THE SOUTH-EASTERN STATES APPROACH

 

Study Report Prepared by:

Sean Bevin

Napier City Council

SOLGM Study Award Recipient

November 1998

SECTION	TITLE	PAGE NO.
	Executive Summary	1 – 5
1	Introduction	6 – 7
2	Study Regions	8 – 10
3	Organisations Visited	11
4	Local Economic Development	12 – 13
5	Importance of Local Economic Development	14 – 15
6	Organisations involved in Local Economic Development	16 – 17
7	Local Economic Development Policies and Programmes	18 – 22
8	Role of Local Government	23 – 26
9	Community/Strategic Planning	27 – 29
10	Local Economic Information	30 – 32
11	Sister City Relationships and Industry Employment Trends	33 – 35
12	Implications for Economic Policy in New Zealand	36 – 39
13	Recommendations	40 – 41
	Appendix	42

 

 

EXECUTIVE SUMMARY

 

STUDY OBJECTIVES

• This report documents the results of a SOLGM sponsored visit undertaken during June/July 1998 to the States of Georgia, Tennessee and Florida in the USA, to study their approaches to Local Economic Development (L.E.D).
• In particular, the objectives of the study visit included:
• Establishing the nature and importance of LED to the overall economic development of the country;
• Identifying the organisations involved in the process and the various LED policies and initiatives implemented by them;
• Understanding the important contributions of Local Government to the LED process; and
• Identifying the degree of Economic Planning (economic information, analysis, strategies and performance monitoring) work undertaken as part of the LED process.
• Two additional important objectives were to assess the implications of the findings of the study visit for both national and local economic development policy in New Zealand, and present some proposals/recommendations for advancing the findings of the research, in the New Zealand context.
• Whilst some caution is required in directly applying the South-Eastern USA experience of LED to the New Zealand environment, which is significantly different from that of the States in a number of ways, nevertheless I believe that our country can still learn a lot from the major commitment to and techniques of LED used in the USA.
• In my view, the LED work of these areas is simply superb and a wonderful model for New Zealand to observe and learn from. As someone who has been involved in the LED "game" in this country for a considerable number of years, I was absolutely thrilled to have visited the US and seen LED activities there at close hand.
• The three States which I visited are amongst the fastest growing parts of the nation and also have virtually full employment. Their successful economic track record is primarily due to their major and sustained commitment to local economic development.
• During the course of my study tour, I visited a wide range of LED related organisations, including State Government departments, local authorities, economic development associations, LED agencies, research and education institutes, and private economic development consultancies.

LED APPROACH

• LED in the three State areas that I visited is essentially concerned with the efforts of State-wide, regional and local organisations to improve the overall "quality of life" of local communities, through increased economic growth and job creation. A fundamental principle involved is the generation of "new" money into a local economy by increasing spending injections (exports) and reducing leakages (imports). This is manifested in initiatives to attract new economic activity to an area, retain existing businesses and encourage expanded production levels from them.
  Since the Second World War, job creation has been the primary focus of LED work in the SE States and this has been underpinned by new hard industrial growth. With the achievement of near full employment and relatively high rates of economic growth in more recent years, the LED emphasis has changed to increasing both the range and quality of jobs, labour-force education and training, and income growth.
• LED in the South-East is very much a community-wide effort. State Governments lead the way and are very committed to the process. They provide economic leadership, specialist economic development departments, financial assistance and access to a variety of tax incentives, specialist LED agencies and support for labour-force development. Private sector involvement includes the extensive LED work of regional Chambers of Commerce, local economic development agencies, corporations, public utilities and economic development consultancies. Other players in the "game" include the professional LED Associations, educational institutes and Local Governments.
• The very pro-active and extensive involvement of the Georgia Power Company in LED in that State, is worthy of separate mention and is a good example of a constructive private sector "investment" in the process. The Company’s participation in economic development is a model that New Zealand power and other utilities could profitably study.
• Two important strengths of the LED organisational involvement in the South-East States are the close collaboration that occurs between the agencies concerned and the professional industry leadership role provided by the LED Associations such as the American Economic Development Council, Southern Economic Development Council and Georgia Economic Developers Association.
• LED agencies in the SE States provide a wide range of equally important programmes and activities, which can be generally classified into the provision of land and buildings for industry development, the provision of advice and assistance to smaller businesses, the provision of financial assistance and access to financial incentives, area marketing and promotion, labour-force development, business sector visitation/consultation (70% of net job creation is from existing businesses), and the provision of economic information, analysis and performance monitoring.

LOCAL GOVERNMENT ROLE

• Key LED roles identified for Local Government, in the course of my discussions, were:
• Providing positive local economic leadership and vision.
• Ensuring a positive overall local economic environment for business development.
• Educating Local Government elected members, staff and the wider community about the importance of LED.
• Providing the appropriate underlying infrastructures for economic development.
• Integrated land-use, economic development and infrastructural planning.
• Business-friendly Council planning, developmental and other procedures and processes.
• Providing for a high local "quality of life".
• Provision of appropriate financial assistance and incentives for new economic development.
• Facilitating local co-ordination and collaboration on LED matters.
• Facilitation of small business development.
• In a nutshell, Local Government’s key responsibility is to adequately prepare the local community "product" for business development, whilst the role of LED agencies is to "sell" the product.
  

COMMUNITY/STRATEGIC PERSPECTIVES

• There are some good models in the USA for preparing a community for future business development, one of the best ones of them being the Tennessee State Government’s "Three Star" (Accreditation) Programme for Community Preparedness. This has a number of elements, including local economic organisation development, community development initiatives, education/work-force development and economic development activities (provision of development sites, area marketing, community data and an existing industry programme). All these elements of a community’s preparedness for LED are evaluated, before accreditation is granted.
• A good example of strategic economic planning that I was acquainted with was the requirements of the Georgia Planning Act of 1989. Under this legislation, local communities throughout the State are required to prepare (and regularly review) long-term development plans, including a specific economic development component, for their areas. Only after having prepared such a plan are communities then able to acess State Government financial assistance and incentives for LED. Generally speaking, strategic planning for local economic development is being increasingly emphasised in the South-East.
• A high level of local economic information provision and analysis is undertaken in the area, as part of the LED process. This is in relation to such aspects as economic growth, demographics, labour-force, taxation levels and transport. Information is provided in a variety of forms, such as detailed statistical publications, promotional "glossies", simple data sheets, computer discs and area profiles, and by such organisations as State Government departments, universities, Chambers of Commerce, utility companies and private consultancies.
• In respect of cost/benefit analysis of major LED projects (eg : business relocation), "Georgia Tech" has produced the so-called LOCI (Advantage Local Impact Model), which models the local economic impact (on the fiscal and employment base) of a particular project. This model could be adapted for the New Zealand scene, if requested by Local Government in New Zealand.
• Performance monitoring of local economies and the strategies and policies of LED agencies is also receiving increasing emphasis in the US. Benchmarking of area economic performance against similar communities elsewhere is an important monitoring technique.
• The contribution of Sister City activities to local economic performance was viewed somewhat differently by the different State areas which I visited. Georgia and Tennessee’s international linkages were seen as essentially political/social/cultural in nature, whilst Orlando/Florida had closely linked Sister City links with trade, under the "umbrella" of a deliberate City "internationalisation" strategy.

LESSONS FOR NEW ZEALAND

• In my view, the experience and approach of the USA South-Eastern States to the LED process, provides a number of very valuable lessons for national and local economic development policy in New Zealand. The national policy lessons include:
  The importance of a clear and practical long-term economic vision or direction.
• The importance of a planned approach to economic development.
• The value in decentralising economic policy formulation, to increase its sensitivity to the needs and conditions of local economies.
• The importance of strong Government economic leadership for successful economic performance.
• Judicious provision of financial assistance and incentives by Government organisations, is an important component of the LED facilitation package.
• A critical factor in economic success is a sufficiently-sized domestic market which also provides for economies of scale in production.
• The importance of a clear and strong commitment to economic growth and employment creation, as a foundation for successful economic performance.
• The need for ongoing labour-force training and upskilling.

The local economic policy implications include:

•  Well led, resourced and focused LED policy can have a significantly positive impact on the performance of local economies. 
• The importance of adopting a planned and strategic approach to LED, including formulating goals, objectives, strategies and specific actions.
• The importance of basing LED strategies on the inherent strengths and advantages of a local area.
• The critically important leadership, facilitation and infrastructural roles that Local Governments have, in the LED process.
• The importance of mobilising the energies of all the key sectors – public, private, education, utilities, industry associations, sports, tourism and the community – in the LED process and coordinating their involvement and encouraging collaboration.
• The importance of everyone involved in the process, in understanding well the nature of LED and its benefits.
• The fundamental goal of LED is to improve the overall "quality of life" of a "local" community. This "umbrellas" such factors as employment opportunities, economic growth and standard of living. Thus LED is a process to achieve these goals and is not necessarily an end in itself.
• LED is essentially about maximising spending injections (exports) into a local economy and minimising leakages (imports) from the economy. From a business development perspective, this translates into retaining existing businesses, encouraging their expansion and attracting new businesses to the area.
• Successful LED requires local communities to be well-prepared for economic development, before embarking on an actual programme to improve growth and development outcomes. Also, local communities must maintain the quality of their infrastructures, which underpin the development process, over time.
• Important components of any LED policy package will include ensuring the availability of buildings and sites for business development, the provision of advice and assistance to small businesses, area marketing and promotion, labour force education and training, business sector visitation/consultation and on-going economic information/analysis/performance monitoring.
• LED is not an "overnight sensation"! It involves a deliberate, planned and long-term approach to building community capacity for new economic activity.
• In recognition of the fact that the performance of a local economy is usually influenced by a wide range of both internal and external factors, thus rendering it difficult at times to directly link LED initiatives and general local economic performance, agencies also need to closely monitor the effectiveness of individual programmes and initiatives.
• Well developed, operated and linked (to LED) Sister City arrangements, can have positive local economic development outcomes.
• In order to be truly effective, LED programmes and initiatives must be adequately resourced.
• The importance of fully evaluating the benefits and costs of major new LED related projects, as part of the decision-making process.
   

 

RECOMMENDATIONS

• In order to advance the findings of my study trip to the USA, for the ultimate benefit of the LED process in New Zealand, the following specific actions are proposed. That:
   
• The findings of the study visit be brought to the attention of Central Government and other national economic policy interests in New Zealand.
• The study visit findings also be brought to the attention of both the elected and organisational arms of Local Government in New Zealand through the respective national bodies, namely Local Government New Zealand and the NZ Society of Local Government Managers (SOLGM).
• As part of the second proposal above, the attention of territorial authorities in New Zealand be drawn specifically to the points in the study report concerning the appropriate role of Local Government in the LED process.
• The report’s findings also be conveyed to the Economic Development Association of New Zealand (EDANZ) and other appropriate economic development-related national organisations.
• The findings of this study, along with those of other relatively recent similar investigations and examples of the recent work of LED agencies throughout New Zealand, be incorporated into a suitable position paper on "Local Economic Development In New Zealand", to be prepared for consideration by the incoming Government in 1999.
• SOLGM itself gives close consideration to the implications of the points highlighted in the report for the future role of local authorities in the LED process.
• The matter of a future role for Power Companies (and other Utilities) in New Zealand in the LED process, be discussed with their national organisation(s).
• SOLGM consider whether there is merit in further investigating the need for a local costs and benefits project impact assessment model in New Zealand, similar to the LOCI model described earlier in this report.
   

 

1. INTRODUCTION

In May 1998, I was advised by the New Zealand Society of Local Government Managers (SOLGM) that I was one of this year’s two recipients of the Coopers and Lybrand-sponsored National Local Government Study Awards.

The general study topic theme for which I received my Award was the United States approach to facilitating Local Economic Development (LED), that is, local initiatives to generate new jobs, new investment and economic growth at the sub-national level.

At the end of June this year, I travelled to the City of Atlanta, Georgia, which was to be "home base" for my three-week study project. There, I was hosted by Mr Robert Pittman, Senior Consultant with the long-established and well-known US Engineering, Industry Site Selection and Economic Development specialist international consulting firm, "Lockwood Greene".

Robert was a keynote speaker at an international conference held in Wellington, New Zealand in December last year, on regional development policy and practice. I am deeply indebted to Robert for the office space he provided me whilst in Atlanta, his invaluable assistance in setting up interviews for me with economic development agencies in the City and his kindness along with that of his wife Anita in accommodating me during my time in the States.

Robert and his colleagues also shared their considerable wisdom with me on local economic development practice in the U.S.

Apart from my two-week stay in Atlanta, I also travelled to Nashville, Tennessee and Orlando, Florida, for discussions on local economic development processes with specialist organisations. Thus, I was able to develop a very good feel during my visit for the approach to economic development of three different States of the U.S.

Within the general parameters of the study project, my specific objectives were to:-

• Understand the US interpretation of what Local Economic Development is all about.
• Establish the context for and importance of local economic development in the South-Eastern States which I visited.
• Identify the range of organisations directly or indirectly involved in the local economic development process.
• Identify the broad local economic development policy categories delivered by these organisations.
• Identify the considered most appropriate roles for Local Government in the local economic development process.
• Identify any community development/strategic economic planning activities being pursued, as part of the overall local economic development process.
• Identify the range and importance of local economic information, economic impact analysis and cost/benefit studies provided or carried out as part of the local economic development process.
• Investigate the extent and methods by which economic development agencies monitor both the results of their activities and the general performance of their local economies.
• Investigate the economic importance of any international Sister City relationships operated by communities in the South-Eastern States.
• Investigate any significant economic trends occurring in these communities that may be of interest to policy-makers in New Zealand.

In addition, as a result of the above, two other objectives were to:-

• Examine the lessons/implications for national and local economic development policy in New Zealand.
• Present some proposals/recommendations for Local Government in New Zealand to consider, in possibly advancing the findings of my visit.

The format of this report essentially follows the sequencing of the above objectives. However, discussion on these is preceded by a brief economic description of the parts of the South-Eastern States that I visited and the various organisations with whom I had discussions (to provide a context for the remaining comments in the report). The Appendix to the report provides a more detailed summary of the roles and work of the various economic development organisations with whom I had substantive discussions.

2. AREAS VISITED

As noted earlier, I visited three different parts of South-East USA, for the purposes of this study project. These were the Atlanta/Georgia area, Nashville/Tennessee and Orlando/Florida. Outside of California and Texas, the South-Eastern States are the other leading economic "hotbeds" in the USA.

ATLANTA/GEORGIA

Georgia State is the centre of the south-eastern region of the USA, which accounts for around 20% of the nation’s GDP. Its 1997 population stood at just over 7.5 million, 16% of the south-east region’s total and 3% of the national population. Over the period 1986 – 1996, Georgia’s population grew by 21%, just behind the leading S.E. population growth area of Florida and significantly ahead of the national figure of 10%. Recent population growth in the State has been mainly fuelled by net migration gains, rather than natural population increase of births over deaths.

On a humorous note, the comment was made to me during my visit that the advent of air conditioning has been a significant causal factor in the "South" now being able to attract and retain people from other parts of the country and overseas! Georgia has experience sustained economic growth since the early 1980’s, with growth increasing at a faster clip since 1991. This trend is expected to continue well into the next Century.

Non-agricultural employment in the State has increased by 30% since 1986, compared to 20% for the country as a whole. Key employing sectors in Georgia now are services; retail, wholesale and restaurant trade; and manufacturing. Georgia unemployment stood at around 4% in May 1998. In general terms, Georgia has moved from a primarily agricultural economy to an industrial one and now to a "high tech"/trade/services focus. In 1996, Georgia was ranked third amongst the South-Eastern States, with respect to a number of consumption and income indicators.

With a current population of 3.7 million, over 50% of Georgia’s population, the Atlanta Metropolitan Area is the dominant centre in the State. Since 1986, its population has increased by 35%, compared to the State-wide increase of 21% and the national increase of 10%. Since 1988, non-agricultural employment has increased by 500,000 or 34%, compared to the nationwide and Georgia State increases of 20% and 30% respectively. Examples of Atlanta’s phenomenal growth over the last decade or so are:

• Nearly 1700 businesses (including 380 foreign-based firms) relocated or expanded into the Atlanta area.
• A 70% increase in the number of business establishments.
• A 45% increase in "total effective buying income".
• 80% increase in nominal retail sales.
• Total new housing permits over the period of nearly 380,000, higher than any other part of the country.
• 50% increase in total passenger numbers passing through Hartsfield Atlanta International Airport and 60% increase in total freight tonnages handled at the facility.

The Metro Atlanta area unemployment rate stood at 3% in April 1998, down significantly from the 1992 peak of over 6%. Economic commentators in the City believe that there is virtually full employment in the area, with the rate of unemployment now down to the frictional level.

In 1997 alone:

• 60,000 new jobs were generated in the Metro Atlanta area, compared with a projected figure of 26,000.
• State GDP increased by 4.4%, compared to 3.8% nationally.
• Atlanta accounted for over 60% of all new job growth in Georgia.
• Some 220 new businesses added over 10,000 additional jobs and $670m of new investment.
• Building permits for 50,000 new homes were granted.
• There was a 14% increase in State-wide international trade activity.

Atlanta’s leading national and international business status is reflected in its recent top ranking amongst USA Metropolitan cities for:

• Overall job creation 1990 – 1995 and projected 1995 – 2000.
• Overall business climate amongst 11 relocation cities.
• Performance in industrial, office and retail markets.
• Total net migration inflows over 1990 – 1996 (320,000).
• Change in total population projected for the years 1994 – 2020.
• The most viable city for overseas investment.
• The fastest-growing "high tech" workforce.
• Best Airport in the USA.
• Preference for real estate development.
• Best (USA) cities for businesses.

Of course, Atlanta’s more recent growth can be attributed significantly to its national and international exposure gained as a result of hosting the Olympic Games in 1996.

NASHVILLE/TENNESSEE

Nashville City is located in the State of Tennessee and is known as "Music City USA", with its world famous Country and Western music scene. In 1998, the Nashville Metropolitan area’s population of 1.2m accounted for 21% of the State-wide population total. Since 1990, Nashville’s population has increased by 177,000 or 18%, compared to the State-wide increase of 11%. Over the period, Tennessee State ranked 5th amongst the South-Eastern States, in terms of population growth. Since 1990, total non-agricultural employment in Nashville has increased by 113,000 or 22%.

The leading employing sectors in the area are services, retail and wholesale trade, manufacturing and Government. The unemployment rate in Nashville last year was running at 3.4%, compared to 5.2% State-wide and has been tracking consistently downwards since the early 1990’s. In 1996, the City ranked second amongst all the major South-East communities, in terms of average household effective buying income. At the same time, Gross State Product reached $149 Billion and was projected to increase by 30% in nominal terms through to the Year 2000. Non-agricultural employment was forecast to increase by 11%, over the same period.

Nashville’s significant business and investment advantages include the fact that over 50% of the US population lives within 650 miles of the area; a diverse economic base with a focus on printing and publishing, finance and insurance, health care management, music and entertainment, automobile manufacturing, higher education and tourism; a relatively low cost of living and a family tax burden which is significantly below many other major centres in the nation.

ORLANDO/FLORIDA

Orlando in Central Florida is well-known internationally for its various Disney World attractions (which collectively employ over 50,000 people and provide a significant management training opportunity) and close proximity to the Kennedy Space Centre.

The area is also well-known for its expertise in film and television production (being the No. 2 USA locality for this industry) and rapidly growing high-tech industries such as computer simulations and laser technologies. Orlando Airport currently handles some 27 million passengers annually but this figure is expected to increase to 90 – 100 million passengers over the next 15 years or so. Metro Orlando’s present population stands at 1.5 million; however, this is expected to increase by 20% to 1.8 million by the year 2005. Since 1980, the area’s population has increased by 670,000 or 83%. Orlando’s labour force stood at nearly 830,000 at the end of last year, with the area’s unemployment rate standing at 3.3%, compared to 4.6% State-wide.

In 1997, 43,000 new jobs were generated in Orlando and 97% of the area’s labour force were employed. Export sales totalled US$1.2 Billion and there were an estimated 16,000 new business start-ups. Gross sales (for sales tax purposes) totalled US$56 Billion and average household income was in the order of $60,000 US.

Orlando is a very attractive, modern and well-planned City. It was recently identified by the "Partners for Livable Communities" as one of America’s most livable cities and by Fortune Magazine as one of the Top 10 US cities for doing business. It has also been identified as one of the likely fastest growing major metro areas in the country, in terms of both population and employment.

3. ORGANISATIONS VISITED

During my time in the South-East States, I visited overall some 23 different organisations with a significant and specialist involvement in some aspect of the ‘local’ economic development process.

Most of the organisations were recommended to me by Robert Pittman, prior to my arrival in the States. The others were recommended in the course of my actual meetings, particularly in Atlanta.

In broad terms, the organisations that I visited included:

 

• State Government Departments (4)
• Local Governments (3)
• Local Government Associations (1)
• Economic Development Associations (2)
• Economic Development Agencies (3)
• Chambers of Commerce (2)
• Power Utilities (1)
• Research/Educational Institutes (2)
• Private Economic Development Consultants (1)
• Sports and Tourism organisations (2)
• Transportation Authority (1)
   

This list is reflective of the wide diversity of organisational involvement in, and commitment to, economic development in the US.

Details on the above organisations and their economic development policies, are provided in the Appendix to this report.

Copies of promotional publications about the activities of a number of the above organisations, are available from me, on request.

4. LOCAL ECONOMIC DEVELOPMENT

Judging from the high priority accorded to the local economic development process in the American States which I visited, the strong State (and increasing Local) Government involvement in the process, the significant role of the private sector and other community organisations, the range of economic policies and programmes in place and their obvious success in generating positive economic growth outcomes, there is a very good understanding in South-East USA of the nature of the local economic development process.

Whilst, as to be expected, there have been some changes over time in the focus and methods of economic development at the local level, nevertheless, the following core characteristics of the process have long been recognised:

• Local economic development is essentially about the efforts of local (State, regional and sub-regional) communities to improve economic outcomes in their areas.
• At a general level, LED is primarily concerned with the generation of ‘new money’ into a local community. That is, the focus is on increasing spending ‘injections’ into (or ‘exports’ from) the community, rather than merely re-cycling existing economic activity within the area. It is also about reducing spending ‘leakages’ from the local economy, as realistically as possible.
• LED has two important economic components, namely increased rates of economic growth (that is, a greater level of goods and services available to a community’s inhabitants) and improvements to the structure and operation of the local economy, to enable it to take better advantage of new economic opportunities and better match prevailing economic conditions.
• The fundamental goals of local economic development policy are to create more wealth in the local community, an increased standard of living and expanded employment opportunities.
• A further important goal has been to ensure that local communities are well positioned infrastructurally and resource-wise, for new business development.
• LED strategies are based around facilitating business expansion, retaining existing businesses and business/investment attraction.
• Successful LED requires the cooperative and collaborative involvement of all key sectors of a local jurisdiction – governments, private sector and community agencies.
   

Application of the above essential ingredients of the LED process was very evident in the three State areas that I visited, for example:

• State Governments have and continue to lead the charge on economic development. Local governments have become increasingly involved in the process, in some cases as a result of State Government legislative requirement (for example, Georgia statutory local government ‘community planning’ requirements).
• The Georgia State Government has recently established a network of ‘regional development advisory agencies’ throughout the State.
  The early history of LED efforts in the South-Eastern States primarily revolved around attracting relatively large ‘exporting’ or ‘import substituting’ industries to local communities. At the same time, employment creation for the relatively poorer South was a key LED objective.
• Whilst local community initiatives to attract outside industries and investment continues (for example, witness Orlando/Florida’s major tourism and high technology investments, Nashville/Tennessee’s industrial and music tourism initiatives and Atlanta/Georgia’s programmes to attract more visitors, corporate headquarters and distribution industries), there is increasing emphasis now on facilitating and nurturing the growth of existing businesses, which are responsible for an estimated 70% of overall net employment creation.

Whilst economic growth and employment creation remain as underlying LED goals in the above States, there have been some changes in their application. For example, labour force training, upskilling and development has now become an important consideration in all three areas. In respect of employment, the emphasis has also now shifted to increasing per capita income levels. The goals of an improved overall quality of life and environmental resource sustainability are now receiving greater attention in LED policies and programmes. There is a major emphasis on ensuring that local communities are ‘up to the mark’ in terms of both their infrastructures and community resources, for future economic and business expansion.

Understanding well what local economic development is and what it entails, is critical for achieving effective results from the process. The requirements for LED practitioners in the US to be suitably qualified for involvement in this field of work, the ongoing training opportunities available to them to update their knowledge and expertise, and the operation of a number of LED professional Associations throughout the country, underscore this important point. The view was expressed to me at one of my agency meetings that, generally speaking, the communities with the best understanding of the LED process have also been the best performing ones, in economic terms.

5. IMPORTANCE OF LOCAL ECONOMIC DEVELOPMENT

The active involvement of ‘local’ communities in the South-East States of the US in advancing the economic development of their areas, has been of paramount importance since around the early 1950’s. These States have had a very solid history of LED involvement and, as a result, have developed a very high level of expertise with the process. In these areas, there is now a very well-developed LED ‘culture’.

Prior to World War II, the southern parts of America were relatively impoverished, in comparison to the northern States. Agricultural activity was dominant and there was only limited industrial activity. Unemployment was a major problem. After the War, State Governments and newly established Industrial Development Associations led the charge to attract industries from the north, encouraging them to take advantage of the significantly lower labour and production costs in the south.

From that time until the present day, job creation has remained a primary and specific focus of all LED initiatives in the South. The obvious success of the three States that I visited in generating major employment increases over time, demonstrates the wisdom of maintaining a high policy priority on this economic objective and should be a timely lesson to New Zealand economic policymakers!! A second lesson is that really there is no substitute for developing new solid ‘industrial’ investment, whether it be generated from within a community or attracted from the outside, to significantly increase local economic growth rates and employment levels. Community-based economic development initiatives, on their own, have limitations in this respect.

As noted in the previous section, full employment conditions and changing workforce requirements have resulted in a change in the employment-related objectives of LED organisations, from the straight out provision of work opportunities to, for example, increased income levels for workers and workforce education, training and upskilling.

In addition to employment, there are a number of other considerations attendant upon the LED process in the southern States of the USA. These include:

• The often strong inter-State competition for a share of increased economic activity.
• A desire to improve the local community’s quality of life, that is, achieving a better balance between economic, social and environmental factors. 
• The principle of ‘managed growth’ is now receiving greater attention in a number of the faster-growing local economies in the south.
• LED agencies such as Power companies obviously have a vested interest in the process, for example, a desire for increased electricity sales.
• Governments also have a vested interest in increasing the tax base of their jurisdictions.
• In Georgia, a current LED objective is to lift the economic performance of the smaller communities throughout the State, without, at the same time, diluting that of the larger areas.
• The Atlanta Development Authority indicated that one of its key objectives was to facilitate the revitalisation of downtown Atlanta, for new residential and commercial development.
   

‘All development is ultimately local’. This point was suggested to me as providing a fundamental rationale for local community involvement in the LED process.

The nature of the underlying objectives of LED organisations is indicated by the following examples:

(i) Nashville/Tennessee’s "Partnership 2000" programme has two overall goals, these being to ‘increase personal income by creating more high wage professional, technical and skilled sub-professional jobs; and to promote job growth in industries with domestic and international market potential by attracting and creating facilities whose key major decision-makers are based in the area’. The four specific objectives of the programme are ‘to increase per capita income by 5% annually, increase the labour force by 2.1% annually, generate a net increase in jobs by 2% annually and increase merchandise export sales by 15% annually’.

(ii) Orlando City, Florida has set for itself a number of key development goals, such as maintaining its quality of life, promoting quality mixed-use land development and accommodating growth whilst at the same time enhancing and protecting neighbourhoods, enhancing and preserving the City’s character, historic preservation, improving the area’s transport system, and creating a stable and diversified economy.

(iii) The Metro Atlanta Chamber of Commerce is now focusing its LED work on targeted and quality job growth, internationalisation, City infrastructural improvements, quality of life and balanced growth, rather than just job creation solely.

(iv) Georgia Power’s objectives for its involvement in economic development include net job creation from existing and new businesses, LED/facilitation involvement with individual companies and revenue generation from new electricity sales.

The importance of LED in the South-East States of America is manifested in many different ways, for example, the strong leadership role of State Governments, the significant number of State Government departments having an economic development division as part of their range of responsibilities, the level of resources applied to economic development promotion, the direct involvement of the private sector in the process, the wide range of other community organisations involved and the requirement for all new Local Government elected members (in Georgia) to undertake some initial education in community issues such as economic development.

6. LED ORGANISATIONS

The range of organisations and agencies directly or indirectly involved in the local economic development process in the South-East States, is reflective of both the major emphasis in these areas on economic development and also the community-wide support for it. It is also reflective of the relatively long history of involvement in LED, in this part of the US.

Section 3 above indicated the range of LED organisations that I visited during my study visit. These are also fairly reflective of the range of agencies that have traditionally been involved in the LED process.

The Appendix to this report provides some organisational details on the agencies which I visited and these can be read there.

To summarise the South-East situation as regards LED agencies:

National Level

• Federal Government’s role is limited to setting macroeconomic fundamentals, providing funding for a small number of economic development and employment programmes, and infrastructural improvements such as roading.
• The American Economic Development Council (AEDC) is a national "umbrella" Association for advancing the interests of the US economic development profession.
• Some private sector specialist economic development Consultancies, such as Lockwood Greene, operate nation-wide.
   

Inter-State Level

• The Southern Economic Development Council (SEDC) is the "umbrella" economic development professional Association for LED interests throughout the southern states of the USA. Membership of the Council is sourced from a wide range of private and public agencies.

State Level

• State Government departments, eg : Georgia Department of Trade, Tourism and Industry, and the Tennessee Government’s Department of Economic and Community Development.
• State-wide EDA’s, eg Florida Government’s "Enterprise Florida" agency.
• Economic Development Associations eg : Georgia Economic Development Association (GEDA). GEDA is the professional organisation for economic development interests in the State and is the largest such grouping in the US. The organisation has over 1,000 members, drawn from such sources as Chambers of Commerce, local development agencies, educational institutes, Local and State Government, private sector enterprises, power companies and professional service organisations.
• Power Companies, eg : Georgia Power and Tennessee Valley Authority.
• Educational Institutes eg : "Georgia Tech" and Universities.
• Local Government Associations eg : Georgia Municipal Association (GMA). The Association has recently established an Economic Development division within its organisation.
   

Regional/Local Level

•  Specialist private regional economic development agencies eg : the Mid-Florida Economic Development Commission, which covers four county jurisdictions in the Orlando area.
•  Regional and Local Chambers of Commerce.
•  City Development Authorities, such as the Atlanta Development Authority, which is a public authority established by the Atlanta City Council to promote the revitalisation and growth of the Inner City.
•  Local authorities, which may or may not have a specialist in-house economic development resource.
• Economic development-related organisations, such as the Atlanta Convention and Visitors Bureau, the Atlanta Sports Council and the Greater Nashville Regional Transportation Authority.
   

Whilst it was difficult to quantify the respective contributions of the various economic development agencies to the overall financing and resourcing of the process, it was indicated to me that in the case of Georgia, the Department of Trade, Tourism and Industry was responsible for an estimated 55% of overall economic development funding, the local major power company around 30% and other agencies the remaining 15%.

A major strength of the LED process in the South-East States that was often mentioned to me in the course of my discussions, was the high degree of collaboration between the various agencies and their specialist personnel. This was also facilitated through the important work of the "umbrella" professional Associations such as SEDC and GEDA.

7. LED POLICIES AND PROGRAMMES

As one would expect from a country generally well versed in the "art" of local economic development, virtually the full range of possible LED policies and programmes have and continue to be employed in the South-Eastern States of the USA.

Broad Terms

In broad terms, the policies and programmes can be categorised in the following manner, in no particular order:

• Export facilitation
• Site location assistance
• General business facilitation
• Assistance with business planning
• Facilitating LED "agency" coordination and collaboration
• Business retention, expansion and attraction policies
• Area marketing
• Labourforce development (education and training)
• Inner-City revitalisation
• Provision of financial assistance and incentives
• Strategic economic development planning
• LED professional development
• Industry visitation programmes
• Economic analysis
• Entrepreneurial policies
• "User-friendly" planning policies
• Industrial land/buildings/parks provision
• Transportation support policies.
• Some Specifics

In respect of the above list, some specific examples of export facilitation include the establishment of both domestically-based and overseas trade offices, provision of documentation on "how to export" and the operation of international Sister City linkages. Site location initiatives include the locational investigation work of expert consultancy companies, the provision of Resource Centres (explained in the next section) by economic development agencies and Local Government-Private Sector joint venture "industrial parks". Assistance with business planning has a small business focus.

Examples of initiatives to promote LED co-ordination and facilitation include regular forums of local economic development agenices, establishment of a network of regional development offices (as in Georgia), the networking opportunities provided through the LED professional Associations and the "one-stop-shop" centres (in Nashville, Tennessee) providing advice to the public on work opportunities, benefit entitlement, training and education course availability.

Area marketing activity includes the preparation and dissemination of high-class promotional material, business/trade missions, industry/sector targeting and promotion of industrial sites. Labour-force development policies include the provision of State-wide education scholarships for tertiary-level education, welfare-to-work programmes, free customised training programmes and the establishment of a Workforce Industrial Board.

Financial assistance programmes include the provision of incentives (eg : property tax abatements, investment and tax credits), direct grants, free land and buildings, and financial help for training courses and programmes. LED professional development is based around the requirement for all practitioners to be certified for this work, the ongoing work of the various professional associations and (in Georgia State, for example) the requirement for newly elected members in Local Government to undergo training in LED and economic leadership.

Industry contact initiatives include regular business visitations, Mayoral business luncheons and annual sector roundtables. Instances of economic analysis work undertaken to support LED efforts include State Department of Labour employment trend analyses, the ongoing research work undertaken by, for example, "Georgia Tech’s" economic development school in Atlanta, industry surveys and local economic monitoring. Entrepreneurial initiatives include small business education and training courses and the facilitation of business-incubator developments. Transportation support policies include the encouragement of regular van/car pooling in Nashville, Tennessee for example, through various financial incentives.

Case Studies

The following commentary presents more detailed examples of the wide diversity of LED policies currently applied in the South-Eastern States of the USA:

• Georgia Power Company
• Economic development services provided by this organisation include:
• State-wide location assistance for companies considering a move or expansion into Georgia.
• Assistance to both manufacturing and non-manufacturing firms (eg : corporate headquarters, back-office operations and commercial firms).
• Assignment of project managers to potentially relocating firms.
• Plans itineraries, transportation needs, contacts, etc for potentially relocating businesses.
• Design of industrial parks.
• Provides prospective companies with customised market/supplier analyses and industry research such as automotive, plastics, and textiles on an as-needed basis.
• Provides listings of available buildings which meet a prospect’s specific requirements.
• Provides demographic data on resident population and business data for specific trade or market areas.
• Publishes industry research, such as Georgia’s Food Processing Industry and Back Office Industry in Georgia.
• Compiles information for customised City or State comparisons.
• A team of regional economic development managers works with local leaders in Chambers of Commerce and Development Authorities to mobilise resources and services for facilitating development.
• Georgia Power’s Area Development Division provides an "Economic Development Process" that helps community leadership focus on issues that may inhibit growth and prepare for economic development.
   
• Georgia Resource Centre
• Highlights Georgia in a state-of-the-art, multimedia presentation facility.
• Provides information and e-mail access on the Internet through a homepage.
• Is a focal point for public/private resources.
• Provides statistical and visual information on communities, sites and buildings.
• Uses a geographic information system data base to highlight information such as population, income, labour, taxes, education, and transportation.
• Provides photo enhancement capabilities and 3-D animation.
• Provides worldwide teleconferencing capability.
• Is located in downtown Atlanta with sheltered access along the entire route via MARTA (underground train system) from Atlanta Hartsfield International Airport.
• Offers its services free of charge, in complete confidence and without obligation.
   
• Education Initiatives
•  The Georgia "HOPE" (Helping Outstanding Pupils Educationally) programme began in 1993 and provides tertiary level scholarship funding assistance to both high school graduates and university/technical institute students achieving or maintaining a "B" average grade in their examinations. The programme is funded from a special State Lottery.
• Georgia Power’s educational assistance programmes include the establishment of Youth Science and Technology Centres which provide school staff development support services in relation to maths/science/technology, primary school partnerships, youth programmes, an Achievers International Programme, student mentor programme and employee education scholarships.
• Georgia Institute of Technology’s Centre for Economic Development Services provides a wide range of LED assistance, including professional development services, economic impact research, community economic development supports (for example, strategic planning, expansion and retention programmes for existing industry, labour surveys, site selection and GIS related reseach), ‘Facilitech’ (provision of management and technical assistance to existing industry), "bid-match" opportunities through the so-called Georgia Procurement Assistance Centre and the Advanced Technology Development Centre (ATDC) for new emerging technologies.
   
• Financial Assistance/Incentives
• Incentives for new or expanding businesses in Georgia include corporate income tax reductions, job creation tax credits, tax credits for plant expansions or construction of new facilities, research tax credits, rapid growth company tax credits, tax credits for retraining and for company provison of child-care facilities for employees, sales tax exemptions, property tax abatements and the "Quick Start" no cost Government training assistance programme.
• Tennessee State’s tax incentives include corporate Excise tax credits for the use of industrial machinery, job creation, no State personal income tax on wages and salaries, exemption from property tax for certain goods and specific sales tax exemptions.
• Florida State incentives for expanding or new industry include job creation tax refunds, grants for quick response training, public transportation improvement assistance, enterprise zones and sales tax exemptions.
• The Atlanta Development Authority provides a variety of low-interest loan programmes for new small businesses, Development Bonds, tax increment financing, enterprise zones, local property tax abatement, job tax credits and utility rate discounts.
  
• Atlanta Export Assistance Centre
•  A one-stop export assistance centre, combining all Federal and State Government export assistance resources under one roof. Specific services provided by the Centre include marketing assistance, information resources and financial advisers.
  
• Georgia Environmental Protection Division
•  The "New Industry Team" of the Division works closely with prospective industries, to ensure that permits are issued properly and in a timely manner.
  
• Tennessee Department of Economic and Community Development
• The Department’s services for prospective and existing industies include a database of available production/manufacturing/distribution facilities and industrial properties, itinerary arrangements, community profiles, statistical databases, existing industries support and in-house research and technical staff.
  
• Florida Manufacturing Technology Centre
• The Centre provides, through regional manufacturing technology centres, local field engineers and manufacturing specialists, and hands-on assistance to small and medium enterprises wishing to incorporate new technologies in their processes.
  
• Metro Atlanta Chamber of Commerce
• The Chamber currently places its highest priorities on a number of service activities, namely:
• Recruiting new domestic businesses.
• Attracting new international companies.
• Advocating regional solutions to transportation problems and improving the sewerage and water infrastructure.
• Lobbying on business issues to State and Local Government.
• Improvements to the educational infrastructure.
   

8. LOCAL GOVERNMENT ROLE

In the course of my study visit, I met directly with four Local Government organisations, namely the Georgia Municipal Association, Atlanta City Council, Metro Nashville City Council and Orlando City Council in Florida, in order to understand their LED roles and also to ascertain their views on the most appropriate involvements for Local Government in the LED facilitation process. I also discussed this latter point with all the other organisations whom I met with during my visit.

At the outset, I should note a few relevant points. Firstly, the absolute plethora of local councils operating in the States that I visited. For example, in Georgia, there are currently some 532 municipalities, 159 counties and 180 school boards. Georgia is a "home rule" State and most councils have their own "charters", which means that they have a constitutional right to exist. Any possible amalgamations would have to be as a result of independent voluntary action taken by the councils concerned. Throughout Florida, there are some 400 municipalities and nearly 70 counties. The existence of such relatively large numbers of differently sized councils in the south-eastern States raises two related issues – the importance of a regional approach to LED in these areas and the caution that is needed in trying to directly link Governmental structures and economic performance. Georgia and Florida are very good examples where despite an expansive Local Government system, they have both had an outstanding economic track record for some considerable time.

Secondly, direct involvement in LED is a relatively new responsibility for many local councils in the South-East States.

• Detail on the different LED roles of the Local Government organisations which I visited, is provided in Appendix I to this report. In summary, the direct responsibilities include:
• Provision of funding to LED agencies.
• Financial assistance and advice for small business start-ups.
• Economic development planning.
• Business visitation/discussions.
• Provision of industrial sites and properties.
• Assisting business/investors through Council planning and resource consent procedures.
• Economic analysis and research.

In response to the question of what were considered to be the key LED responsibilities of Local Government, the various organisations with whom I met frequently identified these as including:

• Providing positive local economic leadership and vision.
• Ensuring a positive overall local economic environment for business development.
• Ensuring that Local Government elected members, staff and the community are well educated/informed about the importance of LED.
• Provision of the appropriate infrastructures (water, roading, sewerage, land, etc) for economic development.
• Provision of integrated land-use, economic development, infrastructural and other planning.
• Providing business-friendly Council planning, development and other procedures and processes.
• Maintaining a high local "quality of life" for citizens and businesses.
• Provision of appropriate funding and incentives for economic and business development.
• Facilitating local and regional coordination and collaboration on economic development efforts.
• If involved in actual service delivery, a particular focus on small business development.

In a nutshell, the overriding responsibility of Local Government is to ensure that the local community is well-prepared for new business and investment development, that is, "getting the product right". The responsibility of LED agencies is then to "sell" the product.

In respect of community preparedness for economic development, the Tennessee State Government has operated its "Three-Star Programme for Community Economic Preparedness" for some 15 years now. The programme’s aim is to assist small communities in their efforts to prepare for economic development, by enhancing their appeal as locations for economic enterprises.

The overall goals of the programme are to preserve existing employment, create new employment opportunities and improve income levels. Its objectives are to provide an inventory of communities that have achieved a threshold of preparedness for economic development, to develop a "can do" attitude towards LED amongst community leaders and provide public recognition for communities who have taken the effort to be better prepared for economic development.

The folowing elements of the programme must be in place before communities can be accredited as a "Three-Star Community":

(i) Organisation Development

• Operation of a broad-based economic development organisation with goals, strategies, annual work programme and long-range strategic plans.
• Leadership development programme.
• Local bonding authority.
• Additional activities, such as youth leadership programme, Chamber of Commerce accreditation and a continuing education policy.

(ii) Community Development

• Community beautification programme
• Comprehensive planning programme
• Solid Waste Disposal Plan
• Emergency Management Plan
• Additional activities, for example: Adopt-A-Highway programme, recycling programme, health care assessment, anti-crime programme, recreational assessment, and Sister City and Main Street programmes.

(iii) Education/Workforce Development

• Education Foundation
• Adult Literacy programme
• Labour force training programme
• Drug-Free programme
• Additional activities such as school-to-work programme, vocational programme, child-care, programme for "at risk" students and a programme for recognising outstanding teachers and students.

(iv) Economic Development

• Controlled development sites for business and industry
• Up-to-date marketing materials and community data
• Marketing strategy
• Existing industry programme
• Other activities such as utility assessments, telecommunications capability, small business development programme, business incubator programme, tourism strategies and regional economic development programmes.

All the above aspects are evaluated by a team of specialist economic and community development professionals, prior to accreditation being achieved. "Three-Star" communities are also re-certified annually, in order to ensure that they have maintained the basic programme requirements and added new elements to their development plans.

What have Three-Star Communities achieved?

• Assessment of strengths and weaknesses
• Formulation of long-range strategies for the future
• Development of strong broad-based community leadership
• Offer sites, facilities and infrastructure for existing and new business development
• Forging of public-private initiatives to enhance the local educational system and prepare a first-class labour force
• Recognition of the importance of clean, safe and economically healthy communities, achieved through cooperation, planning and focused actions.

A recent evaluation by the Tennessee State Government of the programme’s achievements to date, indicated that Three-Star Communities had attracted more new projects, capital investment and jobs, than had non-certified communities.

9. COMMUNITY/STRATEGIC PLANNING

In essence, the Tennesse State Government’s "Three-Star Community" programme, is a form of community/strategic planning for economic development. The programme certainly incorporates specific requirements for such planning, for example, a long-range strategic economic development plan and community development-related plans.

Perhaps the best example of long-range community-based strategic planning for economic development, that I came across during my visit, was the implementation by local governments in Georgia, of the requirements of the 1989 Georgia Planning Act. Key features of this legislation are:

• It provides local councils with an opportunity to plan for their future and also to improve communication with neighbouring councils.
• It provides for the preparation of, firstly, local comprehensive plans which are then to be followed by regionally-based plans and then a State-wide plan.
• Plans are required to be prepared for a 20-year time horizon and be updated every ten years.
• The content of all the plans must include comment on population trends, economic development, natural and historic resources, community facilities, housing and land-use.
• Identification of future trends in respect of these elements is required to be based on prior trends over a 10 – 20 year period and also on benchmarking analysis with neighbouring communities.
• In regards to the economic development aspect, reference in the plan and associated analysis is required to be made to, for example, population, labour force, economic/industry base, tourism (if appropriate), related institutions and government agencies, and special or unique economic sectors.
• Economic development-related issues include the current health of the business community, diversity of the economic base, employee commuting patterns, labour-force education/training attainment, unemployment characteristics and training resources.
• Once the above "Current Inventory (of resources) and Assessment" stage has been completed, the second stage of the plan’s preparation involves developing an "Implementation Strategy and Plan".
• This second stage of the planning process must include the preparation of a 5 year short-term work programme (which is required to be updated every 5 years).
• Public discussion and input must be provided for in the process of overall plan preparation.
• In order to qualify for certain State Government grant and loans assistance, local governments must achieve what is called "Qualified Local Government" status which involves, inter alia, preparing and adopting a comprehensive development plan as above, implementing regulations consistent with the plan, and reviewing and updating both the overall plan and short-term work programme.
• To date, almost all of Georgia’s local councils have completed the first plan and around 30% have updated their short-term work programmes.
• In general, the local plans have been prepared with the assistance of local "regional development centre" staff.
• The second stage of the planning process, the preparation of regional plans, began in late 1995 and is expected to be completed by 1999. Five regional plans have already been completed.

The Metropolitan Planning Commission of Nashville and Davidson County, Tennessee State, represents another example of a community planning process incorporating a strategic economic planning element.

The Commission’s most recent "Concept 2010 – A General Plan for Nashville and Davidson County" plan, has as one of its "Mission" elements "to expand economic opportunities throughout the county" and as its major goal "to preserve and enhance the quality of life, which in turn provides a solid base for economic development".

The Plan’s goals and objectives for economic development include, for example, reinforcing Nashville’s position as the focus of a growing and economically interdependent region, utilising the relative advantages of the area’s cities and counties for economic development, targeting new industries for recruitment, encouraging economic growth through existing industry expansion and investigating opportunities for business cluster development.

The Commission has recently released its Economic Development Functional Plan, as proposed in the earlier "Concept 2010" General Plan. Interestingly, the introduction to the Functional Plan defines Economic Development in the following manner:

"Local economic development involves much more than developing land and creating jobs and revenue. The ultimate goal is not to build "this project" or attract "that company"; rather the goal of economic development is to improve the standard of living and quality of life of the citizens of Davidson County. As such, economic development is a process, not an end product. It is a long-term approach to building community capacity. It involves the coordination of a variety of activities: infrastructure, employment training, business retention, the identification of new markets, the development of alternative industries, and the transfer of knowledge. Economic development seeks to create higher incomes, more or better jobs, more productive enterprises, a stronger tax base, and the opportunity to alleviate poverty. Successful economic development initiatives are derived from and build on a locality’s inherent strengths".

Following a detailed analysis of industry and employment trends in the region over the past 10 years, the functional plan draws conclusions from the trends and then, on the basis of these, establishes LED goals and objectives, as now summarised:

• Overall goal is to retain existing business and attract new business to the region.
• Specific goals are to diversify the economic base, retain and attract industrial business, tourism sector developments, redevelopment of former environmentally-contaminated industrial land, exploration of business incubators/entrepreneurial opportunities and fostering of public/private sector partnerships.
• Particular strategies to address the goals include investigating new development patterns, new industrial land use policies, provision of industrial parks, formation of a tourism sector development Task force, identification of home-based business opportunities and cementing closer links between local education/training institutions and local labour-market needs.
• A third good example of strategic economic development planning is Nashville’s 7 year old "Partnership 2000" plan. Key features of this plan are:
• Strategic goals are to increase personal income levels and promote job growth in industries with domestic and international market potential.
• Specific objectives relate to per capita income levels, labour-force growth, net job creation and increased export sales.
• Strategic actions include removing the region’s labour shortage, improving business-real estate availability, improving Government services and strengthening business financing resources, business retention and expansion, business attraction and area marketing.
• Specific policies for each of the strategic actions.

In general terms, it appeared from my discussions that the whole area of formal strategic/community economic planning in the south-east States had been relatively limited to date but that it is now becoming increasingly recognised as an important component of the LED process.

10. LOCAL ECONOMIC INFORMATION AND ANALYSIS

As one would expect of an area with a very solid history of LED effort, the level of local economic information, research and analysis undertaken in the South-Eastern States is very high. The range of information and data provided includes:

State and sub-State economic growth (GDP) trends.

• Wage and salary levels.
• Population trends and characteristics
• Retail spending
• Freight/transport movements
• Income levels
• Cost of living data
• Taxation rates
• Employment and unemployment
• Employer information
• Education resources
• New construction work
• Power consumption
• House prices
• Demographic and economic forecasting
• New business establishment.

The above data is provided in a variety of forms, for example:

• Detailed statistical publications
• Area promotional publications/"glossies"
• Simple data sheets
• Computer CD Rom discs
• Area profiles.

Local economic information is prepared by a range of different agencies, such as State Government Departments, Universities, Chambers of Commerce, Utility Companies and private consultancies.

Six particular examples of LED information initiatives which are worthy of brief note, are as follows:

(i) Georgia Department of Labour’s "Georgia Quick Stats" – an interactive demographic and economics software application provided quarterly on a CD Rom compact disc. Very user friendly.

(ii) Orange County’s (Central Florida, near Orlando) again CD Rom-based interactive presentation on local economy features, such as lifestyles, neighbourhoods, Web links, economy, Government, education and transportation.

(iii) Industry profiles – for a particular industry, these "glossy" publications provide such information as industry employment, industry growth, wage levels, unionisation characteristics, resources and Associations, local companies within the industry, competitive advantages, labour force characteristics, etc.

(iv) Georgia Department of Labour’s annual 10 year-out Industry Employment and Occupational projections. These are prepared using a fairly rigorous approach involving, sequentially, calculation of a total employment estimate based on past trends and likely trends over the projection period, individual industry forecasts at the 2-digit SIC level, distribution of the draft set of projections to universities and industry for their input, direct discussions with those groups on their views and, lastly, preparation of the final set of projections.

(v) Georgia Power’s "Community Resource Manual" – this is a publication which provides a standard layout for providing a wide range of basic information about a local community. The range of information provided includes an "executive summary" of key assets/strengths, basic City information, taxation details, transportation linkages, financing opportunities, incentives, education, "quality of life" features, labour-force characteristics, research facilities, utilities, available industrial sites, support services and communication facilities.

(vi) "Georgia Tech’s" economic impact analysis/cost-benefit studies. These are carried out by the Institute’s Economic Research Division, on a contract basis, for clients locally and nation-wide. The Division has prepared a large number of such studies, over the years.

One particular study which will be of interest to Local Government in New Zealand is the so-called "LOCI Advantage Local Impact Model", an economic impact software for local governments and economic developers. The model assists them in evaluating the community economic impacts of, for example, fiscal incentives, new infrastructural developments, major industry start-ups and tourism sector developments. Benefits are calculated as tax revenues and fees generated by a new facility. Costs are calculated as the increase in expenditures needed to provide government services for the new economic growth generated by the facility. Analysis can be carried out at three different levels – Level 1 which assesses costs/benefits only of a new facility, Level 2 which adds the impact on employees of the facility and Level 3 which includes the multiplier effects. Modifications to the model would be required in order to take account of the substantially different local fiscal base in New Zealand.

About 70 communities throughout Georgia have used the model in the course of their economic decision-making process. The Division representatives with whom I met indicated that they would be only too happy to develop a modified model for use in the New Zealand scene.

 

In respect of the monitoring by the various agencies of the effectiveness of their own policies and strategies, the general situation which I gathered from my discussions was that whilst this had not necessarily been a high priority in the past, the agencies were now under increasing pressure to evaluate their performance on an ongoing basis. This was especially the case for the public sector agencies, in the face of tighter budgetary conditions and expenditure accountability. The difficulty in directly linking agency strategies and overall area economic performance, requires agencies to closely monitor individual LED programme outcomes in terms of, for example, payroll growth, job growth, companies visited, relocations, business expansions, etc.

An important aspect of US LED monitoring work appears to be "bench-marking" local area economic performance against similarly-sized communities elsewhere in a State or in other States in the country.

Metro Nashville’s "Partnership 2000" LED programme includes specific programme monitoring of such indicators as the net increase in jobs, relocation enquiries/serious prospects/actual relocations (over the 1990 – 1994 period, some 3,100 relocation enquiries and 260 serious relocation prospects ultimately translated into 116 actual relocations, a strike rate of 9% (for relocation enquiries) and 4% for serious prospects), existing industry expansion and an increase in the aggregate payroll in the Metro area.

11. SISTER CITY RELATIONSHIPS AND EMPLOYMENT TRENDS

Judging from the limited discussions I had on Sister City relationships in the three State areas which I visited, there appear to be differing viewpoints on the effectiveness of such relationships from an LED perspective.

Atlanta City’s 14 or so Sister City linkages were viewed as being more political/social in nature than economic. The Tennessee State Government itself had developed specialist international linkages with Brazil, Japan and France, in the fields of tertiary education and, more recently, business and trade. Tennessee State Government representatives with whom I met saw limited value in Sister City relationships as initiators of new investment and trade activities. However, some international trade offices had been established in the State, following the development of international linkages. Orlando was much more positive about Sister City connections, of which it currently had six which were managed by the Mid-Florida Economic Development Commission. International trade offices had been established in Orlando, for each of the six linkages and were actually located in the Orlando City Council building. The operation of the various Sister City linkages in Orlando was greatly facilitated by the City’s deliberate strategy to position itself as a truly "international" area.

It is useful to examine recent industry employment trends in the USA as they provide a valuable guide as to what New Zealand could expect to experience in the future. They also provide a basis for comparison with the New Zealand situation.

Some relevant employment-related trends that have or are projected to occur in Georgia State in particular and have been well researched there, are as follows:

• Over the 1986 – 1996 period, the sectors which grew the most in employment terms in the State were the Government sector, agriculture/forestry/fishing, retailing, services and finance/insurance/real estate.
• With respect to Manufacturing, the fastest growing industries over the period were instrumentation, textiles, rubber/plastics, wood and wood products, paper and paper products, and electronics/electrical items. The declining industries over the period were apparel, leather and leather products, stone/clay/glass/concrete production and transportation equipment.
• In respect of the Services sector, the leading growth industries were motion pictures, amusement/recreation services, social services, business and automotive services.
• Employment growth in Georgia for the period 1994 – 2005 is projected to be most concentrated in services, retailing, construction and transportation.
• Agricultural sector growth will occur mainly in the agricultural services component. Special trades contractors are expected to account for most of the construction sector employment increase. Most of the projected manufacturing sector growth will take place in the durable goods sector-industrial machinery and equipment, electronics/electrical and instrumentation. Trucking, warehousing and telephone communications will dominate employment growth in the transport/communications sector.
• Retail/wholesale sector growth in employment is expected to be most pronounced in food retailing, department stores, eating/drinking outlets and the wholesaling of non-durables such as wood, construction materials, machinery, equipment and computers.
  Finance sector employment growth will occur mainly in institutions such as business credit unions and mortgage bankers/brokers. Noticeable growth in insurance carriers and real estate is also expected.
• Service sector employment growth will likely be dominated by business, health and education services, engineering and management services, and self-employment.
• Local and State Government are expected to be the growing employment areas in the overall Government sector.
• Broad occupational groupings expected to grow most over the 10-year period are professional and technical occupations, service sector occupations, executive/managerial/administrative occupations and marketing/sales occupations.
• Within the professional/technical area, growth is expected to be strongest for computer/maths related occupations (especially systems analysts, database administrators and support specialists), legal system occupations (in particular, legal assistants and technicians), and teachers/librarians/counsellors, health sector practitioners (therapists, health assessment and technicians) and engineering related occupations (especially computer mechanical and electrical engineers).
• Within the service sector, the leading occupational groups are expected to be fire/police/guard occupations, health services, and food and beverage preparation workers.
• In terms of executive/managerial/administrative occupations, the strongest growth areas are likely to be general managers, senior executives, food service, accommodation managers, financial managers, marketing/advertising/PR managers and engineering/maths/natural science related managers.
• The leading growth occupations are expected to be as follows:
   
• Computer Engineers
• Systems Analysts
• Electronic Pagination Workers
• Database Administrators
• Computer Support Specialists
• Occupational Therapists
• Manicurists
• Physical Therapists
• Personal & Home Care Aides
• Physical & Corrective Therapy Assistants
• Paralegals
• Medical Record Technicians
• Nursery & Greenhouse Managers
• Home Health Aides
• Correction Officers
• Numerical Control Machine Operators
• Surveying and Mapping Scientists
• Technical Writers
• Teachers, Special Education and
• Respiratory Therapists.
   

12. LESSONS FOR ECONOMIC DEVELOPMENT POLICY IN NEW ZEALAND

In my view, the USA approach to facilitating sub-national economic development, as exemplified by the three case study areas that I visited, provides a number of extremely valuable lessons for both national and local economic development policy in New Zealand.

In identifying these, one has to be mindful, of course, of the significant differences between the two countries, economically, socially, culturally and in many other ways. However, despite this, I believe that New Zealand can only but learn from the very obvious major commitment to and success of the leading world economy, in economic growth and development at the local level.

In the South-Eastern States, the fact that State Governments and other local economic development agencies have maintained their major commitment to LED at a time of near full employment and strong growth rates, rather than reducing it, is indicative of the vital importance of the LED process in the economic and social development of the USA.

National Implications

These include:

(i) Vision

An important element in the success of LED efforts in the USA is that State, regional and local areas have established a long-term vision for their economies, which provides the focus for their development strategies. The vision essentially describes the type of economy that communities wish to develop, based on the inherent strengths and advantages of the local area. It is my view that economic progress in New Zealand would be greatly assisted by the preparation and active implementation of a long-term vision for the national economy as a whole. This vision would also be of considerable assistance to local economic developers.

The inclusion in a number of the US local economic vision statements, of industries and sectors to be targeted for location/relocation/expansion, also suggests that the apparent NZ predilection for the "level playing field"/"no picking of winners" approach to industry development, is somewhat misguided.

(ii) Planning

A planned approach is an important element in LED in the SE States of the USA. The successful LED experience of these areas suggests that there could be major gains for New Zealand in following a similar path. Whilst planning should not be overdone, nevertheless a healthy element of it is preferable to the unfettered market approach and the considerable policy "ad hocery" that is associated with it.

(iii) Economic Policy

Economic development policy in the US is largely the responsibility of State and other "local" jurisdictions. In New Zealand, economic policy is highly centralised and "captured" by a "few" and, as a result, considerably insensitive to the circumstances and needs of individual local economies. In contrast to the US position, formal economic policy in New Zealand neither includes, nor acknowledges the credibility of, an LED approach. In my view, there is a need for this situation to change, in order that a more balanced and effective overall economic development policy in New Zealand can be achieved.

(iv) Government Leadership

In the South-East States, State Government plays a lead role in the LED process. This is consistent with the high priority accorded to the process, in these areas. State Governments undertake an economic overview role, as well as being actively involved in the delivery of economic development and employment programmes, "out in the field".

In contrast, successive New Zealand Governments, since the advent of de-regulation in the mid 1980’s, have increasingly withdrawn themselves from an active and direct economic development involvement, other than assisting in maintaining an appropriate broad macroeconomic environment. The latest in a long list of examples of this was the recent removal of the Government’s Business Development Board programme.

I believe that a key reason for the success of LED policies in the South-Eastern States, is the major involvement and support of State Governments. Their contribution is not only for purely economic reasons but also for important allied social considerations such as reducing unemployment, greater income equity, environmental enhancement and improving the overall "quality of life" of people.

(v) Government Funding

Another important strength of the US approach to LED, is the preparedness of State Governments to allocate significant levels of direct financial assistance for economic development purposes, with the objective of, inter alia, increasing their tax-base long-term. This includes the use of incentives to either attract new business or encourage expansion of existing enterprises. Given the far greater understanding in the US of the benefits of LED, the community is prepared to accept such State Government support policy. In New Zealand, Government economic policy appears to have long forgotten the important principle of "investing" in new economic development. Instead, Central Government has become almost myopic about containing or reducing public expenditure and costs generally, rather than implementing policies to expand the demand side of the equation.

(vi) Domestic Market

One of the obvious factors in America’s economic success is its large population base of some 250 million people. This provides both a strong domestic market for the business sector and significant production economies. New Zealand needs to significantly increase its population base through an ongoing pro-active immigration policy. As part of this, incentives need to be maintained or increased to encourage new settlers to locate in the smaller provincial regions, thus expanding their markets for, in particular, locally-focused service industries, which form a relatively large proportion of the industrial base of these regions. New Zealand also needs to continue maximising the opportunities available in the much larger and close-by Australian market.

(vii) Economic Growth and Employment Creation

In the South-East States, there has been a clear and unequivocal commitment to economic growth and employment creation, and all the evidence that I obtained during my study visit points to considerable success in achieving these fundamental objectives. In New Zealand, these traditionally important components of the overall economic policy objectives package appear to have been dispensed with, along with most of the other macroeconomic objectives. Price stability and fiscal surpluses appear to be the only explicit objectives of Government economic policy. The US experience would seem to suggest that its successful economic and employment record at the local level is strongly related to, inter alia, its major economic (and social) commitment to employment and growth.

(viii) Labour-Force Development

In one area, economic policy in New Zealand is consistent with the US and that is in relation to facilitating labour-force development, that is, education and training. However, the contexts are very different. The South-East States have virtually full employment and are at the forefront of technology development and use. As indicated earlier in this report, the emphasis of LED policy has now changed from purely job-creation to increasing the range and quality of jobs, as well as earnings levels. By contrast, New Zealand has an enduring major unemployment problem and the achievement of higher levels of formal qualifications does not necessarily guarantee employment opportunities.

Local Implications

The manner in which local economic development work is carried out in the South-Eastern States of the USA also provides a number of very valuable pointers for LED policy in New Zealand. These include:

• The fact that well led, resourced and focused LED policy can have a significantly positive impact on the performance of local economies.
• The importance of adopting a planned and strategic approach to LED, including formulating goals, objectives, strategies and specific actions.
• The importance of basing LED strategies on the inherent strengths and advantages of a local area.
• The critically important leadership, facilitation and infrastructural roles that Local Governments have, in the LED process.
• The importance of mobilising the energies of all the key sectors – public, private, education, utilities, industry associations, sports, tourism and the community – in the LED process, and coordinating their involvement and encouraging collaboration.
• The importance of everyone involved in the process, in understanding well the nature of LED and its benefits.
• The fundamental goal of LED is to improve the overall "quality of life" of a "local" community. This "umbrellas" such factors as employment opportunities, economic growth and standard of living. Thus LED is a process to achieve these goals and is not necessarily an end in itself.
• LED is essentially about maximising spending injections (exports) into a local economy and minimising leakages (imports) from the economy. From a business development perspective, this translates into retaining existing businesses, encouraging their expansion and attracting new businesses to the area.
• Successful LED requires local communities to be reasonably well-prepared for economic development, before embarking on an actual programme to improve growth and development outcomes. Also, local communities must maintain the quality of their infrastructures, which underpin the development process, over time.
• Important components of any LED policy package will include ensuring the availability of buildings and sites for business development, the provision of advice and assistance to small businesses, area marketing and promotion, labour force education and training, business sector visitation/consultation, and on-going economic information/analysis/performance monitoring.
• LED is not an "overnight sensation"! It involves a deliberate, planned and long-term approach to building community capacity for new economic activity.
• Bench-marking local economy performance against similarly structured and sized communities elsewhere, is a valuable LED monitoring tool.
• In recognition of the fact that the performance of a local economy is usually influenced by a wide range of both internal and external factors, thus rendering it difficult at times to directly link LED initiatives and general local economic performance, agencies need to closely monitor the effectiveness of individual programmes and initiatives.
• Well developed, operated and linked (to LED) Sister City arrangements, can have positive local economic development outcomes.
• In order to be truly effective, LED programmes and initiatives must be adequately resourced.
• The importance of fully evaluating the benefits and costs of major new LED related projects, as part of the decision-making process.
   

13. RECOMMENDATIONS AND PROPOSALS

In this final section of the study visit report, I would like to propose some specific recommendations/proposals for consideration, with the simple objective of advancing the findings of my study visit to the ultimate benefit of the national and local economic development process in New Zealand, and particularly the role within it of the Local Government sector.

In doing this, I believe that the country and Local Government can only but benefit significantly from the successful experience of the South-Eastern States of the USA, with the local economic development process.

The temptation for some to respond simplistically by saying that the nature and systems of the two countries are too dissimilar to allow for meaningful comparison, or that the US approach is not consistent with present national economic policy in New Zealand, should be resisted at all costs.

In any event, the obvious major success of LED policies in the States that I visited, provides an overwhelming case for New Zealand, which has been performing rather poorly economically in recent years and has an enduring major unemployment problem, to "own up" to its deficiencies and investigate possible new economic approaches.

Essentially, this amounts to no more than putting the often espoused principle of "best practice", into effect.

My recommendations are that:

• The findings of the study visit be brought to the attention of Central Government and other national economic policy interests in New Zealand.
• The study visit findings also be brought to the attention of both the elected and organisational arms of Local Government in New Zealand through the respective national bodies, namely Local Government New Zealand and the NZ Society of Local Government Managers (SOLGM).
• As part of (ii) above, the attention of territorial authorities in New Zealand be drawn specifically to the points in the study report concerning the appropriate role of Local Government in the LED process.
• The report’s findings also be conveyed to the Economic Development Association of New Zealand (EDANZ) and other appropriate economic development-related national organisations.
• The findings of this study, along with those of other relatively recent similar investigations and examples of the current work of LED agencies throughout New Zealand, be incorporated in a suitable position paper on "Local Economic Development In New Zealand", to be prepared for consideration by the incoming Government in 1999.
• SOLGM itself gives close consideration to the implications of the points highlighted in the report, for the future role of local authorities in the LED process.
• The matter of a future role for Power Companies (and other Utilities) in New Zealand in the LED process, be discussed with their national organisation(s).
• SOLGM consider whether there is merit in further investigating the need for a local costs and benefits project "impact assessment model" in New Zealand, similar to the LOCI model described earlier in this report.