TIP Strategies is a privately held Austin-based economic development consulting firm committed to providing quality solutions for public and private‑sector clients.
This blog is dedicated to exploring new data and trends in economic development.
By: Jeff Marcell, Senior Partner, TIP Strategies, Inc.
Innovation Districts, Prosperity Zones, Creative Districts or Tech Towns—no matter what the terminology, the concept of concentrating industries, technologists, companies, entrepreneurs, and R&D within a definable geography is top of mind for many in the economic development community. Prime locations are usually dense urban environments offering mixed-use real estate, allowing residents to work, learn, and have fun all in the same neighborhood. Examples and elements of these districts are being studied by economists, think tanks, and economic developers alike. Best practice models are scattered around the US, often led by public-private collaborations. Examples include Seattle’s South Lake Union, Detroit’s Downtown and Midtown developments, and recent developments in downtown Las Vegas. Sometimes these districts are executed by formal, organized efforts with specific boundaries, and sometimes they grow from an organic process with informal boundaries. However they take root, successful districts have generated a lot of attention and inspired many communities to pursue similar approaches in hopes of stimulating job creation.
In September, I was honored to join some of the most knowledgeable and successful thought leaders in economic development from across the US to participate in the City of Buenos Aires’s Global Districts Summit in Argentina. The Summit was driven by the city’s motivation to share best practices in the creation and sustainability of economic development districts with a focus on public policy, entrepreneurship, and international business development. My fellow US delegates included leaders from the Research Triangle Park, Ann Arbor SPARK, Creative Oklahoma, the University South Carolina, IAE Business School, and the Center for Strategic International Studies out of DC.
The conference began with a full day tour of the city’s five creative districts dedicated to technology, audiovisual, arts, design, and sports/entertainment. The districts were established in 2008 to address blight, unemployment, and poverty in economically disadvantaged areas. The goal of the districts program is to attract new investment, jobs, and redevelopment. A daylong workshop followed, discussing the districts’ accomplishments and ways in which the city could improve and expand on what has been completed. The summit culminated in a half-day public forum attended by over 200 dignitaries, business leaders, and city officials. This forum is where I and other delegation representatives shared our thoughts on lessons learned from other districts around the world and suggested opportunities the Buenos Aires districts could pursue in the future. An enthusiastic keynote address, about the possibilities that innovation holds for Argentina, was given by Guibert Englebienne. Guibert, who is regarded as the Steve Jobs or Bill Gates of Argentina, is co-founder of Globant, the country’s largest technology company with more than 4,300 employees serving clients like LinkedIn, Zynga, and Google.
At TIP Strategies, we think about successful economic development efforts in terms of Talent, Innovation, and Place. These three components are critical to a successful economic development district as well as to the region in which that district is located. What follows is an outline of some of what is happening in the City of Buenos Aires and its creative districts, as well as ideas that were shared by the delegation, as they relate to Talent, Innovation, and Place:
Talent: Buenos Aires exudes excitement and energy. Its architectural beauty, vibrant art, culture, and nightlife act as a magnet for the creative class. The city also has over 30 universities and colleges within its boundaries. Buenos Aires has made meaningful commitments to strengthen its talent base. One effort is a partnership with three universities, including the prestigious Technology Institute Buenos Aires, to collectively build a new campus in the heart of the technology district. The production of more trained engineers is imperative; roughly 40% of engineering graduates from local schools leave the country to work elsewhere. This is an unacceptable loss of a precious asset. The delegation agreed that all efforts must be made to keep and grow this engineering talent if the districts, city, and country are to be successful.
Innovation:The rapid success of Globant is proof that innovation and entrepreneurship is alive and well in the Buenos Aires region. The city has received international recognition for its growing software industry, drawing attention from companies and technology leaders in places like Silicon Valley. But recognition and international contracts for only the largest firms is not enough. Technology businesses within the district primarily serve back-office functions for business and government clients within Argentina. If businesses within the district are going to succeed, their customer base must be larger than the opportunities within the country’s borders. The city can help attract international business for its emerging tech cluster. Additionally, the city’s university system has focused its energy on the production of skilled students, which is vital, but not enough to achieve success. The conference’s US delegation encouraged an emphasis on research and development and technology commercialization out of these institutions as well.
The city also has a fledgling entrepreneurship program. The program has limited staff and resources with a broad directive to help the people of Buenos Aires create their own business. The US conference attendees recommended that the program narrow its focus to just serving entrepreneurs in the sectors that align with the districts, rather than a more general approach.
Place: Buenos Aires benefits from attributes that create fertile ground for innovation districts: a dense population and mix of residential and commercial activity, served by mass transit. In this respect, the city is fortunate; it didn’t have to create this environment, like many other cities with similar ambitions have to do. In 2008, the city took bold steps to establish the creative districts, identifying areas of focus, setting boundaries, establishing tax incentives to encourage investment and relocation, and making the catalyst investment of building a new state-of-the-art city hall in the technology district. The new city hall not only serves as an architectural gem, it is a statement that the city is committed to the districts’ success. Many businesses have responded—with over 200 firms locating in the technology district alone. They are all benefiting from incentives and infrastructure investments made by the public sector. The US delegation unanimously agreed: if the districts are to meet their potential, the business community must now take a larger leadership role. We encouraged a new formal partnership between the city and the business community with dedicated staff and programming to address the districts’ opportunities and ongoing needs. This kind of initiative would require that the city give up some control; this is necessary to achieve the city’s goals for the districts and ensure their sustained, long-term success.
The concept of innovation/creative districts translates around the world. Concentrating industries, entrepreneurs, and technologists creates an abundance of opportunities that may produce new businesses, investments, and jobs. The Buenos Aires creative district program was established just seven years ago, and they have already generated palpable success. These districts serve as an inspiration to communities everywhere. If it keeps on this path, the city will reach its ambition of being the unquestionable technology capital of South America and will provide jobs and opportunity to its people. Buenos Aires is a place economic development practitioners need to watch.
To learn more about the City of Buenos Aires creative districts visit:
I welcome the opportunity to discuss innovation districts with you and learn about the economic development efforts in your community. Please feel free to contact me at email@example.com.
By: Kyle Vanhemert
Last year, a pair of researchers from Duke University published a report with a bold title: “The End of the Segregated Century.” U.S. cities, the authors concluded, were less segregated in 2012 than they had been at any point since 1910. But less segregated does not necessarily mean integrated–something this incredible map makes clear in vivd color.
The map, created by Dustin Cable at University of Virginia’s Weldon Cooper Center for Public Service, is stunningly comprehensive. Drawing on data from the 2010 U.S. Census, it shows one dot per person, color-coded by race. That’s 308,745,538 dots in all–around 7 GB of visual data. It isn’t the first map to show the country’s ethnic distribution, nor is it the first to show every single citizen, but it is the first to do both, making it the most comprehensive map of race in America ever created.
White people are shown with blue dots; African-Americans with green; Asians with red; and Latinos with orange, with all other race categories from the Census represented by brown. Since the dots are smaller than pixels at most zoom levels, Cable assigned shades of color based on the multiple dots therein. From a distance, for example, certain neighborhoods will look purple, but zooming-in reveals a finer-grained breakdown of red and blue–or, really, black and white.
“There are a lot of moving parts in this process, so this can cause different shades of color to appear at different zoom levels in really dense areas, like you see in NYC,” Cable explains. “I played around with dot size and transparency for a while and settled on the current scheme as being adequate.” You can read more about Cable’s methodology here, but it comes down to this: When you’re dealing with 300 million dots at varying levels of zoom, getting the presentation just right is as much an art as a science.
Looking at the map, every city tells a different story. In California, for example, major cities aren’t just diverse, they’re integrated to a great degree, too. We see large swaths of Sacramento dotted variously with reds, blues, oranges, greens and browns. Los Angeles is more distinctly clustered, but groups still bleed into one another.
In the Midwest, though, the racial divide can be shockingly exact. In Chicago, bands of whites, blacks, and Latinos radiate out from the city center like sun beams. In St. Louis, a buffer of a few blocks separates a vast area of largely black citizens from another of white and Asian ones. In Detroit, the most segregated city in America according to one recent study, there’s no buffer at all. We see how 8 Mile Road serves as the dividing line between two largely homogenous swaths–one predominantly white and one predominantly black.
Looking at the Southeast, a wide, faint band of green represents the Black Belt, a region originally named for the dark soil in Alabama and Mississippi that eventually came to describe the greater region shaped by plantation agriculture. And while the West looks awfully barren, the density of cities like Los Angeles, Dallas, and Houston gives us a sense of why those states are actually so populous.
Responding to the Duke University study last year, experts were quick to expound on the complexities of the issue. Housing desegregation, one pointed out, is not a magic bullet for equal opportunity. Another made clear that blacks remained more segregated from whites than Latinos or Asians. Here, at least, Cable’s given us a chance to see how things stand today in greater detail than ever before.
Check out the full, interactive map for yourself here.
"Outubro, 2012" by copagov via Flickr (CC BY 2.0) [Arena Amazonia, Manaus]
There will be those who say the only thing more boring than soccer is the economics of soccer. I am not one of them. I do, however, have friends and acquaintances who are very much of that opinion. To disabuse them of their benighted view, I’d like to tie Brazil’s current political crisis to more general questions of economic development. What does it mean to spend many billions (yes, billions) of dollars supporting the construction of stadiums? What does it mean to provide subsidies to private corporations or to international governing bodies to host large sporting events? These questions are also ours here in the US. We publicly subsidize everything from the Super Bowl to minor league ball parks to NASCAR tracks. We do this in the belief that there will be a return on investment. Are we justified in this view?
If economic development issues are not complicated enough, I have also indulged my desire to weigh in on the World Cup itself, who will win, and why. Fans of the game can add one more voice to the countless prognosticators and pundits who think they know who will win the World Cup by reading my post on the matter here.
Beyond the spotlight a single World Cup provides lies the larger public policy question of whether massive subsidies for sports are necessary—or even desirable. This post uses the World Cup stage as an opportunity to talk about the economics of sports and the peculiarities of soccer generally.
Brazilians ask: Why did we decide to host this event?
The World Cup begins this week. Thirty-two nations are participating, and a total of sixty-four games will be played in 12 stadiums. Some of these facilities are brand new and purpose-built. All have been constructed or improved through public financing of the Brazilian government. The most remarkable of these is in Manaus, a city at the edge of the Amazon rain forest. There are no viable roads in. Construction materials were sent by barge. Visitors to the four matches will fly in, though there is a river boat option as well. Yes, four matches at a stadium designed for 42,000 fans. And after the matches are played? No one knows. There is no local team that can justify a stadium of this scale. More broadly, the cost is well over $3 billion for all of the stadiums.The entire budget deficit of the country could have been offset by that spending. And there is no discernible ROI for the stadium development. What’s more, soccer’s international governing body (FIFA) will take all of the gate receipts and broadcast rights—one hundred percent.
So with no direct ROI, what justifies that spending? The most common answer, one familiar to cities who have vied for the Olympics (or sports venues or events generally), is that they generate welcome publicity for the host community. Never mind that no credible study supports the perceived benefits. Wh, then, you may ask, do communities continue down that path? There are two answers to that question, neither of which is very encouraging. The first is that officials are corrupt. We have ample evidence of that. FIFA itself is rife with kick-backs and bribery. Sepp Blatter, the head of FIFA, is deeply complicit in “selling” the Cup to the highest bidder. The 2022 Cup is scheduled to be held in Qatar, which would force players into matches where the temperature can reach 140 degrees. Moving the Cup from the summer to the winter would disrupt the professional league matches, so that’s not a good idea. And did I mention that the next World Cup will be held in Russia?
There’s corruption, and then there’s a simple case of being misguided. In 2007, the former Minister of Sport, Orlando Silva, said that no public money would be required for the construction (and improvement) of stadiums for the 2014 World Cup. More recently, Silva’s replacement, Aldo Rebelo, dismissed the notion that the new stadiums would become white elephants. In fact, there is every reason to think that neither the new construction nor the improvements to existing stadiums will ever justify the expenditures. The experience after the World Cup in South Africa strongly suggests that not only is there no ROI, but that the host nation is saddled with additional debt. This was Greece’s experience after the Olympics, and almost certainly played a part in that nation’s debt crisis.
Brazil was the only nation to bid on the 2014 World Cup. Since then, support for the Cup among Brazilians has steadily declined—from over 70% to under 30%. It may sink even further. Brazil’s president, Dilma Rousseff, is a vocal defender of the Cup, but she is struggling with the strikes and protests that have engulfed the nation. Even high profile former soccer stars are questioning the expense. Street protests made the news early this year and can be expected to play to the international news media for the next several weeks. The complaint is that money spent on stadiums should have gone to the country’s “Third World” infrastructure. It’s an argument that deserves more than passing consideration.
It is entirely possible the relationship between major governing bodies (FIFA, the IOC, and even the NFL, with its non-profit status) and host cities and nations will have to change. If countries and cities quit bidding on events, or subsidizing stadiums, sports won’t go away. TV coverage won’t stop, and there will still be breath-taking moments for fans across the country and around the world.
Why the US should care about the Cup
Around the globe, nations are waiting for the first game between Brazil and Croatia with bated breath. But Americans will, as they always do, wonder what all the fuss is about. There are obvious reasons for this: we already have a game called football and it’s, well…different. Beyond that, we have a national team that rarely wins and pretty much struggles against all opponents.
Soccer is a game we don’t understand and we play poorly, but there are other reasons to be skeptical of the hoopla. In addition to the massive capital outlay to host the event, this World Cup carries a load of scandals that rival the Lance Armstrong era in cycling. Are the stadiums actually prepared for the tens of thousands of fans who will occupy them? Are the police ready for the tens of thousands of citizens who will occupy the streets? And that’s not all. Accusations of match-fixing associated with illegal international betting are hitting the presses, just as teams are leaving for Brazil. Then there is the systemic corruption of the sport’s governing body, FIFA.
How, you may wonder, can we be enthusiastic about a quadrennial event the host nation no longer cares to have, is tainted by match fixing, and is overseen by an organization that no fan of the game will defend? And oh yes, an underperforming national team, sub-par officiating, and players that may fall over and writhe in agony when an opponent so much as breathes on them?
Despite all this, soccer’s influence in the US continues to grow. Close to a million Americans may now watch a high-profile English Premiership match. Hundreds of thousands more carefully track the fortune of national teams from Germany, Italy, Nigeria, and, of course, Mexico. Soccer is rapidly becoming our “fourth” sport, ahead of hockey, and it is beginning to rival baseball in popularity. It’s no great stretch to imagine soccer joining basketball and football as one of the big three by the time of the 2022 World Cup in Qatar (or the US, if the scandal that accompanied the selection of Qatar results in a change of venue). In short, soccer is big in this country, and the World Cup will command attention for three glorious weeks. Despite the riots in the streets of Rio and Sao Paulo, despite the bad officiating and the prima donna antics of some players, despite all this, the tournament will captivate a global audience of which the US, for better and worse, will be a part.
What soccer has, and what constitutes a huge part of its appeal, is the flow of the game. In the US, one could argue that sports have lost that beauty. Our major sports are so over-managed that actual playing time is an absurdly small percentage of the coverage. I timed the fourth quarter of the recent Super Bowl from when the ball was snapped to when the play was blown dead. There were less than eight minutes of action in a quarter of play that seemed to go for an eternity. Basketball has begun to follow a similar pattern, with an increasing number of mind-numbing time outs. And baseball, well let’s not even go there. In American sports, players don’t so much play the game as follow the instructions of the coaches. In soccer, there are no time outs. You play for 45 minutes, then you take a break, then you play for another 45 minutes. There are only a total of three substitutions allowed. If you required more than that, due to injury, you would have to play a man down. All this and the players run an average of six miles during the match, often at sprint speeds. Flow is everything—or the ability to disrupt the flow. (Watch Italy.) But in any case, decisions are made and executed by the players rather than managed by the front office’s or television’s demands.
The US can learn to love soccer because it is a beautiful game. People can love it even if their interest in sports isn’t all that great in the first place. Why? Because the passion that drives the 32 nations who participate is unlike that of any other sport, or any other event. While we do watch the Olympics, the intensity has never equaled that of soccer. US sports certainly generate enthusiasm, but soccer more closely resembles collegiate athletics than it does our professional sports. There is also the separate question of how insular our big sports are. Yes, baseball is international, but we continue to host the “World” series even though we won’t allow other countries to participate (excepting Canada). American football is little more than a curiosity outside of North America. Basketball is the notable exception, but it pales in comparison with soccer.
Soccer is wonderful for the non-sports enthusiast, if for no other reason than it provides an alternative to Ambrose Bierce’s chillingly funny adage: “War is God’s way of teaching Americans geography.” Soccer, it turns out, can also teach Americans about geography. We can learn to appreciate that Bosnia and Herzegovina is a single small country in what was the former Yugoslavia (and the former Austro-Hungarian Empire), that many great Belgian players have more than a passing affinity for the Congo, and that England is, well, just England and that Scotland and Wales and Northern Ireland all have their own soccer teams (none of which qualified for this Cup).
What does this all mean for economic development?
There are lessons to be learned from Brazil’s misadventures with the World Cup. Yes, we want the Cup to be a success, but if we fail to understand the consequences of bad decisions, we will certainly repeat them ourselves:
- Do not assume that public subsidies for facilities will yield measurable benefits.
- Question assumptions about the promotional value of sports generally.
- Acknowledge that governing organizations (such as FIFA and the NFL) are profit driven even if they are “non-profit.” Their profits are simply allocated differently
- When working with private developers, ensure that the stadiums are integrated into the fabric of the community (Portland’s Providence Park soccer stadium).
- Promote and support sports that the community can participate in, not just as spectators but as participants and investors (youth organizations, for example).
- Stand firm in the face of pressure from professional teams who will claim to “put you on the map.” You are already on the map. Your economic development success will not be the result of sports franchises. Here in Austin we have no professional sports teams (and did I mention that we lead the nation in job growth)?
The World Cup is a unique event. Its viewership (and the passion it generates) is second to none. Being the host nation, however, is not a reason to cave to the demands of an overreaching governing body, and to ignore the greater needs of the country. If we think our sport is so great, we’ll find a way to support it without bankrupting a country.
By: Jon Roberts, Principal & Managing Director, TIP Strategies
March 11, 2014, marked the last day of this year’s SXSW Interactive. Austin’s premier tech event has grown steadily since its inception in 1994. One notable mark of its reach, that may be overlooked by the standard measure of badges sold and tourism dollars generated, is the heightened presence of economic development organizations at the festival.
The industry’s interest in SXSW was apparent from the number of US states and cities, as well as foreign cities, regions, and countries, that set up shop at SXSW, all vying for one of the most desired of economic development targets: tech start-ups and young entrepreneurs. No doubt about it, this tactic represents a sea change in what counts as credible economic development. Where in the past the profession’s holy grail was the relocation of a major manufacturing company, we now see a shift to technology and high growth start-ups (though manufacturing is still seen as the primary objective in many parts of the US). We’ll leave for another time a more thorough discussion of how successful these efforts are. (The short answer: it varies widely.) At one end of the scale is the possibility that bringing companies to SXSW will only speed their exodus from less tech-savvy regions to (you guessed it) Austin. At the other end is the ability to connect with and recruit entrepreneurs to new markets. My panel, “Start-up Grind: What Makes Austin a Startup Hub,” touched on these issues, as well as the question of what made Austin successful in the tech space.
Clearly, industry recruitment and expansion is not the stated objective of SXSW Interactive, nor is it likely to be the primary draw for most participants. As suggested by their mission statement—encapsulated in three values: creativity, innovation and inspiration—SXSW Interactive is about stepping outside your intellectual comfort zone. At a minimum, spending time in the presence of so many creative companies and individuals gives you an opportunity to rethink assumptions behind your business—even, and especially, at a fundamental level. From an economic development perspective, for example, this rethinking of assumptions raises the question of whether measuring success by jobs created is the best way to grow our economy. Abandoning this gold standard is, in some ways, analogous to growing a business without worrying about profitability. It’s a radical notion, and one that, on the face of it, makes no sense. Just don’t tell that to Amazon or to Facebook.
But testing one’s assumptions is not the whole of the SXSW experience. The real power of SXSW lies in what Tony Hsieh, of Zappos fame, calls collisions—connections that occur spontaneously and bring together individuals and companies that might never have connected before. The sheer number and variety of panels, speakers, and registrants makes this goal relatively easy to accomplish. It can be as simple as colliding with the AT&T team during the Ping-Pong tournament (and, in my case, losing to them) then learning what AT&T is doing, what their talent strategy is, and what their new product line will look like. If I’m busy “recruiting companies,” I miss out on these chance encounters; my agenda gets in the way of making real connections. Sometimes an indirect approach is the surer path towards one’s goal.
And even if you weren’t able to experience the randomness of SXSW, you couldn’t fail to miss this year’s driving theme. It was already apparent on the first day and gathered steam throughout the event: Internet privacy. First Julian Assange, via Skype from the Ecuadorian embassy in London, then Edward Snowden from an undisclosed location in Russia (routed through multiple ISPs). Whatever one’s political attitude towards Assange and Snowden, their message is coming through loud and clear and is being fully embraced by the tech crowd: privacy matters.
The question of Internet privacy has numerous dimensions. It is not exclusively governmental. It extends to transactional privacy with corporations and to the question of who owns our personal data (our Internet identity). The default answer should not be that this information is “owned” by corporations or the government (or health care providers). We—it is being argued—have an absolute right to our personal data and we ought not to be giving it up (or having it taken from us) without our informed consent. This, of course, is a discussion that requires a much larger platform. At a minimum, however, SXSW is signaling a shift in how we think about our use of the Internet. I’ll venture to say it signals a sea change, one whose implications may be profound.
Among the immediate insights that arise from taking a privacy perspective on data are the following:
- Bitcoin is interesting far beyond its effects on financial institutions. The way to think about Bitcoin is as a means of ensuring transactional privacy. What could only be done with cash, can now be done electronically with the same advantages – and, as we have discovered, some of the same risks.
- Our health records are ours, and do not belong to a health care system or the government. The realization that our health records tell our personal story and that their ultimate value belongs to us and needs to be managed by us is still a startling fact.
- Every online transaction, from simple browsing to Internet (and credit card) purchases, reveals information about us that we have the right to control. Commercial transactions, by definition, are between at least two parties. E-commerce exponentially increases the parties involved in each transaction. Data collected during the initial transaction becomes a commodity in itself, which can be shared and sold many times over. Whether we explicitly agree to this extension of our transactions or not, we are entitled to know which of our data is kept and how it is being used.
These points—and many more like them—could have enormous business and social implications. It is immediately apparent that they relate to one another and foreshadow a changing relationship to the data and metadata that increasingly define who we are. In fact, we can expect to see a new wave of disruptive technologies related to managing our on-line activity. We are already beginning to note distinctions where before there were none: distinctions, for example, between privacy and security, and what it means to own our digital identity. Add in social media (in its multiplicity of forms), and every on-line activity is subject to a major re-thinking.
SXSW has a way of making small ideas very big. This was true of Twitter, and it may be true of a new wave of privacy-related companies. Stay tuned.
Over the past two months, we have been engaged in a conversation about the future of jobs with economic development practitioners at the TEDC and IEDC conferences.
Now, we’d like to create an open forum to continue this dialogue beyond the conference setting. In the comments section of this post, you’re invited to respond to the following questions, or pose additional questions for your peers.
How will the “future of jobs” change how you approach economic development?
What mechanisms have you created to support corporations and freelance workers in your community?
Below you’ll find a video of Jon’s recent IGNITE presentation from IEDC’s Leadership Summit in San Antonio. The IGNITE structure allows speakers 5 minutes total to present in the form of 20 slides, with 15 seconds per slide. A brief overview of the presentation follows the slide show.
The Future of Jobs from GIS Planning on Vimeo.
This is a discussion about the future of jobs. The idea of what a job is has changed throughout history (and continues to change). Farmers and craftsmen have always had trades, or livelihoods. Since the industrial revolution, a fundamental shift in the nature of jobs has occurred; individuals are employed by entities (corporations) and in return for their labor (9-5), they are compensated (wages) and receive benefits (healthcare, etc.). When unemployment is high, as it has been in the aftermath of the recent recession, we must ask ourselves who should create jobs: the public sector? the private sector? Can the economy continue to grow, even if jobs are not being created? (answer: yes).
The economy grows when value is created. Corporations can create value by increasing productivity (but not necessarily increasing employment), and independent contractors can create value outside of a traditional employee-employer relationship. If we take this thought experiment to its logical extreme, could there be corporations without people on the horizon? Will trade guilds become an organizing structure for independent contractors in a variety of professions?
If jobs are no longer the most useful or accurate measure of economic development success, how can practitioners best promote economic vitality in their communities? Are there mechanisms by which cities, regions, and states can offer resources to corporations and freelancers that will support their ability to create value, regardless of hiring trends or employment status?
We invite you to participate in this conversation in the comments section below.
By: Jon Roberts and Caroline Alexander, TIP Strategies
Via: IEDC, ED Now (member login required)
The impressive expansion of the nation’s healthcare sector has proven resistant to economic downturns. Over the last two business cycles, healthcare employment has grown by more than 30 percent nationally. Total nonfarm employment, on the other hand, has increased by just 3 percent. This resilience is almost certain to continue. Optimistic growth prospects are well supported by demographic trends. As a result, the sector has caught the eye of many communities seeking to strengthen their economies. The challenge for economic development organizations is how to maximize the economic benefit of this sector.
While healthcare may not be seen as a traditional target for economic development, the sector offers many of the benefits of a “primary industry:” it often draws in outside dollars, it has linkages across a wide supply chain, and it offers a number of opportunities for high-wage, skilled jobs. In addition, access to healthcare has become an essential element of a region’s infrastructure. For these reasons, targeting healthcare can be an effective way to strengthen and expand a regional economy. The following framework provides a starting point for communities that want to consider this strategy.
1. Assess the sector. Economic development organizations typically have an incomplete picture of who is involved in providing medical services. They may have the CEO of the regional hospital on their board, but they may not know what services are (and are not) provided or how a hospital relates to clinics and physicians outside the system. More importantly, they may not have a full understanding of the supply chain on which the hospital relies. Assessing the sector and creating a complete cluster and network map is the starting point for crafting a healthcare strategy.
2. Engage relevant stakeholders. The next step involves understanding your local sector’s growth prospects. This requires direct communication with relevant stakeholders – regional healthcare providers, higher education institutions, and the local development community. Regional healthcare providers can provide information about their expansion plans and workforce needs. Higher education partners can provide insight into corresponding training programs, key research initiatives, and expansion plans. Beyond that, engaging the development community on the benefits of anchoring developments with healthcare and medical assets can lay a strategic foundation.
3. Identify the opportunity. With a complete picture of the healthcare sector and a deep understanding of its growth prospects, the community is ready to identify possible “catalyst” projects. These projects should include more than one strategic anchor that will help the project reach critical mass. Projects should be evaluated based on their potential job creation, tax revenue generation, capital costs to the community, and other tangible and intangible benefits. The project with the highest potential should be prioritized for investment.
4. Establish a framework. The tools needed to promote the opportunity must be put in place, starting with a clear vision and attainable goals for the project. Then, a framework must be established through the community’s regulatory environment and resource allocation to advance the opportunity. This will involve planning tools such as zoning and overlay districts. Adequate funding sources, including grants, bonds, and tax increment reinvestment zones, also need to be identified to finance needed infrastructure. Innovative incentives programs that support the recruitment of key tenants should also be part of the mix.
5. Implement. Ultimately, success depends on a shared vision. Keeping stakeholders fully engaged from inception to implementation will require an integrated approach – one that also involves business recruitment, marketing, entrepreneurship, and workforce development. A concerted effort can yield tangible and widespread benefits.
How it’s working in Round Rock, Texas
Round Rock is one of a growing number of examples of how the healthcare sector can be harnessed for economic development. Using a large tract donated by a local landowner, the City of Round Rock, in collaboration with the Round Rock Chamber of Commerce, higher education institutions, and regional healthcare providers, has formed a nascent, yet robust, healthcare cluster.
The basis of Round Rock’s approach was the creation of a medical education campus. The campus links medical education programs (offered by Texas A&M Health Science Center, Texas State University School of Nursing, and Austin Community College) with regional healthcare providers (Seton Medical Center Williamson, St. David’s Round Rock Medical Center, Scott & White University Medical Center, and Lonestar Circle of Care). The campus functions as an anchor for Avery Centre, a commercial node of the Avery Farms master-planned development. Employees, patients, visitors, and students connected with the medical education campus enhance the commercial and retail value of the development.
The project is textbook economic development – it generates high-paying professional jobs, enhances Round Rock’s workforce training, creates a magnet for talent, boosts commercial tax rolls, supports retail development, serves as an asset to attract bioscience companies (a target industry) and provides a valuable community service. What more could a single project strive for?