Ideas in Development

Thesis 2: On the other hand, entrepreneurial initiative in the private, public, and nonprofit sectors is almost synonymous with the process of economic development.

Entrepreneurship involves moving resources from lower yielding investments to higher returning ones.  It may involve incremental productivity changes, breakthrough technologies and products, a new startup, or ideas from the shop floor.

Thesis 3: Economic development and economic opportunity can move in tandem or in opposition. 

The goal of economic development is to increase the business creativity, productivity and competitiveness of a specific place.  In such an environment, new businesses are encouraged to start and existing firms to expand and modernize.  This will further entail the growth of jobs and economic opportunities.  The objective of an economic opportunity strategy is to enable economically disadvantaged places and people to contribute to this dynamic and take advantage, as employers and employees of this period of growth and restructuring.  The problem is that an economic development strategy of increasing the size of the economy will only trickle down so far. Without equity-based efforts and the dynamic of creative destruction that accompany even the most positive economic changes, such a strategy will likely hurt those who are already hurting.  It is for these reasons that development strategies need to be designed with both fairness and efficiency in mind.

Thesis 4:  Economic development is all about removing barriers.

This entails improving the overall conditions for commerce, as well as working with particular firms, sectors and clusters.   Among the former, actions to upgrade the skills and agility of the workforce and entrepreneurial pool stand  out as critical, given the tight link between technological and market changes and trends.

Thesis 5: The most forward thinking approach to meeting this need is undertaking significant educational reforms and investments, from pre-K through high school, that are required to equip today’s and tomorrow’s workforce with the skills and attitudes for economic success and civic participation in the new economy and polity.

If we want to have educational investments and reform play a larger role in states’ overall economic development plans, then there are four major challenges to be faced as product cycles accelerate and competition for market share ensues from other economies across almost the entire earth:

• We need to curb the rising costs of incentive competition among the states and localities and reinvest a portion of scarce public dollars in educational reform.
• We must create a modern tax system, which boasts lower rates, more predictability, a broader base, more equity, greater simplicity and sufficient fiscal resources for a state’s highest priorities.
• The state must prepare students to leave school ready for work in a high skill, information economy.
• Policymakers and citizens must recognize that increasing proportions of the future labor force will be minorities, new immigrants and workers from economically disadvantaged backgrounds.

Thesis six: Education matters for economic development.

Education funding has been losing ground over the past several years, at a time when our knowledge-based economy demands a different and higher set of skills than those traditionally provided by public education and when increasing numbers of public school students are minorities or new immigrants. A compelling body of research links primary and secondary education to economic development and growth, showing that people are a type of economic asset—“human capital” —and that increased investment in health, skills and knowledge provides future returns to the economy through increases in labor productivity.  Education increases workers’ average earnings and productivity, and it also reduces their incidence of social problems, such as drug abuse, crime, welfare dependency and lack of access to medical care, which can put a hefty drag on the economy.

Thesis 7: Avoid what does not work.

Fortunately, the picture of effective practice in education reform is becoming clearer. However, let us start with what doesn’t work:

• Charter schools with hemmed-in autonomy and no thoughtful, “tested”, unique school strategy do not deliver.
• Lowering class sizes and not altering how kids are taught does nothing.
• Enhancing teacher skills have limited effects.
• Just spending more money does not enhance learning.
• Low-wealth school districts need more fiscal resources.
• Disadvantaged schools typically cannot retain the teaching and principal talent that they need: higher salaries are needed.
• Vouchers are not popular politically and have lost most referendum drives.
• Teaching to pass required tests and meet other standards discourages the customization and experimentation that is needed today for school reform.
• Low relative teacher salaries are hindering retention of good teachers.

Thesis 8: Yet, money wisely spent on schools in the poorest areas can raise student performance. 

Here are three illustrations of innovation in the school and creativity in spreading promising or proven practices.

Alliance Schools, the Texas-based network run by nationally respected community organizing outfit the Industrial Areas Foundation, demonstrate that money well spent on shrinking class sizes, establishing definite and understandable goals, providing high quality and relevant teacher training, structuring incentives, holding students to high standards and getting parents involved can make significant changes.  Most important has been parental and faculty agreement that there are real problems, demanding a commitment to genuine change.  This, along with IAF’s leadership development work with the parents, provided the leverage and energy that led to success.

The University Preparatory Academy, a charter school in Detroit, has grown tenfold in its seven years and exceeded its target of 90% graduation rate and 90% going onto a post-secondary school.  The strategy? 

• Developing the student identity of and motivation to be an excited and successful learner. 
• Aiding the student to become familiar with and adept at understanding and working within mainstream workplaces. 
• Building “soft” and academic and technical skills by individualized learning plans/compacts. 

Strong adult and peer advisee groups are needed to provide “family” and counsel.    Internships are a necessity, so are smaller classes and smaller schools.  High standards curriculum should be used.  There is a great need to set aside time to experiment, reflect and tailor new learning approaches.  Need for greater principal control over hiring and firing.  Critical is creating a school culture which will battle “street” culture.  UPA’s ”never give up” philosophy, which involved walking the extra mile, is definitely a prerequisite for establishing a cycle of success dynamic within the school and raising the trust and confidence of the student.

Minnesota’s nonprofit group, Growth and Justice, has recently held a conference on “Smart Investments in Minnesota’s Students,” whose aims were to acquaint policy makers, advocates, and opinion leaders with evidence on what works in education from Pre-K to the 12th grade and build a movement to raise the number of high school graduates to receive a respected credential or a 2-year or 4-year college degree by 50% by 2020.  In addition, conference participants dealt with and discussed what would be the cost of the likely and most promising program portfolio.

Thesis 9: Investing In What Works

Research confirms the value of investing in educational programs, curricula, technologies, skills and infrastructure, particularly in the following areas:

Pre-K – Longitudinal studies calculate a significant return on investment (ROI) for preschool education as well as a net public-dollar savings because of a decreased likelihood for preschool participants to repeat grades, require remedial education, be incarcerated for crimes and become dependent on welfare.  Many states are moving toward offering subsidized preschool, particularly for at-risk children, but funding these programs remains a challenge.

Primary and Secondary Education – Research shows that a high-quality education increases the earnings of individuals and the economic health of their communities.  Many believe, however, that increased public investment will not necessarily improve the quality of education offered.  To the contrary, recent studies show that education spending can have a direct, positive impact on business climate and can improve the success of at-risk students, whose contributions to the economy are critical if we are to achieve a high-value/high-wage economy in the 21st century.  Such spending will have a greater chance of success if coupled with specific reforms, such as smaller class sizes, greater access to technology for at-risk students, support for teacher training and innovation, and improved accountability structures. 

Community Colleges – The rate of return on community college education is generally positive; those who attend community college earn significantly higher wages than those who stop at a high-school diploma.  Because of their low cost and lack of requirements for admission, community colleges have become the postsecondary organizations that many disadvantaged groups use to gain access to employment.   Thus, community colleges are well-positioned to help bridge the educational, wage, race and class divides in America.

Thesis 10: How To Invest More in People (i.e., Who will pay for all of this?)

Supporting this continuum of programs will require a financial commitment.  Federal and state governments need to take a leading role and a long-term perspective, considering the significant ROI that a productive education and training infrastructure can bring.  Such a long-term and forward-thinking perspective demands courageous reform of the current tax system.  Specifically, CFED recommends the following strategies for financing an investment in education and training programs: 

• Curbing the use of profligate business incentive programs, which give businesses economic “breaks” but do not always guarantee local job creation or economic growth.

• Halting the use of corporate tax-sheltering loopholes, which are eroding revenues generated by state corporate income taxes.

• Modernizing state (and local) revenue systems to be more efficient, effective, customer-friendly and accountable.

Thesis 11: Attaining the Prerequisites for a High-Wage, High-Performance Economy

More American goods and services are facing stiff foreign competition.  If this nation is to achieve a higher and more shared standard of living, U.S. firms must compete on the basis of new, higher quality service and production approaches, utilizing new technologies and a more skilled workforce.  Economic developers call this “the high road.”  Taking the high road will require that we as a nation develop a more seamless, well-endowed lifelong learning system; reform wasteful business incentive programs and redirect the resulting savings into education or other state priorities; and create and maintain a modernized, high-quality revenue system.

States and localities must find ways to encourage more of their employment in high-value sectors and workplaces. A high-quality education and training continuum, while not alone sufficient, is a necessary condition for meeting this challenge.