The Next Frontier for The Next Frontier for Kansas Rural Development Kansas Rural Development

Mark DrabenstottMark DrabenstottDirectorDirector

RUPRI Center for Regional RUPRI Center for Regional CompetitivenessCompetitiveness

University of Missouri-ColumbiaUniversity of Missouri-Columbia

mark@rupri.orgmark@rupri.org

A New Approach for A New A New Approach for A New RaceRace

Globalization has made regions Globalization has made regions the new “athletes” in the the new “athletes” in the

global economic race.global economic race.

Overland Park has a new strategy. Overland Park has a new strategy.

You need one, too.You need one, too.

A 21A 21stst Century Race Century Race Demands Demands

A 21A 21stst Century Strategy Century Strategy

Every region on the planet is Every region on the planet is asking how best to run this race.asking how best to run this race.

You are not alone on this You are not alone on this frontier.frontier.

1.1. Why is a regional approach critical? Why is a regional approach critical?

2.2. What does it take to win? What does it take to win?

3.3. What can you do?What can you do?

The Next Frontier for The Next Frontier for KansasKansas

Rural America Losing Rural America Losing GroundGround

1.1. Rural regions lag far behind in the race for Rural regions lag far behind in the race for jobs jobs and income.and income.

2.2. The main hurdles are lack of critical mass and The main hurdles are lack of critical mass and heavy reliance on assembly heavy reliance on assembly

manufacturing.manufacturing.

3.3. Meanwhile, Meanwhile, transformativetransformative innovation innovation appears scant.appears scant.

Globalization Globalization handicaps most handicaps most rural regions.rural regions.Critical mass is more important than Critical mass is more important than ever — most rural areas lack it.ever — most rural areas lack it.

Top 10% Counties for Top 10% Counties for Job CreationJob Creation1995 to 20051995 to 2005

Source: BEA, REIS

Denotes rural county

Top 10% Counties for Top 10% Counties for Income CreationIncome Creation1995 to 20051995 to 2005

Source: BEA, REIS

Denotes rural county

2. The global economy rewards innovation. 2. The global economy rewards innovation.

Most rural areas are still wedded to Most rural areas are still wedded to commodities…whether agricultural or commodities…whether agricultural or industrial.industrial.

Competition will drive consolidation… Competition will drive consolidation… or take business elsewhere.or take business elsewhere.

Globalization Globalization handicaps most handicaps most rural regions.rural regions.

-1.0

0.0

1.0

2.0

3.0

4.0

5.0

0 1 2 3 4 5 6 7 8 9State Non-farm Proprietor Growth (1970-1990)

Employment Growth (Wage and Salary: 1990-2004)

More entrepreneurs…more More entrepreneurs…more growth!growth!

State Entrepreneurial Growth and Employment Growth

Calculations based on BEA, Regional Economic Information System data

MS

UT

Iowa

ND

MS

KSKS

Source: Drabenstott & Henderson, 2006

Source: Bureau of Economic Analysis, Regional Economic Information System

Index: 1990 = 100

Kansas Employment IndexKansas Employment Index

Rural KS adding jobs much slower than Metro KS …Rural KS adding jobs much slower than Metro KS …

A tough jobs picture over past quarter century…A tough jobs picture over past quarter century…

But things appear somewhat better more recently.But things appear somewhat better more recently.

KS lagging further behind in income…KS lagging further behind in income…

Though things look a little better more recently.Though things look a little better more recently.

An exodus from most of KS…An exodus from most of KS…

With little turn around recently.With little turn around recently.

1.1. Why is a regional approach critical? Why is a regional approach critical?

2.2. What does it take to win? What does it take to win?

3.3. How to move forward?How to move forward?

The Next Frontier for KS

What does it take to What does it take to win?win?

1. Craft a regional strategystrategy.

2. Build robust regional governancegovernance.

3. Deliberately pursue innovationinnovation.

4. Grow a lot of entrepreneursentrepreneurs.

A New System for A New System for Regional DevelopmentRegional Development

Strategy

Entrepreneurship

Governance

Innovation

RegionalRegionalProsperityProsperity

1.1. Sound regional Sound regional strategystrategy

your compass for the your compass for the futurefuture

Regions must...Regions must...

• Identify their unique competitive advantage — Identify their unique competitive advantage — founded on their distinct economic assets.founded on their distinct economic assets.

• Chart a course to seize it.Chart a course to seize it.

• Prioritize public investments to leverage it.Prioritize public investments to leverage it.

Without a strategy, you will not know the Without a strategy, you will not know the “ask” “ask” in Topeka or DC.in Topeka or DC.

Two Key Strategy PrinciplesTwo Key Strategy Principles

1. Must be founded on the region’s economic strengths (assets). The era of smokestack chasing is over.

2. Must target industries where the region can build synergies around established or potential business clusters.

A regional roundtable is crucial to crafting sound regional A regional roundtable is crucial to crafting sound regional strategies — strategies — the region must own it!the region must own it!

This roundtable must engage public, private, nonprofit This roundtable must engage public, private, nonprofit leaders.leaders.

Who will supply the Round Table?Who will supply the Round Table?

Who plays King Arthur?Who plays King Arthur?

2.2. Robust Robust regional regional governance governance

Thinking & acting as a regionThinking & acting as a region

Much of rural America rests on the laurels of assembly Much of rural America rests on the laurels of assembly mfg & commodity agriculture. mfg & commodity agriculture.

We must look much further onto the horizon. We must look much further onto the horizon.

The key will be deliberately connecting public The key will be deliberately connecting public research with what each region does best. research with what each region does best.

3.3.Deliberate Deliberate investment in investment in regional regional innovation. innovation.

4. World-4. World-class class entrepreneurientrepreneurial climate. al climate.

Creating this climate will require…Creating this climate will require…

A change in culture…from we work for “them” to we work A change in culture…from we work for “them” to we work for “us.”for “us.”

Regional e-ship support systems.Regional e-ship support systems.Systematic in approach and regional in scope.Systematic in approach and regional in scope.

Recycling the wealth in new equity instruments.Recycling the wealth in new equity instruments.Don’t bury your talent in the dirt.Don’t bury your talent in the dirt.

1.1. Why is regional development critical? Why is regional development critical?

2.2. What’s the new paradigm for development? What’s the new paradigm for development?

3.3. What can you do?What can you do?

The Next Frontier for KSThe Next Frontier for KS

A Regional Strategy ProcessA Regional Strategy Process

Identify a “region”

Build a “governance”

group

Diagnose the region’s competitive

advantageMap region’s assets

and potential—ground-level view.

Select “best” economic direction—craft strategy

to seize it.

Public Investment Priorities

Private Investment Priorities

Identify a “region”

Build a “governance”

group

Diagnose the region’s competitive

advantageMap region’s assets

and potential—ground level view.

Select “best” economic direction—craft strategy

to seize it.

Public Investment Priorities

Private Investment Priorities

Who does what?Who does what?

Identify a “region”

Build a “governance”

group

Diagnose the region’s competitive

advantageMap region’s assets

and potential—ground level view.

Select “best” economic direction—craft strategy

to seize it.

Public Investment Priorities

Private Investment Priorities

KS Region TeamKS Region Team

RUPRI Center for Regional CompetitivenessRUPRI Center for Regional Competitiveness

Step 1: Identify the RegionStep 1: Identify the Region

What is the most logical economic region? What is the most logical economic region?

What is the “commuter shed”? “Retail shed”?What is the “commuter shed”? “Retail shed”?

Is there compelling geography? Is there compelling geography?

Who plays well together in the same sand box?Who plays well together in the same sand box?

Are there historical/cultural factors to consider?Are there historical/cultural factors to consider?

Is there a business cluster to unite the region?Is there a business cluster to unite the region?

Step 2: Build Regional Step 2: Build Regional GovernanceGovernance

Who are the regional “champions”? Who are the regional “champions”?

Who can provide aegis for the roundtable? Who can provide aegis for the roundtable?

Which public officials will engage? Which public officials will engage?

Which private sector leaders will engage? Which private sector leaders will engage?

Which foundations or non-profits can supply glue? Which foundations or non-profits can supply glue?

Can a university/college bolster the effort? Can a university/college bolster the effort?

Step 3: Diagnose Competitive Step 3: Diagnose Competitive AdvantageAdvantage

What are the key economic trends in the region? What are the key economic trends in the region?

How’s the region doing against its peers? How’s the region doing against its peers?

What is learned from leaders/laggards in the region? What is learned from leaders/laggards in the region?

What are the region’s existing & emerging clusters?What are the region’s existing & emerging clusters?

What are the various impacts of economic options? What are the various impacts of economic options?

RUPRIRUPRICenter for Regional Center for Regional CompetitivenessCompetitiveness

World-class regional strategies for the global economic race

Five world-class analytics: Five world-class analytics:

• Baseline trends in the region — economic & demographic critical trends.

• Benchmark against other regions — how is the region under/over performing.

• Economic linkages — where the region has the strongest economic ties.

• Business cluster analysis — existing and emerging business clusters on which to build.

• Economic impact analysis — which development options have the biggest bang for the buck?

What are the region’s distinct assets? What are the region’s distinct assets?

Are there “unexploited” assets? Are there “unexploited” assets?

What would it take to unlock their potential? What would it take to unlock their potential?

What are the region’s biggest economic barriers? What are the region’s biggest economic barriers?

Step 4: Map the Region’s Step 4: Map the Region’s Economic Assets Economic Assets

Present menu of “near-term” & “long-term” economic options.Present menu of “near-term” & “long-term” economic options.

Identify consensus options. Identify consensus options.

Prioritize public investments and leverage the “ask” with the Prioritize public investments and leverage the “ask” with the governance group.governance group.

Prioritize near-term development steps.Prioritize near-term development steps.

Prioritize long-term development steps.Prioritize long-term development steps. Launch action steps. Launch action steps.

Monitor progress against plan and evaluate progress. Monitor progress against plan and evaluate progress.

Step 5: Craft the Region’s Step 5: Craft the Region’s Strategy Strategy

Two Case Studies on Regional Two Case Studies on Regional StrategyStrategy

Western Alabama-Eastern Western Alabama-Eastern MississippiMississippi

WIRED RegionWIRED Region

• 11stst generation WIRED grant generation WIRED grant

• Mostly ruralMostly rural

• Driven by 8 community collegesDriven by 8 community colleges

• No prior regional initiativesNo prior regional initiatives

• The state line was hugeThe state line was huge

What is the WAEM What is the WAEM Region?Region?

37 counties.37 counties.

1.028 million people.1.028 million people.

Most people (88%) work in theMost people (88%) work in theRegion … 368,000 jobs.Region … 368,000 jobs.

What are the What are the Region’s economic Region’s economic

strengths?strengths?

ForestForest The best pine forest east of the Mississippi.

AgricultureAgriculture A strong history of commodity production.

ManufacturingManufacturing A diverse legacy of industrial activity.

Quality of lifeQuality of life Excellent water, clean air, and connection to outdoors.

History & cultureHistory & culture The cradle of Civil Rights and a rich history of the region.

Location & logisticsLocation & logistics Great highway/railway/waterway network in the heart of the South.

Faith communityFaith community A vibrant faith community woven into the fabric of the region.

Outdoor recreationOutdoor recreation Abundant outdoor recreation opportunities.

Roundtable results

A Timeline for DevelopmentA Timeline for Development

Today 5 Years Future

10 Years Future

• Rests mainly on currentRests mainly on current mix of industries.mix of industries.

• Key is making firms in Key is making firms in each key industry more each key industry more competitive…competitive…

• And exploiting market And exploiting market trends in every industry.trends in every industry.

A Timeline for DevelopmentA Timeline for Development

Today 5 Years Future

10 Years Future

• Advanced mfgAdvanced mfg

• Wood productsWood products

• Tourism & cultureTourism & culture

• Warehousing & distributionWarehousing & distribution

• Health careHealth care

• EntrepreneurshipEntrepreneurship

Advanced MfgAdvanced Mfg

The region has a big mfg presence, but it is highly The region has a big mfg presence, but it is highly vulnerable to global competition.vulnerable to global competition.

Key is moving to higher value segments through Key is moving to higher value segments through advanced mfg techniques.advanced mfg techniques.

Workforce training, business support, and cluster Workforce training, business support, and cluster development will be critical tactics.development will be critical tactics.

Option 1Option 1

Advanced MfgAdvanced Mfg

Motor vehiclesMotor vehicles

The WAEM region is surrounded by a “crescent” of large The WAEM region is surrounded by a “crescent” of large auto assembly plants.auto assembly plants.

The region has not taken full advantage of its location—to The region has not taken full advantage of its location—to be home to other parts of the value chain. be home to other parts of the value chain.

Keys are infrastructure, workforce skills, and rapid Keys are infrastructure, workforce skills, and rapid adoption of advanced mfg techniques.adoption of advanced mfg techniques.

Option 1Option 1

Defining the Southern MN RegionDefining the Southern MN Region

KEY PARTNERSKEY PARTNERS

• AgStar Financial

• Southern Minnesota Foundation

• MN Dept. of Employment & Economic Development (DEED)

• Workforce Investments Boards

• Bio Business Alliance

• Expected support from agribusinesses, regional foundations and others

Northwest Minnesota Foundation

West Central Initiative

Southwest Initiative Foundation

East Central Initiative Foundation

Southern MN Foundation

Northland Foundation

The Minnesota Initiative Foundations

http://www.mcknight.org/greatermn/index.aspx

RUPRIRUPRICenter for Regional Center for Regional CompetitivenessCompetitiveness

World-class regional strategies for the global economic race

1. A “competitiveness dashboard” for regions.

2. A tool to diagnose competitive advantage.

3. Connecting university innovation with regions that can use it.

4. Assess impacts of policies on competitiveness of regions.

5. Support effective models of regional governance.