Emerging Issues: The Economic Development Game Has Changed

January 11, 2010
The Economist magazine reports "a deep-seated movement of economic power away from rich nations towards emerging markets" is occurring "faster than was thought"(12/31/09). And the shift is accelerated by the recession; it is not a temporary result of the downturn. 
Fareed Zakaria, editor of Newsweek International, provocatively titles his excellent new book "The Post-American World" (2009 Norton). He says that, while the United States will remain the sole "superpower" at "the politico-military level," in every other dimension "the distribution of power is shifting, moving away from American dominance." 

These changes result, not so much from absolute American decline or decay, but from what Zakaria calls "the rise of the rest" - China, India, Brazil, Indonesia and many other so-called "developing countries." 

Bill Stafford, president of the Trade Development Alliance (TDA) of Greater Seattle since 1991, says that these changes have direct, urgent and important implications for American cities and city leaders. 

Those implications are both negative and positive, but they do demand changed attitudes and orientations. In short, "the game has changed," and it's way past time for American players to play by the new rules. 

The U.S., says Stafford, is "about the only country in the world that does not have a national agency aimed at attracting foreign direct investment." The National Export Strategy - developed by many federal agencies through the Trade Promotion Coordinating Committee (TPCC) - goes largely unnoticed. And where, he asks, does there exist in practice a national competitiveness strategy that might include, for example, game-changing, large-scale infrastructure investments and targeted research and development? 

The "smug" attitude that allows these federal lapses is mirrored at the state and local levels. There remains, for example, a certain resistance to accepting that we have much to learn from practices in other countries. And, has your local economic development office reviewed the Export Strategy; proposed appropriate steps to make use of (or resist!) the initiatives; and submitted comments to TPCC about why its proposals are inadequate? 

Too many local governments still act as if they have the luxury of merely competing with each other for tax base, especially within their region. But economically this is a sideshow or a delusion. The real economic competition is global, says Stafford, and competing effectively requires regional collaboration. 

Stafford speaks with considerable credibility on this topic. He served in high posts for three Seattle mayors for nearly 20 years. At TDA, he has led Seattle region's political, business and civic leaders on annual study tours of successful city regions around the globe. Columnist Neal Pierce's 1997 description of him still seems apt: "rumpled" and "old shoe" and more knowledgeable about how U.S. cities and regions must compete in the new global economy "than any other living American." 

Stafford often makes his points with stories and data. 

A story: A small, specialty watch repair shop in a Seattle suburb restored old watches and offered them for sale on their Internet site. The owner was surprised that the orders were coming from Japan rather than Seattle. Now, half his customers are foreign and his business is doing fine. 

Some data: One in three jobs in metropolitan Seattle is tied to the international economy. These jobs are not only in big corporations, the likes of Boeing or Microsoft. They are also in universities that educate international students, tourism, high quality manufacturing - and watch repairs. 

The international portion of metro Seattle may be larger than yours. Stafford says, however, that the general point remains the same - "Competition is now worldwide in every industry, every sector." That generalization includes manufacturing, retail and services as well as the local hospital, and it means both challenges and opportunities for your local economy. 

There may be much gnashing of terrible teeth and roaring of terrible roars to protest the changes in America's and city regions' relative global economic positions. Trade disputes with China and other nations will continue. But chanting "we're number one!" is not an effective competitiveness approach. 

Local and regional economic development strategies need, then, not just a separate short "foreign" element, but rather a global consciousness that pervades every aspect and action. NLC's 1993 report, "Global Dollars, Local Sense," urged this shift in orientation, and many cities have moved in this direction. But much more remains to be done. 

The relevant mantra is: think and act both globally and locally. 

Details: The 2008 Export Strategy can be found at www.ita.doc.gov/media/Publications.) Helpful NLC "International Programs" materials and other links are at www.nlc.org, under the "Resources for Cities" menu and then "Programs and Services." For those who delight in such things, the "terrible teeth..." image is from Sendak, "Where the Wild Things Are." 

Bill Barnes is the director for emerging issues at NLC. Comments about his column, which appears regularly in Nation's Cities Weekly, and ideas about "emerging issue" topics can be sent to him at barnes@nlc.org. To view and read previous columns, visit the Emerging Issues webpage.