Four Waves of Economic Development: A Short History of US Industrial Policy

1
Four Waves of Economic DevelopmentA Short
History of US Industrial Policy
Scott Loveridge, January 2002
2
Introduction

• How has local development policy in the United
  States changed over the years?
• What are challenges and opportunities for rural
  areas?

3
Organization

• First Wave Pioneer.
• Second Wave Industrial Recruitment.
• Third Wave Retention and Expansion.
• Fourth Wave Reinventing Government.
• Rural Challenges and Opportunities.

4
Why Use the Wave Analogy?

• Each wave comes on top of the prior strategies. A
  wave washes over prior waves but most of the
  water doesnt move.
• New waves dont represent criticisms of past
  strategies just new approaches that may enhance
  old waves.

Note Wave Analogy and timeframes adapted from
Ross, Doug, and Robert E. Friedman, The Emerging
Third Wave New Economic Development Strategies
in the 90s The Entrepreneurial Economy Review.
Autumn 1990. Vol. 9, No. 1, pp. 3-10.
5
Why Think About This?

• Basic framework for understanding ED AoE efforts
  and how they fit into broader Michigan Economic
  Development Picture.
• How has economic development practice changed in
  past decades?

6
Wave 1 Pioneer

• Peak 1700s to 1930s, but continues today.
• Strategy find place with best natural assets and
  locate there.
• Examples Detroit, Alaska
• Began to run out of new places

7
Wave 2 Industrial Recruitment

• Timeline 1930s to present.
• Started in South, spread to all states.
• Sometimes seen as the only economic development
  strategy. (early Ren zones)
• Some obvious benefits, some hidden.
• Escalating costs.

8
Wave 3 Retention Expansion

• Timeline 1980s to present.
• Response to recession and increased costs of
  recruiting new industry.
• Includes much more than biz visits.
• Less successful when economic fundamentals are
  changing.

9
Wave 4 Reinventing Govt

• Timeline 1990s to present.
• Reduce costs and increase effectiveness of govt
  services to biz. (WIA, Lifesci Corridor)
• Multiple policies--less visible than IR or BRE

10
Todays Rural Challenges

• Infrastructure.
• Workforce.
• Critical Mass.

11
Todays Rural Opportunities

• Image as safe.
• Reputation for work ethic.
• Value-added for existing products.

12
Conclusions

• Development policy is changing, and the pace of
  change is increasing.
• We need to educate people about these changes
  develop our vision of how we fit.
• And
• We need to share our vision with internal and
  external audiences.