The question as to whether this Second War penetrated into the professional economic development organizations would seem most appropriate at this point. An IEDC history attests to the likely reality that the AEDC’s membership was disproportionately southern-based. The organization (AIDC) had a high representation of members from the American South and a healthy contingent of Canadian members. Its focus was on serving rural communities. Furthermore, AIDC historically concentrated on forging ties with the private sector. Government programs played a secondary role. [1]
AIDC at the time was located in Boston MA (CUED was in Washington D.C,) and in 1971 established the first professional economic development certification program, and held its first exam in May, 1971 from which 58 economic developers were accredited[2]. In 1973 AIDC headquarters moved to Kansas City and in 1974 developed and approved the criteria for accrediting a “Basic Industrial Development Course” an entry level introduction to economic developers which would be offered locally throughout the nation’s regions. In 1975, AIDC introduced a monthly “Legislative Affairs Report” and by 1978 its paid membership reached 1000.[3] It would appear that AIDC during this period was not deeply involved in the Second War but choose instead to distance itself from the War’s politicization, literally being in Boston and Kansas City, and spiritually in that this period marked very serious achievement in professional standards, education, and certification. There is no indication that AIDC engaged in any serious lobbying or was in any major way linked to the SGPB.
CUED on the other hand had been very active in lobbying the newly elected Nixon administration and was a vigorous defender of the EDA in its early years (CUED being the recipient of several EDA operating grants). Still the Nixon Administration did cut urban renewal funds suggesting some mixed results. CUED, which it must not be forgotten was only two years old in 1973, did quickly develop professional-based activities such as its first Annual Meeting (1973) as well as “technical assistance to cities such as Detroit, St. Louis Allentown (PA) and Xenia (OH)”[4] the last experienced a serious natural disaster.
Moreover, CUED seem very interested in promoting newer economic development strategies and tools such as “creative financing, small business development, commercial revitalization and central business district renewal” as well as “business retention and the linkages between universities … and the needs for small business incubators, the role of technology…”CUED, during the Carter years, published several reports under its second Executive Director (the first, Milwaukee-based Ken Fry) James Peterson on CETA training programs and a major research study of CDBG, funded by HUD, “Coordinated Urban Economic Development” in 1978. But political involvement was never neglected. In 1976 CUED lobbied Ford’s EDA nominee…”He became a strong supporter of CUED”.[5]
With Carter’s election in late 1976, CUED returned to its intense lobbying and political involvement and early 1977, CUED:
was positioned to play an influential role during the transition period that ushered
in the new Carter Administration. CUED was part of advisory groups working with
HUD, EDA and the White House, meeting with new Secretaries of HUD and Commerce
And the new president’s key advisers on domestic and state and local policy, Stu
Eisenstadt and Jack Watson.
“We actually wrote a national urban policy which became the Carter Administration’s
economic program when he came into office … We played a role in finally getting an
amendment through which allowed EDA to work with urban areas. (Ken Patton)
The late 1970’s were a time to innovation. There was an almost competitive situation
between HUD and EDA as who could best deliver the best economic development
programs to cities. CUED’s greatest value in those days was that it was a meeting place…
(Walter D’Alessio, Chair of CUED 1978-80)[6]
This was followed shortly by the recruitment of at least three CUED staff by EDA[7]. It appears that CUED maintained an active presence with these key federal agencies and to a certain degree was involved in the policy process within HUD (and UDAG) and EDA. Accordingly, it would appear that CUED, certainly more politically involved than AIDC, was a participant in the early years of the Second War. It did so while maintaining some balance with more professional activities such as organizational development, research and technical assistance/expertise.
The second war is a page turner for economic development–it is one of the more critical episodes in the evolution of the practice and profession of economic development.
In 1975 CUED commenced what turned out to be a more than two year study of the “state of the practice and issues of economic development”. Financed by HUD, the staff through case studies and a large advisory council the staff interviewed and conducted three-four day site visits resulting in twenty-two case studies of individual cities and economic development agencies. An eight volume report was published in March 1978. The “primary aim of the analysis is to provide information that cities can use to enhance their capacity to plan and implement a coordinated economic development program”.[8]
Many of this report’s observations provide a fascinating look into the internals and the mindsets of key agencies and economic development leaders. In many ways these reports provide a perspective of the problems and their past background which afflicted the profession on the eve of the 1980’s–but more importantly the report announces without fanfare or even discussion a momentous but very subtle revolution within the Progressive stream. That subtle revolution was very simply that governmental-based economic developers were assuming responsibility for the management and direction of their economic base and their local economy. No longer would a municipality’s economy and prosperity be directed by the area’s private sector and no longer would the configuration of the “area-wide” economic base be left to private enterprise-market decisions. We will offer some observations salient to our history of the profession derived from our reading and understanding of these reports. Several caveats would seem appropriate before we begin.
First, the CUED report is not an exhaustive census of the entire profession. By its own admittance, the report is focused almost exclusively around large cities–membership in CUED was based on population of 50,000 or more. CUED was still in its early years, about ten years old at the report’s issuance; many large cities had not yet joined CUED. Also, CUED in these early years was very close to EDA and also to HUD. It was probably at the height of its lobby powers with the White House and federal agencies. For both good and bad reasons, it is likely that the impact and role of federal agencies and their programs are more emphasized than is local autonomy, innovation and state and sub-state public policy-making (although the latter, in fairness does receive much attention but usually is a somewhat negative or unhelpful factor). CUED, in our sense of the economic development profession, flows, especially in these early years (much less so after its merger with AEDC), along the Progressive stream–it is we repeat very oriented toward federal programs and leadership. The CUED report is based and reflects economic development in our larger cities.
Small cities and towns, third tier cities and rural areas as well, live in very different worlds from the larger cities–economic development is noticeably different in these smaller-sized communities. In the sixties and seventies especially, more homogenous populations, non central city status, and the impact of more limited resources, affect the complexity, and the goals of economic development. Size and resource base alone are critical to the definition and capacity of EDOs. Economic development agencies in smaller communities exhibit much less complexity and far fewer staff; specialized programs receive generalized attention and management. Programmatic variance from central cities is also likely to be considerable; new suburbs, for example, need first time infrastructure, not urban renewal. Residential communities are not central cities in their diversity, needs, or goals. In addition, small cities and towns tend to receive less attention and assistance from federal categorical grants and demonstration projects. In these cities and towns, Privatist economic development has much more appeal.
And some mention ought to be made regarding the context, the backdrop during which the study was conducted. The events described in this chapter are critical to the development of the profession–and they are quite dramatic and even traumatic. The War Between the States, the reaction to the Great Society, Vietnam War, Riots, Assassinations, Watergate, and social and generation change–not to mention the truly shocking perception of the rise of the Sunbelt and the specter of regional decline. As we have stated elsewhere, economic development got shoved to the top of the public policy agenda. Economic development, always important we must modestly confess, assumed a first order importance for many cities, regions and political and public officials. The escalation up the policy agenda priorities list occurred precisely during this study. The need for coordination and planning, upon which much of the study is based, we believe reflects an awareness that previous structures, practices, and policies were not going to be adequate in what was a brave new world for economic developers. Fragmentation and poorly coordinated programs are tolerated much easier when no one is watching.
To us the report’s formal underlying theme is the need for coordination of economic development. An earlier, 1976 version of the report made the case for the consolidation and coordination in the federal agencies providing economic development programs. That call for federal coordination went nowhere quickly, and the focus turned toward coordination of local economic development. Why the need for coordination? Because the existing structure and fabric of municipal economic development policy system was not sufficient to the task that lay before it. Indeed, the opening lines of the report’s Executive Summary announce the subtle revolution and why it was necessary:
Urban decay, loss of population and jobs and the mounting costs of public services all threaten the economic vitality of our cities. As a result cities are taking new initiatives to stimulate private employment opportunities, and strengthen their tax base. Increasingly, cities are abandoning the notion that the role of government is to provide services while private sector market forces determine the mix of local industries, the expansion and movement of local firms, the number, location and mix of jobs. City governments are trying to find ways to consciously and purposefully influence their economies in order to provide jobs for urban residents, increase per capita income, and reduce the heavy, and often inequitable bite of the local tax structure. But revitalization of the urban core cannot be accomplished with public resources alone. It requires public-private cooperation in a comprehensive economic development strategy that makes effective use of public funds to maximize private investment.[9]
Several revolutionary implications flow from economic development’s new role and task set. This report and is new goal structure is a radical departure from the then dominant urban renewal approach with its geographically-limited, physical-real estate infrastructure strategy driven by the private sector of the community from economic development agencies whose control and direction were shared by mayors and the private sector. In its place was a city government assuming responsibility, for not just blighted areas and modernization, but for the regional economy and economic prosperity. This is far more than simple Keynesian tweaking applied to the municipal economy. Second, this is a central city focused economic development desperately seeking to overcome the inequities and decline induced by regional change and suburbanization. Thirdly, the goals of economic development are clearly set: job creation, fiscal and tax stability and equity, and economic revitalization of the central city. The role of the private sector is clearly stipulated–its cooperation in the remaking of the local economy and economic base by city government and economic developers. What is needed to accomplish these goals is the content of the report.
The most obvious deficiency was that economic development was fragmented and comprehensive (i.e. unified) policy was frustrated because it was implemented by multiple and diverse economic development organizations (EDOs) in an unplanned and all-too unthoughtful manner. Economic Development policy was at that time driven by bureaucratic bias and constituency demand–both of which were regarded as unfortunate and impediments to sound rational economic development policy drawn from a sound, rational economic development plan. Structural and policy coordination-reform and the establishment of new forms of economic development planning were, therefore, the initial fundamental reform to achieve the goals of the new economic development perspective. Certainly, the heritage of Progressive economic development’s long association with planning was asserting itself at this very critical juncture of Progressive, big city economic development.
Our reading of the report suggests that over the past years, economic development programs had been incrementally added, located perhaps logically in one department or agency or another and over time simply diffused through the bureaucratic and community public policy landscape. Economic development “things” were filed in locations that seemed easy and logical at the time–and they accumulated over time. By the late 1970’s every major city had economic development programs all over the place, in no particular order.
In most local governments, development-related functions are housed in separate and often unrelated line and staff agencies, or are under the aegis of different policy-making bodies. This is the result of the traditional service orientation of city governments in which most municipal activities are viewed as unrelated services meeting the individual needs of the community.[10]
We would also observe from our history, that government had in relatively recent years become engaged in what had in the past been a primarily private-Privatist activity and function. For the most part, except for urban renewal which had mostly been pushed into an independent quasi EDO redevelopment agency governed in partnership with the private corporate leadership, the newly devised economic development programs represented an innovative, new to the scene intrusion of the public sector into the affairs, hitherto seen as predominately private and business community-related. The new set of economic developers, however, was frustrated with what they saw in the jurisdictional policy and bureaucratic landscape.
Diffused as they were through the community policy system, there was no easy way to innovate or manage these disparate and differently operated programs. How did these economic development programs get placed into different diffused locations? Often because they were financed by different federal agencies–economic development in the field had already become siloized. The picket fence of categorical federalism, tempered to be sure, by Nixon’s block grants, had lodged different economic development programs in different departments and different independent agencies.
Each department or independent agency had their own goals, staff, and funding sources–and most importantly, their own constituency–entities that were dependent upon, linked with, or attracted to the goals and outputs of the federally funded programs. Coordination and structural reform, therefore, potentially meant institutional war and community conflict; a potential reordering of priorities and benefits helped and hurt groups, individuals and organizations throughout the community. Comprehensive economic development planning and policy-making was at best unlikely, most likely impossible in such an environment.
Over the years, the numbers of semi-autonomous bodies that carry out development activities have increased. Although many of them have successfully completed development activities, they have also created problems. The city government may experience difficult in involving them in comprehensive public development because the constituencies and objectives of these groups frequently are different from those of city government.
Federal program regulations have also contributed to this proliferation. Some o programs require the creation of separate agencies to manage or direct the program at the local level, and in some cases direct funding is provided to those bodies. In addition, federal regulations may require community or private sector involvement which lessens the city’s influence or control over these programs. Some examples include the community development corporations funded by the Community Services Administration, business development organizations funded by the Office of Minority Business Enterprise (HUD) and Model Cities agencies funded under the former Model Cities categorical program.[11]
The report observed that strong mayors are more successful in countering the effects of fragmentation and those weak mayors, especially those elected every two years or subject to frequent turnover, are less able to achieve control over development agencies and to accomplish coordinated economic development. The “economic situation” of the community is cited as an important factor in creating the need to coordinate economic development. A growing or stable economy “may have less need to a sophisticated institutional framework and might opt for a more informal and ad hoc approach… On the other hand, cities with declining economies have a greater need for public intervention…”[12]
In addition, the cases studies suggest several models by which coordination can be achieved. A line model, in which all economic development programs are combined into one department or a single administrator (Milwaukee’s Department of City Development placed planning, urban renewal, land banking, and financing functions together) is one option[13]; a staff approach is another alternative in which the mayor establishes either an office or a single administrator in the mayor’s office who is responsible for the coordination of the independent and department line agencies (City of Baltimore’s Physical Development Coordinator, The City of Louisville established a Community Development Cabinet, and Portland’s Office of Planning and Development)[14].
Economic development planning, or more precisely the need for such planning, is clearly distinguished from conventional planning associated with housing and zoning.
As cities assume more responsibility for local economic development, the need grows for practitioners to set clear development objectives and to devise means for achieving them. During fiscal crises and national recession, competing demands for scarce resources become more intense as the needs of every constituency escalate. Local officials come under pressure to set priorities and develop more rational approaches to urban economic development. At the policy level, this means devising overall investment strategies to address job creation, fiscal solvency, and growth management issues.[15]
The Executive Summary is blunter and to the point. “Comprehensive economic development planning is a new concept and a new function that will require significant changes in many city planning activities. A new set of objectives and policies must be imposed upon existing city operations …”.[16] Acknowledging that “Public planning for economic development has been limited in most cities” despite several past efforts by the federal government to create local economic development planning capacity, the need in 1978 was to establish, with federal support, a new planning apparatus and approach to economic development.
Deserving of particular praise for effectiveness in promoting local economic development planning was EDA’s Section 302 program which, at that time, had provided funds to forty cities for that activity. HUD, EDA, and DOL had also created a joint program and funded ten cities. If so, it appears that by the late seventies, the need for local economic planning had been perceived as central to economic developers and the tasks they had set for themselves
The initial need was to gather city-wide data and construct the datasets necessary for effective economic development planning. These datasets were discussed at great length and now, for the most part, they have been created. The next step in planning was to adopt “area-wide planning techniques”. First and foremost this involved understanding the economic base of the area, its sectors and industries, their growth or decline, business starts, export industries and their multipliers and how each compare to national trends. From this one can better understand the role the central city plays in the area economy and the competitive advantages and disadvantages of each and how they play into the region’s business climate can be derived. Further data should reveal the nature of social and demographic changes and how local residents and the labor force are affected.
Today, all this is rather commonplace–but to our understanding, this is the first time one sees it so specifically and prescriptively in the economic development “literature”. In the seventies local economic development had indeed taken a decided turn away from urban renewal towards new forms of economic development in which government was no longer a supporting participant but the leader in what amounted to an attempted remaking of a jurisdictions economic base in order to safeguard the primary and prosperity of that region’s central city. There is, however, a legitimate question as to how much, if at all, this subtle revolution was shared by others outside the profession at this point in time. In our minds, we suggest that the frustration of the local economic developer was to a considerable degree the result of the indifference or outright opposition of other actors in their policy system and local environment. We strongly doubt that constituencies and decision-makers in every city from this time forward looked to economic developers, and their plans, in this leadership role.
Delving deeper into the planning approach advocated by this report we discover some interesting, oft-times perceptive insights into the future evolution of the profession and economic development theory. Of particular note is the strong reliance on sector and industry trends and developments. The manufacturing sector is certainly foremost among these sectors, but the increasing growth of the “commercial” (i.e. services) sector, while secondary to manufacturing, was also noted. The Sunbelt’s non-manufacturing-based resurgence had apparently been noticed–either that or economic developers did notice that the only construction cranes in their jurisdiction were building commercial facilities.
Also interesting was the use of the term “industrial cluster”. As it turns out this has little to do with the cluster approach to be advocated by Porter twelve years later. Industrial clusters in this report resemble the old-style industrial districts and are “geographic concentrations of industrial activity”. The physical conditions of these areas in which these industrial clusters inhabit are described in terms very similar to those used thus far for blighted neighborhoods and urban renewal projects. The economic development planning as described in the report focused very heavily on the physical land use and site characteristics which were the then existing paradigm in the central city.[17] The break with economic development’s immediate past was far from complete and the report in no way represents a disparagement and a repudiation of urban renewal or the physical redevelopment strategy. Instead, we see economic development enlarging upon urban renewal to evolve into a much more comprehensive, area-wide redefinition of the tasks which central city economic developers were to achieve. Urban renewal was an acceptable strategy for economic development, but it was not, and could not be, the entire strategy for central city revitalization.
What we do think we see in this report, however, is advocacy of structural reform–the centralization of as many economic development programs and policy areas into one department or one mayoral office staff member. If so, the report is very much a “power grab” within municipal government and an attempt to unify different economic development policy areas into one “comprehensive” policy process which is constructed from rational “scientific” and “objective” “planning techniques” as described above[18]. Accordingly, we see concerted efforts to bring to heal the “community development” agencies, programs and departments (more precisely grab onto a greater share of the CDBG budget for area-wide activities) and to establish some sort of linkage with DOL’s CETA workforce programs. The latter, while acknowledged as critical to area-wide economic development, was not the target of consolidation but rather of policy innovations and program changes which were more compatible with area-wide sector-based economic development initiatives.
While not a formal theme of the CUED report, it is possible to assemble a picture of the range of economic development programs offered in the major urban centers in the late 1970’s. Obviously (or not) urban renewal and housing-related problems seem to be the most common and are the most difficult for mayors to control in that they are usually located in bureaucracies outside of direct mayor control. The panoply of community development and model cities agencies are also very common and they too appear to be operating in distinctly different bureaucracies than economic development programs. Nevertheless, the “physical-infrastructure-real estate” strategy is found in all examples presented in its twenty-two case studies.
The types of programs in operation which appear to be, by current standards, conventional economic development programs are usually of two generic types: (1) those which are real-estate related (incubators, industrial parks and sites) and those which are (2) finance related (business loans, MBE, venture capital, business surveys and visitation). Industrial development bond financing, usually associated with an independent quasi EDO, do not seem to be as common in large city municipal governments. There appears to be a wider variety of programs associated with community development-style agencies including both real estate and finance programs, but also more “people”-oriented, workforce, skill building and, of course, neighborhood-based revitalization and housing-related programs.
There are some references to formal, titled economic development strategies; in particular, attraction[19] and retention[20] are clearly identified and seem to be pervasive. We would digress from the report and suggest that these strategies and tools (both real estate and finance related) associated with attraction and retention possess the following characteristics: (1) the strategies have probably been around for some time and are the result of a half-century of North-South sparing over manufacturing firms and the support of the state and its SSS; (2) both real estate and finance tools appear to be what we term “micro economic” (some refer to it as cost minimization) approaches to economic development–i.e. they seek to reduce the cost structure of a private firm in order to influence a location decision. As such, in these most Progressive big city policy-systems a Privatist approach to economic development is thoroughly and safely ensconced in the economic development framework by the late 1970’s. We do not see formal reference to job creation in any volume of the report.
We would also add neighborhood-community development based strategies to this as that strategy does seem to characterize a good deal of the various tools and programs common to community development agencies and departments. Interestingly, we do not sense in the CUED report that community development approach is viewed as any different in its goals, strategies and tools from conventional economic development. Indeed, a major element of the report is to find ways to “fold” the community development approach into the conventional economic development paradigm. That is a major goal of the coordination theme and an entire volume of the report is dedicated to that topic alone. That volume supports strongly the start made in the 1977 Community Development Block Grant Act to enlarge upon the eligible economic development activities under CDBG. The report also specified a number of HUD-CDBG reforms, such as the elimination of the “three day” rule which precluded HUD funds from being included in a revolving loan fund.[21]
The economic strategy picture that emerges from these pages is that central city economic development (and its lead agency EDO) is clearly multi-strategy based. We see evidence that any individual central city municipality could simultaneously follow an urban renewal-physical redevelopment, community development-neighborhood, micro economic, workforce, tourist-industrial attraction, business retention strategy. An individual EDO within that municipality could specialize as a workforce or tourist EDO would likely, or, and this is especially true for the jurisdiction’s lead agency EDO, include several strategies and the tools appropriate for each strategy within one EDO. That the CUED report exhibits some willingness to concentrate a number of strategies into one line agency, we can see evidence that by the middle, and certainly late seventies there were typically one, and probably a number of multi-strategy EDOs simultaneously operate within the jurisdiction’s boundaries.
[1] Frankie Clogston, “Ten Years After the Merger: A Celebration of IEDC and its Forerunners”, Final Draft, July 12, 2011, p.5.
[2] Shelton, Birkhead, and Seal, “American Economic Development Milestones – 1960-2000, Economic Development Review, Fall 2000, p. 29.
[3] IBID. p. 29.
[4] Jim Breagy CUED At Thirty, Commentary, Fall, 1997, p. 10.
[5] IBID. p 10.
[6] IBID. p. 10-11
[7] IBID. p. 10
[8] Coordinated Urban Economic Development: A Case Study Analysis (Executive Summary), National Council for Urban Economic Development, March, 1978. P. 1. In addition to a Executive Summary volume, seven other volumes were issued: Coordination of Public Development Institutions, Comprehensive Economic Development Planning, Coordination of Community and Economic Development, Neighborhood Economic Development, Coordination of Manpower and Economic Development, Public-Private Development Institutions, and Development Financing.
[9] Coordinated Urban Economic Development, Executive Summary, p. 1.
[10] Coordinated Urban Economic Development, Coordination of Public Development Institutions, p. 1.
[11] CUED, op. cit, Coordination of Public Development Institutions, p. 2.
[12] CUED, op. cit, Coordination of Public Development, Executive Summary, p. 4.
[13] Interestingly, even after establishment of the Department of City Development, the report lists four major public economic development entities which were not included and remained independent or in separate departments. In other words, the most successful example of combining economic development functions into one line agency was unable to combine all economic development functions.
[14] CUED, op. cit, Coordination of Public Development Institutions, pp. 2-3.
[15] CUED, Volume 2, Comprehensive Economic Development Planning, p. 1.
[16] CUED, Volume 2, Comprehensive Economic Development Planning, p. 4.
[17] Comprehensive Economic Development Planning, pp. 5-7.
[18] Comprehensive Economic Development Planning, p. 4.
[19] The attraction strategy, “industrial attraction” is “one of the most extensive and controversial elements” of local economic development. “Typically the domain of consulting firms’ attraction attempts to “match the needs and economic potentials of a locality to those of expanding industries”.”Local development officials then prevail upon selected industries to relocate or expand there”. Data processing and analysis required for screening hundreds of industries … consulting firms have developed standardized procedures [but] a controversy exists concerning the usefulness of these techniques”. Philadelphia is cited as relying principally on industrial attraction. Activities included in industrial attraction are: site selection studies, market studies and feasibility analysis (which combine site and market studies), marketing and customized “packages [we assume incentives]” infrastructure investment and site selection (an early forerunner to shovel ready). CUED, Volume 2, Comprehensive Economic Development Planning, p. 6.
[20] Retention strategies they imply are more common “particularly in the urban centers of the Northeast and Midwest which have experienced steady out-migration of manufacturing”. The basic instrument of the strategy is the survey and the visitation program. They cite Minneapolis, Long Beach, Baltimore, Philadelphia, Chicago and Milwaukee as having used this tool extensively. Survey was quite extensive and not especially dissimilar to that utilized in recent times. The survey is used to coordinate development activities including public works investment, manpower programming , provision of municipal services, compatible land use and transportation planning and a second section links retention to “redevelopment of industrial areas” or urban renewal. CUED, Volume 2, Comprehensive Economic Development Planning, p. 6.
[21] Other criticisms include the relatively few CDBG dollars that survive social services, administration, housing and conventional community development programs. Economic development is clearly conceived to be the last of a long list of priorities of CDBG. Spreading CDBG funds across neighborhoods also seriously limits the ability to use such funds for concentrated micro economic business development programs. Finally, an interesting discussion on an apparently common internal opposition from HUD administrators (New England is cited twice) who simply are perceived to be at war with economic development.
Ron W. Coan 