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Regional Insights: Blueprint can help older industrial regions reinvent themselves
Sunday, December 02, 2007

Last month's column ("Slow Job Growth is Reducing Our Labor Force," Nov. 4) lamented the poor economic growth in the Pittsburgh region. Job creation here has been less than one-third the national rate for the past four years, with little signs of improving.


Harold D. Miller is president of Future Strategies LLC, a management and policy consulting firm based in Pittsburgh. He also publishes www.PittsburghFuture.com, an Internet resource on regional economic development issues.

What's the solution? Last month, more than 50 experts and leaders in economic development from across the country met in Hershey as part of the 106th American Assembly in order to create a blueprint for growth in older industrial regions such as Pittsburgh. (The American Assembly was founded in 1950 by Dwight D. Eisenhower to serve as a national, nonpartisan forum on important public affairs issues.)

They agreed that if older industrial regions such as Pittsburgh want to be successful, they need to dramatically reinvent the way they approach economic development, both in terms of what their priorities should be and how they should go about achieving those priorities.

First on the Assembly's list of recommendations is placing a higher priority on promoting entrepreneurship. This is a particularly critical issue for the Pittsburgh region, since data recently published by the Pittsburgh Regional Indicators Project (www.PittsburghToday.org) show that, in virtually every industry, we rank dead last among similar regions in the rate at which new startup companies are created.

Key steps to helping startup companies are increasing access to early stage capital, also known as angel investment (see "Regional Insights: City's Future is In Angels," Jan. 7, and providing training to prospective entrepreneurs. But it's more than just creating programs for entrepreneurs; it's creating a culture of entrepreneurship in the region. The Assembly report urges that "The leadership of these metropolitan areas -- public and private -- needs to celebrate, reward and incentivize entrepreneurial behavior as a key pathway to economic growth."

In contrast, the Assembly recommended making business attraction efforts much more selective and reducing the use of firm-specific subsidies. They noted that most job growth occurs through the retention and expansion of existing businesses and the creation of new ones, not by luring existing companies across jurisdictional lines.

The Assembly also called for regions to recognize that increasing the rate of job growth depends on the ability of their businesses to succeed. The Assembly's report says, "Metropolitan areas need to treat businesses as customers, continuously seek out and listen to those customers (both current and prospective), and use that feedback to set priorities for infrastructure investment, work force development, and public services."

In particular, the group urged that local governments revamp outmoded rules, regulations and processes to create an environment that is hospitable to the formation, attraction and growth of businesses. It called for a reduction in the fragmentation of local government in order to improve regions' ability to make coordinated investments in infrastructure -- which is critical both for business growth and for the quality of life for residents -- and for reforms in local tax systems in order to enable more effective support of regional services and to reduce intraregional competition for growth.

These recommendations should be a particularly high priority for the Pittsburgh region, because we lead the nation in local government fragmentation (see "Regional Insights: Too many towns spoil the economy," Aug. 5).

Of course, businesses need capable workers to succeed, so the Assembly said developing human capital also must be a high priority for regions such as ours.

This includes radically improving the level of performance in public schools (in the Pittsburgh region, one-third or more of the students who graduate high school aren't proficient in reading or math), eliminating the fragmentation of work force development programs and better aligning training programs with business needs.

The full set of recommendations is in the Assembly's report, "Retooling for Growth: Building a 21st Century Economy in America's Older Industrial Areas," which will be available on the Assembly's Web site (www.americanassembly.org) in the near future.

These recommendations can and should serve as a blueprint to help the Pittsburgh region get its economy growing again.

First published on December 2, 2007 at 12:00 am