Economic Development: Global Scholars Forum Judith I. Stallmann, Professor Agricultural Economics, Rural Sociology, and Public Affairs Community Development Extension Specialist April 12, 2006
Constitution and Economics Korea United States • Coin money • Foreign trade • Interstate commerce • Taxing power – No export taxes
Basis of law • If not specifically allowed by the law, it is prohibited. – For an economy, results in rigidity • If not specifically prohibited by the law, it is allowed. – For an economy, allows flexibility • Which do you have?
Local power • Korea United States • Decentralized • Overlaying local jurisdictions – General purpose governments with taxing and ordinance authority – Single purpose governments with taxing and implementation authority
Overlaying local governments Single purpose governments School district S c Hospital h district o o l Water district Multi-purpose governments County Town
Budget of General Government
Local government Structure of decentralized and overlaying local governments: • Local governments have a lot of power • Means need to collaborate and cooperate • Means that they also compete – Often choose to compete on incentives and low taxes – Could compete on well-run government, quality of workforce, quality of life, business climate
Economic development • National government determined • Market determines • Market with government policies and incentives – National government – Local government
Level for economic development? • At the level of the majority of costs and benefits – Some projects have national importance • National government giving incentives makes little economic sense unless it has an explicit regional policy
Collaboration and cooperation • • Between governments With businesses With citizens With non-profit agencies
Citizen participation Formal: • Elections • In some jurisdictions citizens can petition to put issues on the ballot • Some laws require citizen input – Oversight commissions – Public hearings Informal • Local government may ask for citizen input • Citizens take an idea to local government
How to get citizens to participate • • Ask citizens for their ideas Work to make sure all groups are involved Meet where citizens are comfortable Have a history of using citizen input – Don’t ignore the ideas that you asked for
Economic development ideas • All economic development requires a mix • A concentration only on manufacturing and large scale infrastructure may not fit the current global economy • Also may not fit the current national economy • Services (or tertiary) include a lot of business services that are very important – Original idea was that services just served the local population—still true for some services, but not all – What you call things influences how they are viewed
Social overhead capital and other services • • • • Electric power, gas & water supply Construction Wholesales & retail trade, consumer goods Restaurants & hotels Transportation, storage, communication Finance & insurance Real estate rent & business service Public administration, defense, social security Education service Health & social welfare Other public society, personal service House-keeping service International & other foreign institution
Manufacturing
Economic development options • Clusters • Information technology can be broken into steps • The creative class – Talent and technology needed, but not enough – Tolerance for new ideas and new ways of thinking leads to: • Innovation and entrepreneurship in the private, public and non-profit sectors • New ideas often come from outside the mainstream
Population Richard Florida: http: //www. creativeclass. org/
Scientific Citations Richard Florida: http: //www. creativeclass. org/
Patents Richard Florida: http: //www. creativeclass. org/
Some questions that were asked
Is political ideology related to type of industry? A conservative city tried fashion and video and it didn’t work What attracts creative class? • Quality of life in area • Other talent in the area – Clusters are built on this • Tolerance in the area
Tourism: An island with international tourism, is looking at manufacturing because tourism is too cyclical • Transportation costs • National tourism potential? – Mexico has done this • Tourism areas have a high quality of life, which attracts the creative class – What options exist?
Everyone is talking about biotechnology Still new but will be as diverse as manufacturing is: • Algae producing hydrogen for fuel • Bacteria cleaning up oil spills • Plants producing plastic or pharmaceuticals • DNA computers • Gene therapy • Nano-biotechnology for medicine
Everyone is talking about IT • Everything that we do relies on it • Friedman, “The World is Flat, ” talks about breaking down the IT steps
Universities • Do they increase the local level of education? – Also need jobs to keep people in the area after they are educated • Should you move universities? – Generally no, but can start new ones – Economies of scale for a comprehensive research university (creative class) – Focused research university (creative class) – Teaching university can be smaller
Judith I. Stallmann stallmannj@missouri. edu
Population
Price index
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