Ideas in Development

All Americans recognize that China is a rising economic power. According to the Institute for International Economics, China became the third largest trading nation in the world in 2004. This rapid ascent is not only a function of its sheer size and high growth rates, but also its openness to trade and foreign investment. Its ratio of trade to Growth Domestic Product and its ratio of inward investment is already double Japan’s. Couple these facts with its currency manipulations and its low pay and overall production costs, China constitutes a serious threat to America’s remaining manufacturing base.

As part of the Rural Dislocated Worker Initiative, the Rural Center seeks to understand the many aspects of worker dislocation, from the numbers of people affected to the programs and policies designed to assist them.

NELP's economic dislocation initiative is focused on job losses flowing from the restructuring of the Midwest's auto industry. This page includes documents from experts regarding options for responding more effectively to economic dislocation.

A New Direction

North Carolina could explore other labor-intensive subsidy models, especially since job creation is a prime imperative in these counties. Indeed, one of the paradoxes of the field of business incentives is that most development subsidies are capital-based, yet they are supposed to create jobs. Such subsidies can create jobs, but they are less efficient than labor-targeted ones. Capital subsidies only generate employment as a byproduct of increased production; that is, employment increases are coincidental. However, this does not mean that capital subsidies are inherently good: It just means labor-targeted subsidies offer more direct and potentially cost-effective ways of creating jobs.

For The North Carolina Rural Economic Development Center

Introduction

That North Carolina has been hit hard during the recent recession is news to no one. The state has seen a record number of jobs lost, plants closed, and mass layoffs as its traditional manufacturing base restructures and moves abroad. More than a quarter of the state's manufacturing base disappeared (about 219,800 jobs) between 1990 to late 2003.1

A Progressive Economic Development Agenda for Shared Prosperity: Taking the High Road and Closing the Low (pdf format, 36 pages)

Elected officials and policymakers are under intense pressure to do almost anything that might create wealth and jobs. Their operating environment is characterized by corporate threats to relocate (or not come at all) unless they receive public subsidies, along with increased job, income, and production insecurity from globalization, outsourcing, and lower-cost imports. In this context, economic development is vitally important for America's state and local elected and appointed officials. Never has so much political and public financial capital been expended on its behalf. Despite tight state budgetary constraints, it rarely suffers cuts, and citizens now expect state policymakers to take some responsibility for the workings of their economy.

I actually admire business recruiters, despite my continued criticisms of the business incentives "arms race." Unlike me, they can claim that their work actually puts food into a baby's mouth. When they deliver the jobs, they deliver concrete employment opportunities and life support for their citizenry. (I, on the other hand, tend to deal more with abstractions - policy research, development and advocacy and lots of planning with communities and states. The ratio of words to action is rather skewed.)

They are also on-the-line. Either they deliver the goods or else they become an unemployment statistic. There is little ambiguity in their field, regarding success.

And it is understandable that they feel forced to play the incentive game, even if they are opposed to this strategy on principle. First, it can be regarded as a condition of their employment. Second, it is the way the contest is played.

Regarding job creation, the United States economy is the king. During the last few decades, it has overwhelmed our Western European competitors in sheer numbers. But it has not done as well in terms of job quality. A much higher percentage of new (and old) jobs pay less and provide fewer benefits and little security. The US is also losing many of the jobs that combined modest skills and good pay in manufacturing.

An earlier article—Good Jobs, Part 1: What Are They and Why Are They Important?—sketched the problem of not having a large enough supply of good jobs in the American economy. This piece identifies a wide range of approaches to improve opportunities. Some, if done right, may work all the time. Others may work some of the time, but turned too tightly, could send the economy into a nosedive.

Manufacturing Modernization Programs Could Point the Way

Many economic development projects and programs actually cause harm to the environment.  This is no surprise to anyone who pays attention to growth’s effects on the local landscape or knows anything at all about the threats climate change may pose to the Earth and its denizens. 

Sadly, the Bush Administration has not advanced the causes of renewable energy, habitat protection, energy efficiency and so forth.  Furthermore, most environmentalists would claim environmental policy has suffered in the last seven years. 

Today’s rural communities in United States are very different from those in the past. No longer boasting a predominately agriculture economy, they are in many respects facing the same competitive challenges that other places do. Low-wage foreign competition, accelerating product cycles, and the application of information technologies throughout the economy will continue to generate lots of economic change, for the better and the worse. As will changing workforce demographics and the widespread adoption of the logistics and outsourcing techniques, demonstrated successfully by Wal-Mart and others.

Economic development is half policy and half practice - kind of an applied science and art that overlaps many other academic disciplines - urban and regional studies and planning, economics, geography, economic sociology, and economic history. It is an enigma, often crudely defined and full of contradictions.

Its fundamental definitions are contested. What is growth? What is development? How should its progress be measured? And what is progress? A lack of concord over definitions is usually taken as a sign of an intellectual discipline's scientific immaturity.