At Magnale we are passionate about delivering practical solutions to complex commerce problems in order to address the under-served needs of regions and their businesses. To this end we enjoy advocating our position on key industry topics while engaging in meaningful conversations in an open and direct manner. Our insights and observations are based on market intelligence and analysis that is generally not available to regions or their small and mid-size businesses. We are committed to connecting you to resources, people and opportunities you didn’t know were there by providing you better intelligence about your industries and market. This post outlines the challenges faced by your region and offers practical advice to address these challenges for our collective benefit.

The growing economic gap in prosperity performance between regions is damaging to the U.S. national economy as a whole; as it means that these regions are not realizing their potential. It also results in reduced quality of life for people in these poorer regions where not only low productivity but also reduced standards of living i.e. poverty, unemployment and ill health are concentrated.

The federal and state governments have done a good job by acknowledging the scale and persistence of this regional prosperity gap and have made attempts to reduce the gap between regions. The regions themselves currently have a vague understanding of this growing economic disparity and its impact on regional standards of living.

We are concerned that not enough has been done to adequately address this growing economic disparity between regions that “have” and those that “have not”.

Creating the fundamentals for smarter investment in smarter growth requires a regional economic development strategy that is specific to the attributes and nuances of the regional economy relative to existing and emerging industry and occupational clusters.

Measuring performance is critical to the establishment of economic strategy, policy and investment success. Tough decisions about regional priorities require local political leadership that is all too often well intentioned but lacks the resources and information to make fully informed decisions.

The profit system cares little about regional or local political motivations. The private sector pursues profit and its self interests wherever it can find them; thus the mobility of labor and the enterprise is at an all time historical high.

We believe that the single most important priority for regional leadership is to make sustainable improvements in the economic performance of their region to reduce the gap in prosperity between their region and competing regions. The starting point is to define measures of successful performance and reporting progress against pre-established regional targets. Measures relative to retaining, and attracting businesses within the regions existing and emerging industry clusters should be given emphasis.

Regions need to make tough decisions about their priorities including:

• The ability to recognize the unique attributes and differences of their region by accessing regional comparison data to prioritize the regional economic agenda for high wage job growth. This is important to developing a regional economic strategy specific to each region; versus the current federal and state approach of developing policies for the benefit of all regions;

• Acknowledging that the performance measures needed to tackle unemployment or high wage job growth need to be different in areas where there are lots of jobs versus places where job opportunities are few and far between;

• Ensuring that the physical and technology infrastructure fundamentals for growth i.e. transport, research and development investment and collaboration between the private, academic and public sectors are formalized and in place now as a prerequisite building block to regional prosperity;

• Establishing Public Private Partnerships with adequate powers and resources to serve the public good, manage physical and technology infrastructure and costs, and mitigate risks.

The current indicators for measurement of regional prosperity against targets are inadequate and poorly distributed among regional citizens. In addition, comparison data for regional competitive analysis is virtually nonexistent within most regions. As a starting point we recommend a handful of key performance measurements be adopted by each region and be published to the general population, they are:

Gross Metropolitan Product (GMP): The per capita dollar value of all final goods and services produced in the metropolitan area in one year.

GMP Growth: The one year percentage change in the per capita dollar value of all final goods and services produced in the metropolitan area.

Knowledge Economy: The percentage of the workforce employed in knowledge-intensive occupations.

Knowledge Workers (Young): The percentage of the population ages 25-34 with a bachelor’s degree or higher.

Long-term Employment Growth: The five year percentage change in total employment.

Long-term Wage Growth: The five year percentage change in average annual wages.

Poverty Rate: The percentage of the population with income in the past 12 months below the poverty level.

Short-term Employment Growth: The one year percentage change in total employment.

Short-term Wage Growth: The one year percentage change in average annual wages.

Unemployment: The rate of unemployment in the metropolitan area.

Unemployment Change: The one year absolute change in the rate of unemployment.

In a democracy, it is necessary to have clear and accurate information, so that informed decisions can be made. It has become clear that information about the economies of the U.S. regions is limited and poorly distributed. Not only does this mean that regional policy decisions are being made on the basis of inadequate information, it also undermines the regional government’s approach towards monitoring performance against targets and the accountability associated with performance monitoring.

Trade and industry sector policies have insufficient capacity to respond to differences between regions. The regions need to increase and align public policy with industry policy, recognizing that some policies will not be appropriate in some regions. Regional administration of national and state policies is not the same as a regional response with economic strategies based on regional competitive analysis.

National and state policies to support investments in innovation are not reducing regional disparities, as they are available to all regions. The gap between regions affects everybody. Not only do people in the less prosperous regions have fewer opportunities where they live and suffer from lower standards of living, worse health and greater deprivation; they are increasingly suffering from congestion, unaffordable housing and diminishing public sector support services.

The gap between regions is persistent and increasing. Reducing this gap could improve everyone’s quality of life. The federal government has made significant progress over the past several years in acknowledging the extent of differences in prosperity between regions and beginning to think about how the gaps can be closed. The federal government has even begun to promote regional thinking. However, to reduce the gap in prosperity measurements between regions, significant actions and difficult regional decisions are needed.

The current approach of federal and state policies for the benefit of all regions will not reduce differences between regions. The regional and local governments need to enable regional differentiation of national and state policies.

If the least prosperous regions are to begin to catch up with the more successful regions, greater emphasis will need to be placed on their development; in particular putting in place the fundamentals for sustainable economic growth.

Mainstream policies such as transport, physical and technology infrastructure, culture and research and development need to be assessed for their regional impact.

Regional bodies need access to powers and resources adequate to the scale of their tasks. The actions of a wide range of state and regional government departments affect the chances of regional disparity being addressed. Tackling regional disparities should be a responsibility across state, region and local government departments, not simply those departments with traditional responsibilities for the economy and regional policies. “Mainstreaming” regional economic development policy is critical to addressing the challenges we face. Regional actions to be considered:

• Facilitate networking and collaboration between regional stakeholders in business, academia and government within competitive industry clusters.

• Enhance communication among regional governments, economic development agencies, chambers of commerce, workforce development boards, and other regional leaders.

• Ensure that an adequate workforce is available to support existing and emerging industries.

• Increase the attainment of undergraduate and graduate degrees in science, technology, engineering, and mathematics in regional universities and colleges.

• Enhance community involvement by raising public awareness of regional plans and programs as developed by regional leaders and stakeholders.

• Enhance or establish partnerships between regional businesses and research institutions, universities, and colleges.

• Improve the transfer of technological innovations from universities and research centers to the regional marketplace.

• Increase the competitive position of existing and emerging industry clusters within the region.

• Promote small and mid-market business development, helping entrepreneurs and enterprises with technical and financial assistance.

• Increase the availability and use of venture capital.

• Increase the number of federal Small Business Innovation Research (SBIR) and Small Business Technology Transfer (SBTT) awards received by the region’s businesses.

Committed regional leadership can overcome institutional fragmentation, build community capacity, improve public-sector service delivery and attract investment through regional deployment of low cost technology infrastructure. With advanced market intelligence, regions can leverage economic incentives to make smarter investments in smarter growth, retaining and attracting businesses that are growing in high-wage jobs.