“The number 6,” Eduardo Pontes

February 26, 2019; CityLab

One of the major shifts happening in economic development is an increased focus on inclusivity as a primary driver of sustainable and holistic development. As NPQ has written about many times before, equity is essential for remaking the economy into one that works for everyone. As more nonprofits focus on exploring their role in remaking the economy, and considering programs, services, and initiatives that they may institute individually or collaboratively, it is important to understand the dynamic tension occurring in the transition from traditional economic development to a more inclusive one. This growth edge embraces equity as a centerpiece of economic development, and leading thinkers, practitioners, and advocates are embracing equity not only as a strategy, but as a philosophy of economic development.

One of the leading thinkers in economic development for inclusivity is Richard Florida, co-founder and editor at large of CityLab. This week, Florida released an article discussing six major rules for inclusive economic development. These rules are important considerations for nonprofits working to advance equity in the economy.

The six rules he lays out are:

  1. Just say no to incentives.
  2. Invest in local clusters and ecosystems.
  3. Work closely with anchors.
  4. Leverage talent (and define it more broadly).
  5. Foster quality of place for everyone.
  6. Make equity and inclusion a priority.

While these rules are not all encompassing, they do reflect a major change of attitudes for economic development. One shift, which NPQ has discussed repeatedly, is the recognition that tax incentives are largely ineffective at creating jobs, and in some cases actually deter economic development. Some states, like New Jersey, have sought to determine the overall effectiveness of their tax incentive programs, and with good reason. Nationally, cities, and states collectively spend upwards of $80 billion collectively on tax incentives, which are largely designed to extract public dollars in return for the promise of job creation and economic growth. Most of the time, little public scrutiny is given in the process, and in cases where public discourse does occur, it is often after the fact when incentives fail to deliver on their promises.

Certainly, stewarding limited public resources is desirable, and the public expenditures spent on tax incentives could be reallocated towards long-term, sustainable, equitable, and inclusive job creation strategies that draw upon community’s existing strengths. One way to achieve this, Florida suggests, is through investment in the development of clusters and ecosystems that can be done in tandem with another key strategy: leveraging the local anchor institutions such as universities, colleges, and hospitals, which can prime and facilitate investment. (NPQ will be discussing leveraging anchor institutions on its March 14th webinar as part of the “Remaking the Economy” Webinar Series.) Through weaving interdependent, local economic development networks, and relying on the existing assets, regional economies have the capacity to foster resilient and inclusive economies that work for everyone. While public policy and planning have a significant role to play in ensuring the success of cluster and ecosystem initiatives, when done correctly, they can lead to a healthier and more equitable local economy.

In addition to ecosystems, clusters, and anchor institutions, a key rule for inclusive economic development that Florida suggests is broadening the definition and scope of the talent used by economic development efforts. Traditional economic development sees business driving talent, in that talent is essential for attracting and retaining businesses, which drive incentives. This extractive model of development does not produce equitable results. In the emerging inclusive economic development model, as Florida correctly notes, talent-driven strategies are extended to encompass the entire workforce and all residents. This means that workers’ pay increases, and that workers become more involved in the company decisions, driving innovation, boosting sales, and increasing productivity.

The final two rules Florida outlines hit at the heart of inclusive economic development. First, by fostering a quality of place for everybody, inclusive economic development considers a more comprehensive strategy other than just place making by improving the attractiveness through amenity driven strategies. These strategies can drive gentrification, increase inequality, and push low-income homeowners out of their homes, along with other deleterious effects. By revisiting quality of place strategies, and making them more balanced and inclusive, cities can spur economic growth while protecting residents at the same time. This echoes NPQ’s article from last July on “What does inclusive economic development look like?” which notes that an essential inclusive economic development strategy recommended by Michael Fortunato and Bruce Balfour, writing in GreenBiz, is to be more than a developer of places, but to be instead a developer of communities.

Finally, policymakers, leaders, and others involved at every stage of economic development must prioritize inclusivity. It must be at the heart of conversations, discussions, decisions, investments, strategies, and plans. To this end, as economic development boards, councils, departments, and other collaboratives consider the role of inclusivity, Florida makes a critical insight about who is in conversations. He says, “It needs to involve players and stakeholders at all levels—local governments, anchor institutions, community-development organizations, labor organizations, and civic and neighborhood groups.”

Certainly, nonprofits have a central role to play in advocating for and remaking the economy as well. By putting inclusivity at the forefront of discussions, and by ensuring that oft unheard voices are heard, nonprofits can fully embrace and fulfill their charge as key stewards of an emerging inclusive economic development philosophy that values everyone.—Derrick Rhayn