community and potential investor networks and are a key source of market intelligence. Partnership models include formal MOUs, facility/resource sharing and project or event-based cooperation. Specific actions to explore are staff and skilled worker exchanges, business match making and industry knowledge-sharing. Outside of formal alliances with ED agencies, other informal relationship-building activities are key to enhancing a community’s global reach. Repeated visits to target markets via trade missions, and a long-term commitment to regular attendance at targeted, relevant trade shows, will show more results than one-off visits to a new hot market or spotty representation at myriad industry gatherings. Maintaining continuity in the individuals that represent a community on trade missions and at trade shows also helps build the familiarity and knowledge that are key to successful, long-term relationships. To ensure that connections to international markets through local networks and global partnerships are fruitful, economic developers must bring a strong body of sophisticated market intelligence on their own region to the table. This includes knowledge on which small and medium-sized businesses are open to synergies and joint venture opportunities, the growth trajectories of locally based global corporations, and information on locational assets that is customized to the needs of investors from the target country. In other words, to be successful at a global scale, economic developers first must do intensive intelligence gathering at home in order to illustrate their community’s value proposition to international businesses. Strategies in action: World Trade Center St. Louis (WTCSL): The WTCSL recently merged with the St. Louis Center for International Relations. This move aligns the organization to achieve greater global reach by increasing its relationships with key business, government, education and cultural leaders abroad. By acquiring new relationships and networks from the merger, including the St. Louis Sister Cities Program, the WTCSL is able to build its international reputation and capitalize on existing connections that were previously housed and maintained through a separate organization. Akron, OH: One hallmark of Akron’s success at attracting FDI has been its approach to nurturing relationships with public and private sector contacts in a small set of target countries. Each year for the past two decades, the city has sent a delegation to two advanced materials and machinery trade shows in Germany. This dependable presence helps Akron to be a known quantity both to



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large corporate players and fast-growth startups in these industries. The result has been Akron’s rise to rank 13th among the top 50 cities that receive investment from Europe. Akron also has settled on a similar strategy for foreign trade missions. City delegations, led by long-term Mayor Don Plusquellic, concentrate on a handful of target countries for frequent, short visits. Since 2004, for example, Plusquellic has visited Israel five times, resulting in unprecedented levels of economic cooperation. Invest in Sweden (ISA): ISA’s aggressive FDI attraction strategy relies heavily on cultivating relationships that enable global reach. Recognizing that individuals, not companies, make investment decisions, the organization works to build personal relationships with players in key industry sectors, rather than participating in big trade shows or blanket marketing efforts. To support this approach, ISA’s staff is predominantly based within the target markets and is selected based on their in-country industry experience and networks of business contacts. Providing information to potential investors on what Sweden has to offer is another organizational priority. ISA assembles extensive materials on the investment landscape, including opportunities for strategic alliances, operational agreements and other domestic business activities. Approximately 200 titles are published every year for niche audiences – publications, fact sheets, case studies, website articles and PowerPoint presentations in nine languages (Arabic, Chinese, English, French, German, Japanese, Korean, Russian and Swedish).

Spotlight: The Greater Richmond Partnership, Richmond, VA (GRPVA): Outside of the in-depth case studies conducted in the course of this research, IEDC learned of many EDOs across the country that are implementing cutting-edge strategies to go global. One example worth further discussion is the Greater Richmond Partnership, Inc., a regional public-private EDO serving Virginia’s capital city. GRPVA makes the most of its budget for attracting international business by striking up formal alliances with partner EDOs in target countries. To date, the organization has signed three memos of understanding (MOUs) with EDOs in the UK and Germany. The MOUs focus on fostering synergies in science, technology, finance and business service industries and create a “partnership to encourage mutually beneficial business relationships such as joint ventures, partnerships and licensing agreements between companies in [both] regions,” according to a 2008 press release from GRPVA. The foundation for these formal partnerships was laid through extensive relationship-building activities, including frequent trade missions in both



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directions. EDOs approached as potential partners were targeted based on their ties to multinational corporations with branches in both regions, and because of the potential for innovation-based partnerships between incubators and research parks in growth industries targeted by both EDOs.

4. Position yourself as a knowledge hub Industry mobility – both among communities and among countries – has been increasing for decades and will only continue to do so. Low-cost countries attract low-cost industries, and for the most part, the US no longer has a competitive advantage in this area. So in order to realize economic growth and vitality in the 21st century, US communities must grow and leverage their knowledge-based resources, which are the foundation of today’s most competitive industries. There are many avenues for communities to increase their knowledge resources and reputation, ranging from universal broadband access to good public schools. Depending on community size, economic composition and existing knowledge-based resources, the path to positioning yourself as a hub for innovation will vary. Larger regions with major research institutions have found success by focusing efforts around a handful of specific knowledge industries in which they have a competitive advantage. The Akron, OH case demonstrates best practices for this globally renowned hub of the polymer industry. Smaller or rural communities can also tap into knowledge-led economic development as a tool for competitiveness, on a smaller but no less effective scale. The case spotlight below from Michigan’s Upper Peninsula illustrates how smaller communities can implement this lesson. Strategies to develop innovation ecosystems include fostering university-led partnerships; creating flexible workforce training programs; supporting high-tech entrepreneurial development; connecting venture and angel capital networks to start-ups; and pursuing international research and development synergies. Higher education institutions lie at the heart of these knowledge-led strategies, as they enable workforce development, talent retention & attraction, technology transfer, licensing, the pursuit of industry-relevant R&D, and in some cases the development of applied research facilities and equipment. These are essential tools for fueling high-tech innovation, building robust businesses, and putting your community on the global investment map. The resources available at applied research facilities, especially those which participate in international R&D consortia, attract talent from around the world and lay the groundwork for innovations which fuel long-term growth.



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Economic developers should be actively engaged with these institutions, helping them to take a dynamic role in the community and to be active participants in the region’s economic development strategy. Due to their relationships with state and regional governments, workforce development organizations, the venture capital community, entrepreneur networks and established businesses, economic developers are uniquely positioned to integrate higher education resources with these players to strengthen and focus workforce training programs, applied research goals, venture capital priorities and enterprise needs. Entrepreneurial development is another area where economic developers can ensure economic growth against a backdrop of increased global market competition Knowledge-based start-ups are some of the most agile, creative, and fast-growing businesses a community can foster, and the ones most likely to see and take advantage of opportunities abroad. Through entrepreneur support services, peer-to-peer networks and investor matchmaking, economic developers can foster an environment where ideas can be developed at an accelerated pace into global market-ready enterprises. Assisting high-tech entrepreneurs with business development and financing – especially within the context of developing an area of industry knowledge specialization for the region – will translate into quality job creation and put a community on the map as a hub of innovation. Strategies in Action: Greenville-Spartanburg, SC: With textile jobs moving abroad at a rapid clip and automotive sector players well established in the area, community, industry and university leaders came together to discuss a plan for future economic growth in the region. For this group, the automotive and transportation technology expertise at Clemson University, combined with the growing industry cluster in the Greenville-Spartanburg region, were a natural fit for developing a high-tech applied research and graduate educatio facility. The resulting Clemson University International Center for Automotive Research (CU-ICAR) promotes the skills training, science and engineering talent attraction, and technology transfer capabilities necessary to drive continuous innovation for local industry. CU-ICAR reflects a commitment among public and private leaders to embrace a globally competitive approach to economic development that emphasizes knowledge-led strategies and university partnerships. Also contributing to Greenville-Spartanburg’s innovation ecosystem are a local angel capital network and customized workforce training programs delivered by regional community colleges. Akron, OH: In response to the decline of its manufacturing base, Akron is developing new core competencies and diversifying its economy. It is now an internationally recognized leader in polymers, a material expertise evolved from the foundations of the rubber industry. In cooperation with higher education and private sector players, economic developers have created an innovation



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ecosystem which supports the global competitiveness of a few strategically identified niche industries with high growth potential and export orientation. This support network fuels local business competitiveness by funding market-driven applied research; creating pathways for tech transfer; attracting best-in-class talent; providing workforce training resources; and supporting fast-growth, born-global entrepreneurs. The case describes Akron’s path to becoming a knowledge hub in advanced materials, including its multinational business accelerator, globally networked research facilities and workforce development programs.

Spotlight: Michigan Tech Enterprise SmartZone in Rural Upper Peninsula

For communities without a major research university, it is still possible to partner with smaller higher education institutions to foster an innovative ecosystem conducive to the growth of robust, globally active businesses. The key is to align curricula with industry needs, emphasize applied research and encourage commercialization via entrepreneurship support, incubator space and accelerator services.

One notable example is the Michigan Tech Enterprise SmartZone, a partnership between Houghton/Hancock, MI, the Keneewaw Economic Development Alliance (KEDA), and Michigan Technological University (MTU). While Houghton/Hancock in the remote Upper Peninsula has only 12,000 residents, MTU has a total student population of 6,000. The university serves a broad range of employer needs and academic pursuits by offering certificates, associate, bachelors, and advanced graduate degrees.

The SmartZone is a state designation which uses certain state tax dollars to encourage a collaborative approach to the creation and growth of tech-based businesses. The Michigan Tech Enterprise SmartZone partnership has developed 4 incubators across the region, finances a pre-seed capital fund, and provides business development services. For instance, the region recently introduced a pilot program which taps MTU library staff to conduct customized market research for local small businesses; the results will be used to fuel expansion plans.

The university itself supports industry-relevant R&D, and assists with the process of licensing and commercialization to spin off viable, home-grown businesses around innovations. MTU also runs an award-winning retention program targeted at increasing completion rates of economically and academically challenged science and engineering students.

Through the Michigan Tech Enterprise SmartZone, this small university in a rural town has become a major asset positioning Hougton/Hancock to



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develop and retain talent and promote high-tech innovation to keep local companies globally competitive.

5. Invest in amenities Like several of the other strategies detailed in this document, investing in amenities in order to be competitive in a global economy is an extension of what EDOs should be doing already as part of their basic economic development strategy. Technology and business mobility have changed the practice of economic development so that a low-cost business climate is no longer the most compelling attribute for most businesses – and those for which it is may not provide the kind of jobs and investment sought by communities aiming for sustainable competitiveness in the global economy. Access to skilled workers has taken the place of low costs as the key asset for today’s most competitive businesses. And from the young and talented to experienced workers contemplating semi-retirement, today’s workforce is highly mobile and has many choices of places to live. In fact, many young professionals now choose where to settle first and then look for a job, in contrast to previous generations, which lived or moved wherever their jobs took them. A great deal of research has been conducted on the link between a community’s quality of life and economic growth, including a recent study by the Federal Reserve Bank of Philadelphia which looked at 150 metro areas around the U.S. and found that those rich in what they called “consumption amenities” – such as parks, historic sites, museums, and beaches – “disproportionately attracted highly educated individuals and experienced faster housing price appreciation.” The paper found a statistical correlation between the number of leisure visits to a metro area and the growth of factors like population and housing values. This kind of research, plus empirical evidence, show that educated workers tend to prefer cosmopolitan culture and diversity; dense, mixed-use development and traditional, walkable neighborhoods; and consumption amenities like those mentioned above. Today’s globalizing communities are reaching far beyond traditional aesthetic improvements such as streetscape programs or main street development to invest in the amenities that talented, mobile workers value – such as walkable residential neighborhoods, public transportation, bike trails and green space, entertainment and cultural venues, and so-called ‘third spaces’ which provide low-cost work space for artists, freelancers and entrepreneurs. Successful communities are viewing the development of these amenities not as short-term expenses but as long-term investments that create the right atmosphere to attract and retain the best and brightest. Strategies in Action:



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Greenville-Spartanburg, SC: Greenville’s extensive downtown overhaul, which helps this community stand out as a destination in the predominantly rural region, is a prime example that even smaller communities can strengthen their pitch to attract and retain businesses by investing in placemaking. The region’s ascendancy to globally competitive status has been fueled in no small part by ongoing investment to build a distinctive sense of place through downtown revitalization. City planning agencies have skillfully navigated public-private partnerships to develop a mix of arts, cultural, sports and entertainment venues, residential and office spaces and specialty retail. These amenities have served the region well as a selling point for attracting talent and investment. St. Louis, MO: St. Louis has attracted nearly $5 billion in new investment in its downtown and increased its downtown residential population from near zero to 10,000 over the past 10 years by investing heavily in restoring its downtown’s grand architectural legacy. It has invested in other regional amenities as well, such as a new River Ring project, which eventually will be a 600-mile web of biking trails and greenways designed to encircle and connect the entire region and help metro St. Louis compete with other areas that have a wealth of outdoor opportunities. Significant investment in the Missouri Botanical Garden, a scenic oasis and tourist attraction in the city of St. Louis as well as a center for botanical research and science education, has helped the region become a leader in plant and medical sciences, attracting or retaining research divisions of major multinational corporations. 6. Build capacity for economic development Entering new geographic arenas and supporting an ever-widening set of economic development functions necessitates a parallel enhancement of organizational and staff capabilities. The aim of capacity-building efforts should be to ensure your organization—and the network of economic development players in your community—has the structure and resources to embark on the Going Global Roadmap. One approach is to expand the functionality of existing organizations. To do this, some EDOs are spinning off 501(c)3 or (c)6 foundations, especially to augment technology licensing capabilities and qualify for new financial resources. Others are acquiring complementary entities such as World Trade Centers, sister cities programs and export assistance centers. In addition to expanding existing EDOs through strategic acquisitions and partnerships, some communities with less pre-existing economic development capacity are creating new public-private organizations (predominantly for regional marketing and knowledge-led ED programs) or issues-based councils which convene community experts around specific goals and projects. In Spokane, for example, existing ED players pooled



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resources to spin-off a separate nonprofit entity dedicated solely to helping small businesses engage internationally. To expand their reach, smaller shops are finding novel ways to plug into the international programs and activities of bigger players at the regional and state level. At the staff level, implementing these Roadmap strategies means relying on individuals who can handle increasingly complex and diverse tasks, are effective at building relationships in multiple geographic and functional arenas, and can think strategically about partnership opportunities. In addition, permanent staff with multidisciplinary backgrounds, international trade experience, cultural exposure and foreign language skills will be of increased value. Successful organizations will take a deeper look at the skill sets and interests of existing staff in order to take full advantage. Smaller EDOs can heed this directive by tapping into the abilities and talents housed within larger partner economic development entities. The bottom line is this: building synergies, revisiting your organizational model and leveraging the talents of each individual in your network are key to making these strategies work for your community. In this period of diminished budgets and increased pressure to deliver ROI, optimize the capacity for economic development already at your disposal. Focus on mapping existing assets—in terms of funding, staff skills and connections—and using them to the fullest extent possible. Strategies in action: Greenville-Spartanburg, SC: In Greenville-Spartanburg, economic development capacity has been expanded through the creation of three new public-private EDOs: a regional partnership for marketing and attraction and two county-supported EDCs that cooperate in the delivery of economic development functions with Greenville and Spartanburg’s city agencies and chambers of commerce. By building capacity in this way, EDOs serving the region are able to specialize functionally and deliver a broader range of high quality ED programs, specifically with regard to FDI attraction and knowledge-economy strategies. Spokane, WA: To deliver a broader range of international economic development services to the region, the city, regional chamber and EDC spun off a separate nonprofit organization, the International Trade Alliance (ITA). The ITA’s primary activities are inquiry-based research services, education and consulting to small and medium enterprises. Consulting services include export readiness reviews, customized leads and trade advocacy. With the creation of this organization, the city economic development agency and regional EDC can focus more resources and staff time on attracting new foreign investment, while the ITA supports the expansion and global competitiveness of existing businesses.



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Invest in Sweden: This agency’s staffing policy includes heavy reliance on part and full-time consultants engaged in target markets. Consultants are local industry specialists with extensive experience who build on a base of contacts plus sector and market-specific experience to provide leads and insight. Most of the overseas representatives are business professionals approaching the end of their careers, with known profiles in the industry and the gravitas to meet with CEOs and decision-making executives. Conclusion Unlike the forces behind globalization and many of its effects – which largely happen outside of a community’s control – going global is an intentional process undertaken by a region. It involves engaging in many traditional economic development functions and processes but with expanded scope and tactics, as well as undertaking brand new strategies. It is a change of mindset from the traditional outlook in which communities view their competition as other communities in the state or country, to understanding that competitors may now be located in Brazil, India or Poland. It adds a layer of complexity to the economic developer’s job, for not only must their perspective change, but ED professionals now must help their boards and elected officials understand the new competitive landscape and the resources and strategies it requires. In more practical terms, this means developing industry and business intelligence from new sources and extracting new meaning from that knowledge, as well as identifying and using cross-cultural resources previously untapped for economic development purposes. It also means continual knowledge development on and anticipation of global trends, because if anything is true of our globalizing economy, it’s that change is the only constant. Economic developers and communities who do not seek to understand how new policies, technologies, trends or news constantly reshape their work – and respond accordingly – will find themselves at a disadvantage to those who do.

ROADMAP TO GLOBALIZATION · International Economic Development Council ... hallmark of Mayor...

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