Elaine Van S. Carmichael, AICP

President, Economic Stewardship, Inc.

Community Economic Development
 

REMARKS SUBMITTED TO THE LEADERSHIP CONFERENCE ON CONSERVANCY AND DEVELOPMENT

September 1999, Yunnan Province, China

  1. Taking massive action—for example, building superhighways and airports virtually overnight—takes preference over incrementalism.
  2. While capital to build major infrastructure and commercial improvements—for example, the many new high-rise hotels in Kunming—is available, money for ongoing operations and especially maintenance is in much shorter supply. Unfortunately, this is not a sustainable approach.
  3. Limited attention is given to linking economic development investment decisions to the market’s ability to generate enough business to support the improvements.
  4. Similarly, only limited attention is given to choosing public investments that build upon the strengths of the existing economy to maximize productivity, that is, return on investment to the government and to the people.
  5. Making the quantum leap from a resource-based economy to a knowledge-based economy is unlikely, given such significant problems as illiteracy, poverty, pollution, and infrastructure deficiencies.
  1. How to ensure that income and wealth flowing from economic development initiatives in Yunnan accrue to local people, rather than enterprises in other provinces or abroad, including the multi-nationals hungry for access to China’s market of a billion people.
  2. How to reconcile ambitious economic development objectives with equally ambitious ecological and cultural stewardship goals.
As a premise, I believe the wealth created by successful and sensitive economic development is probably the best tool for encouraging natural resource conservation and enabling threatened cultures to survive and even thrive. People living at a subsistence level are far less able to muster the energy necessary to manage resources than those who feel economically secure. Income and willingness to conserve go hand in hand. Now for the suggestions.
  1. Upgrade access to education and training—whether for high tech jobs, for the hospitality industry or simply to update existing skills—for it a strong labor force is the foundation for economic development. The training agenda should include assembling programs tailored for specific investment initiatives to ensure that a prepared workforce can step into new jobs.
  2. Favor improvements that simultaneously benefit residents, business and tourists. They offer the most immediate payoff. Providing potable water and adequate sewer service should be high priority items.
  3. Incorporate the techniques of market demand assessment and feasibility analysis to inform economic development investment decisions. In the U.S., these tools are no longer limited to the private sector. Local, state and national government agencies, along with NGOs, use them to ensure the wise use of scarce funds. Adopting a return-on-investment approach makes sense regardless of whether public or private sector money is at stake.
  4. Similarly, use economic impact theory—which identifies how productive an investment is by determining how long associated spending will circulate within the local economy before being exported away—to compare competing economic development investments under contemplation. Economic impact theory provides an established methodology which enables governments to measure return on investment in terms of jobs, wages and indirect ("spin-off") economic activity. It allows investments benefiting different sectors to be compared using common means, but must be employed strategically, since not all investment benefits can be reduced to monetary terms, particularly cultural preservation.
  5. Using economic impact theory points out the benefits of encouraging horizontal and vertical integration, for example, manufacturing a key component locally to cut down on transport costs and enable cost-cutting business practices like just-in-time inventory systems.
  6. Help existing enterprises modernize their equipment and processes to increase efficiency and cut down on pollution and other harmful environmental effects. Consider incentives to motivate individual enterprises to make these improvements on their own.
  7. Find ways to help universities convert their research findings with commercialization potential into applications to help grow new industries locally.
  8. Involve managers from local enterprises, banks and educational institutions in making economic development policy and investment decisions. They have their fingers on the pulse of business and intuitively know the economy’s practical requirements, beyond what statistics reveal.
  9. Encourage entrepreneurship and micro enterprise development through economic development policy and educational offerings. While many will fail, others will take off.
  10. Take advantage of centralized government where advantageous, for example, in land planning and regulatory systems including zoning and building codes and ensuring that future development and infrastructure improvements occur in a pattern, scale and with building materials that respect the community’s historic fabric.
  11. With regard to tourism development, beware the erosion of authenticity that accompanies an arts/culture-oriented strategy. For example, people selling mass-produced goods can always outbid true artisans for the premier real estate locations. Moreover, marketing and the development of packages has to accompany local tourism product investments. Finally, tourists are unpredictable and fickle, and marketing cannot create expectations the experience can’t provide.
  12. For both economic development and tourism development, accept that incrementalism is the most probable and the most viable approach. Growth has to proceed in tandem with capacity, whether its regarding infrastructure, a trained workforce, the ability of a culture to persist in the face of modernization, or the ability of the environment to absorb additional economic activity.
Thank you very much.