"Local government officials are cautiously optimistic about the future of economic growth, according to a new survey released Monday by the Washington-based International City/County Management Association (ICMA) and the National League of Cities (NLC). The Economic Development 2009 Survey found that 74 percent of the respondents believe their local government's economic base would see slow to moderate growth over the next five years."

I think this is changing as I see a wave of for-profit incubator/accelerator/co-working spaces springing up, succeeding and expanding.
Thoughts?

Don Macke and Deb Markley, with the RUPRI Center for Rural Entrepreneurship, and Christine Hamilton-Pennell, with Growing Local Economies, would like to encourage this dialogue by sharing some observations based on our own experiences. We’ll admit at the start that we don’t have all the answers. And, we may be missing something significant that you’d like to add to the conversation. We encourage your comments, ideas, solutions and suggestions. Please share resources, case studies, examples of places that are working to move regional development strategies forward. We invite you to join the dialogue by commenting on this blog. To do so, you’ll need to register for our social networking site (a simple process). Since we want to encourage professional dialogue, please use your first and last names as your display name so we can reach out and have deeper conversations as needed.

Here are 10 issues we've been pondering recently:

1. Many Movements – Many Voices. Over the 10 years that we have been working in the field of entrepreneur-focused economic development, a number of very important movements have emerged – economic gardening, Enterprise Facilitation®, the Entrepreneurial League System®, Entrepreneur Friendly Communities, to name a few. Practitioners working with these models also tend to define key terms such as entrepreneur, incubation, business coaching, self-employment, and microenterprise in different ways. While each of these movements has unique features, the common thread across them is a focus on building entrepreneurial talent as a pathway to regional economic prosperity. They represent a significant departure from the industrial recruitment, “buffalo hunt” strategies that dominated rural development beginning in the 1980s. From a policy maker’s perspective, however, these many movements may also contribute to confusion – has the important focus on entrepreneurship as a core regional development strategy been lost among the many voices? Is there an opportunity to retain the unique features of these approaches to entrepreneur-focused economic development while we speak with a more consistent, singular voice on this issue to policy makers?

2. Rising Numbers of Necessity Entrepreneurs. The rate of “necessity entrepreneurship” increased dramatically during the recession – growing from 16.3% of new U.S. ventures in 2007 to 24.7% in 2009, according to Global Entrepreneurship Monitor surveys - http://www.businessweek.com/smallbiz/content/mar2010/sb2010039_995571.htm In addition to the current recession, two other trends support this rise in necessity entrepreneurship. Corporate downsizing, and the shedding of “legacy” workers, appears to be not just a function of the current economy but a longer term trend. This trend coincides with increasing opportunities to outsource work, not just on a temporary basis but over the long term. This rising pool of necessity entrepreneurs and the structural change toward outsourcing may offer significant development opportunities for communities and regions. The question becomes how to help these entrepreneurs step onto a pathway from necessity to opportunity entrepreneurship so that their enterprises contribute to regional prosperity.

3. Moving Necessity Entrepreneurs onto a Pathway to Opportunity. How many of these necessity entrepreneurs have the potential to grow their businesses? At one extreme, Kauffman Foundation supported research - http://www.kauffman.org/uploadedfiles/high-growth-firms-study.pdf - finds that high growth, “gazelle” firms make up only about 1% of all businesses. If this figure holds true for the growing pool of necessity entrepreneurs, we would expect to see an increase in the absolute number of these ventures. While these gazelles may be relatively rare, there are other types of breakout ventures among these necessity entrepreneurs with the potential to impact regional competitiveness, investment, employment, tax base and spin-off development. The challenge for rural regions is how to focus development efforts and identify those necessity entrepreneurs with the motivation and potential to become opportunity entrepreneurs and, with the right idea and support, growth entrepreneurs. Building the right entrepreneur development strategy and the infrastructure to support that strategy seems to us to be the key challenge to responding positively to this trend.

4. Building the “Right” Entrepreneur Development Strategy. What are the essential components of the “right” strategy? Three elements seem to us to stand out. Moving from necessity to opportunity entrepreneurship requires market intelligence – the ability to identify and strategically target markets where demand for products and services is high. It requires the creation of networking opportunities – bringing entrepreneurs together with peers, mentors, and other resources. Increasingly we see value from having someone in the role of coach – to challenge, support and connect entrepreneurs to the right resources as they build their business ventures. And, any system needs to build a pool of development resources that can provide sustainable support for this long term development strategy – investment resources from public, private and community-based philanthropic resources. The challenge is to design and build this essential infrastructure recognizing the unique features of rural regions. In addition, we see a more fundamental first step that is required in many rural regions – building the leadership, organizational and resource capacity to effectively engage in economic development more generally. A challenge is to harness the resources needed to do this capacity building work.

5. Connecting Workforce and Entrepreneurship Development. The ranks of necessity entrepreneurs in this struggling economy are populated, in part, by the unemployed. Whether these necessity entrepreneurs become an economic development asset to communities may depend upon how well workforce development and entrepreneurial support resources are connected. Promising examples of collaboration in support of entrepreneurship have been generated through the Growing America Through Entrepreneurship (GATE) program of the U.S. Department of Labor, such as ongoing work in North Carolina - http://www.ncprojectgate.org/ Collaboration across support organizations seems to us to be a key to creating a system that moves entrepreneurs seamlessly from self-employment to managing a business to operating a growing venture. Fostering this collaboration remains a critical challenge to effective entrepreneurial development.

6. Value Chains as a “Scale Up” Strategy. Innovation in and of itself is not sufficient to create regional economic development – it requires “scale up” strategies that are intentionally connected to the markets and demand for goods and services. These are the opportunities to leverage the innovation in a break out entrepreneurial venture by establishing relationships with other regional entrepreneurs who can help to build a stronger value chain – by contributing to production, logistics, marketing, etc. The ease and tradition of outsourcing nationally and internationally often denies local and regional economies the ability to capture greater value and wealth associated with innovation and entrepreneur-focused economic development. Building stronger value chains that engage regional players is a key to creating innovative regional economies, and to building stronger and more equitable linkages between rural and urban parts of a region.

7. Moving from Rural vs. Urban to Regional Development. There is growing recognition of the interdependence of rural and urban places among practitioners and policy makers. Indeed, this recognition provided the principles underlying the current administration’s domestic policy priorities and new initiatives such as the Sustainable Communities Initiative of US Housing and Urban Development, Department of Transportation, and Environmental Protection Agency, and US Department of Agriculture’s Regional Innovation Initiative. Rural communities have a distinctive set of assets that create unique opportunities to participate in emerging energy sectors, food systems development, eco-system services (i.e., services people obtain from their environments including, for example, carbon sequestration, watershed protection), and rural outsourcing. To take advantage of these emerging opportunities will require rural leadership on the part of the public and private sectors to identify entrepreneurial opportunities and participate in value chains that connect rural producers with urban consumers. How well these relationships will be facilitated, and by whom, are important considerations going forward.

8. Important Role for Regional Anchor Institutions. Entrepreneur-focused economic development is a long term process. Entrepreneurial needs, and strategies to respond to those needs, evolve over time, requiring consistent and sustainable support. Regional anchor institutions, such as community colleges, regional universities, and regional development organizations, can provide a stable, non-partisan source of institutional support for this work. These institutions have the potential to strengthen other critical connections, such as community colleges reinforcing the connection between workforce development and entrepreneurship. Too often, however, key regional institutions are not partnering across sectors – public, private, non-profit – in a way that leverages resources and creates positive impacts in these regions. The categorical nature of federal resources does not encourage such partnering, an obstacle that must be addressed.

9. Expanding Development Resources through Wealth Capture. Local and regional economic development infrastructure, found in municipal, county and regional economic development agencies, is under extreme fiscal stress. The primary sources of funding for these entities – local and county units of government – continue to face declining revenues associated with the economic downturn, the slow recovery, and declining federal resources. As a result, core functions like police and fire protection take primacy over economic development expenditures deemed discretionary. At the same time, rural regions are on the cusp of an historic intergenerational transfer of wealth that could, if captured through community foundations and other community-owned institutions, create a more sustainable source of development resources. Communities will need to develop the value propositions to attract these resources and create investment strategies to effectively grow these development resources over time. Recognizing the limitations of grant dependency is a first step in the process of developing a broader pool of resources in support of economic development.

10. Defining Success in terms of Wealth Creation. The nation’s attention is laser focused on job creation in the wake of a long and stubborn Great Recession. However, regional prosperity requires the creation of broader forms of wealth – a clean and resilient environment, a more skilled and healthy workforce, diverse civic engagement and leadership, for example. There is growing recognition that “sustainability” should be a consideration in the design of economic development efforts, and there has been considerable regional innovation focused on sustainable development. But, for the most part, rural regions lack effective models of sustainable development and the set of tools for implementing these strategies and measuring outcomes. Initiatives such as the Ford Foundation’s Wealth Creation in Rural Communities and the Economic Development Administration’s support for the creation of a Triple Bottom Line measurement tool, in partnership with Portland State University, represent opportunities to better understand how to create multiple forms of wealth in rural regions.

Things are a bit different across the pond. A decade ago the United Kingdom instituted a new way to bring youth and government together: the UK Youth Parliament (YP). The YP holds one session a year and each session is staffed by a retinue of youth 11 – 18 years old elected by their peers in local elections across the country. Voter turnout for each of the last two elections has been over 500,000 and they elected a body of 600 representatives.

What do they do? Exactly what parliament does: they meet and discuss issues important to the country. Every year they publish a manifesto (party platform, for Americans) detailing what they believe to be the most important issues facing youth in the UK. The manifesto sets the stage for debates and discussions at the Youth Parliament session.

What do the youth of UK want? Thanks to the Youth Parliament’s manifesto, it’s easy enough to tell. Certainly the manifesto is not all inclusive, and it is geared toward political and social issues instead of the economic solutions often preferred in regional development organizations, but there is a wealth of information in this document. Some sample concerns include:

* Negative portrayal of youth in media
* Keeping university tuition fees down
* Expansion of local government-youth interaction
* Rural development

We can’t just pay lip service to youth engagement. Youth are savvy enough to pick up on instances where adults are asking, but not listening. Case in point: In the USA, we sometimes have student members of school boards. These representatives very often have no voting rights, no committee memberships, and no authority. Ask the youth in these schools how much they care about being represented in this kind of structure.

By contrast, the UK invests legitimacy into youth councils and the YP. When a municipal government proposed budget cuts to youth related services, they required budget analysts and executives to justify these budget cuts to a local youth council. Ultimately this committee was charged with trimming down the budget in a way that preserved the most value for youth.

Although the YP has had its share of setbacks, it provides a number of benefits to youths and their communities. Participating youth are able to articulate policy preferences and have an organization which is responsive to their preferences. The community benefits by receiving additional feedback, which can be used to refine government services and the programs of community organizations.

Economic or business development firms may benefit from these kinds of organizations as well. Youth councils are potential sources of valuable marketing data and can also provide a channel of distribution for goods and services.

There are plenty of good ways to get a similar program started. Simply bringing together a number of youth and asking them to talk about their community is one way. In 2008 the McCook Economic Development Corporation brought together a number of youth to discuss ways to improve their rural Nebraska community. The result? McCook’s Young Leaders (MYL)– a non-profit organization composed youth and young adults. Since then, MYL has gone on to produce a large First Night festival. The youth had to write grants and request permits from the city.

Youth organizations are good for a lot of things and are not exceptionally tricky to establish. Community support and a little communication can go a long way. Ask anyone involved in the UK Youth Parliament.

~This blog post was originally posted to Dropping In (innotout.wordpress.com).