Last week we explored three simple questions – where have we been? where are we now? and where might we be going? – in order to help provide some context for Ohio’s economic reality. One of the things we learned is that Ohio’s major cities all vary greatly when it comes to their demographics and growth. While Columbus has been growing at a rate of 10% each decade, Cleveland saw their population peak back in the 1950’s. This highlights the idea that no city or town is exactly the same. Each place is diverse in their resources, needs, and opportunities. There is no “one-size-fits-all” proposition to achieve economic vibrancy. However, there is quite a bit of research that has helped us identify factors that are most highly associated with economic growth. This week’s blog will explore these factors, with the hope that people can use it to ask more strategic questions about how “growth” can be pursued in their communities, and to identify their own distinct approaches to get there.
Educational Attainment & Human Capital
One of the most important factors driving economic success of an area is the educational attainment of the population. This may not come as much of a surprise: an improvement in human capital means an increase in the availability of workers for higher-skilled and higher paying jobs. According to the National Bureau of Economic Research, possessing or attracting a large population of skilled, educated workers appears to be the key factor in determining whether declining urban areas can chart a path back to prosperity or remain relatively stagnant. In a separate analysis, “Reinventing Boston: 1640 to 2003” , the researcher presents Boston as a perfect example of how well-developed human capital can consistently overcome economic adversity. Statistically, educational attainment–summarized by the fraction of the adult population with a four-year college degree–explains roughly 60 percent of the variation in per capita incomes among large U.S. metropolitan areas.
Population & Infrastructure
The discussion about the relationship between economic growth and population have been made by various parties. Among them are Floater (2014), Henderson (1980) and World Bank (2000). The conclusion of these discussions are ultimately that a city’s economic growth will accelerate the growth of population. Losing residents can present a serious issue for cities, as it becomes more difficult to collect the taxes needed to pay for fixed costs and can stifle efficiency and vibrancy of a dense urban core. It’s also perceived as a bad sign of a city’s overall health if more people seem to want to move away than move in. A growing population means there is an increase in the availability of workers or employees, which means a larger workforce.
However, if the condition of urban infrastructure can’t meet the needs of a growing population, it will pose more problems than it solves for the city. Because, as the city’s population increases, there will be an increase in the need for clean water, sanitation, electricity, household waste management, housing needs, and the needs of population mobility facilities.
Business Costs
According to a study conducted by the Fund For Our Economic Future, metro areas with a higher tax cost (ratio of local tax revenue to personal income), energy cost, and unionization rates tend to exhibit slower growth in GMP, productivity, and employment, but no difference in per capita income. These “higher-cost” metros also exhibit a lower share of the population that is low-income, and typically have better health insurance coverage and less-concentrated poverty. This factor urges communities to think about where they land on a continuum of tax and energy policies, understand why the cost are there and what, if any, alternatives can be proposed to increase efficiencies without sacrificing quality of life.
Development of a Diverse Entrepreneurial Ecosystems
Industrial transitions happen. Ohio is no stranger to this fact. That is why it is important to create an environment where people want to do business and then identify and support entrepreneurs by giving them every chance to succeed.
This factor encompasses a complex array of variables related to entrepreneurship including self-employment, establishment birth rates, and prevalence of small businesses. Business start-ups and/or self-employment are associated with every measure of growth: jobs, income, productivity and GMP, and are especially pronounced in metro areas with more diverse and integrated populations.
Growing from within
Prioritizing established and emerging firms and industry clusters, and investing in the ecosystems of innovation, trade, talent, infrastructure, and governance to support globally competitive firms and enable small businesses to grow in the market.
Fundamentally, businesses understand their industries better than anyone else; hence the public sector should identify ways to encourage growth, increased productivity, greater inclusion, and more competitiveness in targeted sectors by listening to businesses and jointly setting goals that marry private sector profit and public economic and social interests effectively. This approach may offset some of the other realities of short election cycles and limited capacity to participate in goal-setting or planning processes.
Discussion
What defines “economic growth/vibrancy” for your community? What affects that growth and who is benefiting from it?
What options should be considered for improving your economy?
What challenges and opportunities do you see for making your region of Ohio a more vibrant place to live?
The worst thing ever done was letting independent folk be able to to be privatized with their plans for other folks property, Hence economic development!They are protected,and we are not.where they have a lot of money,and friends in high places they change the ordinances,
and laws to acquire what land they want,and are making folks homeless! This is not doing nothing,but lining their pocket not helping the community seeing how the same people have bought up most of the town.some of these properties have been in families for generations, and are being STOLEN! Their pull allows them to change ordinances among other things, because they know folks are poor,and cannot challenge them! They say we talked to people, and they love it! I bet they do,because they didn’t talk to the people in the neighborhood it was happening too! The poor the disabled the veterans the Senior citizens! Yes this is who LAWRENCE COUNTY OH IS MAKING HOMELESS, so that they can profit get grants,Etc and look like they are helping the Community! Tell me how you get a grant in the housing project,and replace the same sidewalk you just did the summer before? The same folks bought up most of the town in the so called Economic Development area,but we as citizen home owners,and folks who live where these people have plans for where we live are entitled to know nothing about what they have planned for our property,and we own it,but they are protected BECAUSE their business is private! How is it they get to know everything about our property, and submit plans for our property ,and we are not priveledged obout their plans? They have access to all our info,and can make threats,and people homeless,and thats acceptable? All because of a new highway exit! Slick talk when the big wigs come to southern Oh that we find out about after they are gone so they dont know better! I know folks who are affected who would gladly speak to you openly,and honestly! I tell you it would be informative, but anonymous because of possible retribution! Trying to make things better. I ❤ OH