Mike Koles, with the UW Extension office in Waupaca county, recently sent me a presentation with Steven Deller, professor of agriculture & applied economics at the University of Wisconsin-Madison.
Deller provided an update on the state of Wisconsin’s economy. At the end of the presentation, he included several slides related to economic development.
He argues that there have been three “waves” of economic development thinking over the past 80 years.
The first wave started in response to the Great Depression, and it focused on the cost of doing business. A “good” business climate was one that included low taxes, low regulation, cheap land and cheap labor. The sole strategy for achieving a good business climate in this first wave was business recruitment (aka smokestack-chasing).
This of course created fierce competition between states, counties and local municipalities as they used tax incentives, giveaways and reduced regulations to attract large companies and projects.
The second wave of economic development thinking had its origins in the late 1960s and early 1970s, as a response to increased global competition and the decline of U.S. manufacturing. The second wave followed a critique of the first wave in the early 1960s, which evaluated the techniques used previously as a zero-sum game. Companies would pull up stakes and move if better incentives were offered, or would play communities against each other to increase the amounts offered.
The second wave focused on existing business retention and expansion, not recruitment. It also focused on small business development. Economic development practitioners used tools like business visitation programs, identifying sources of capital, workforce training, business management education, technology transfer programs, business feasibility studies and new business counseling to help “grow their own.”
The third wave was first identified in the early 1990s, and is marked by a declining emphasis on industrial attraction and retention, and an increasing focus on strategies such as regional cooperation and public-private partnerships. The Waupaca County Economic Development Corporation was created in 1995.
Regional networks are established that focus on developing industrial clusters, increasing human capital, leveraging capital resources and educational opportunities, facilitating business opportunities, and coordinating investments in public services.
From my perspective, as an economic development professional in Waupaca County for the past 20 years, I still utilize the various tools connected with the second wave. I believe it will always be important for me to personally advocate for and assist Waupaca County businesses, in order to help them grow and thrive.
However, since the early 2000s, I have become increasingly involved with regional networks. The following example is a good illustration of this.
On May 25, I was part of a presentation at a NEWREP meeting. NEWREP formed in 2004 and consists of economic development professionals from 18 counties in northeastern Wisconsin. The presentation was the culmination of a regional partnership that put together a global trade strategy for small and medium-sized businesses in northeast wisconsin.
That study was funded by a $135,000 grant from the U.S. Economic Development Administration (EDA). The matching funds of $65,000 were supplied via cash contributions and in-kind services from the two regional planning commissions (RPCs) in northeast Wisconsin. I have been working with the RPCs on this project since April of 2010.
The grant funding was available to all communities that experienced or were threatened by job loss resulting from international trade impacts. The Community Trade Adjustment Assistance Program (TAA) was the name of this EDA grant program, and it was funded by the American Recovery and Reinvestment Act of 2009 (stimulus funds).
Communities “significantly impacted by trade” were determined by using the U.S. Department of Labor’s Trade Adjustment Assistance (TAA) worker certifications from Jan. 1, 2007 through Dec. 15, 2009. Eligible communities had to have at least 8.25 out of 1,000 unemployed workers affected by trade since 2007.
Waupaca County had 28 per 1,000. Nine counties in northeastern Wisconsin qualified under the TAA criteria, but we were able to convince the EDA to allow us to include all 18 counties in the region as part of the study area for the global trade strategy project.
Dave Thiel is the executive director of the Waupaca County Economic Development Corporation.