Economic development today is simultaneously local and global.
Projects such as highway infrastructure improvements or attracting foreign direct investment require collaboration among local, regional, state, and often even federal partners. At the local level, economic development organizations (EDOs) are facing mounting pressure to increase efficiency and economic growth with fewer resources, all while competing with neighboring communities for many of the same resources. In response to these challenges, many areas have turned to a regional approach. Regional EDOs are comprised of stakeholders and resources from across large geographic areas that collaborate to prioritize significant projects that maximize the region’s return on investment. Understanding why some Regional EDO’s fail and others prosper is crucial when developing a new regional organization.
Recognizing these trends, in January 2017, the International Economic Council (IEDC) published a white paper entitled “Organizing for Success: Regional Economic Development”. The paper provides a clear rundown of the anatomy of a regional economic development organization (or EDO), the advantages and challenges that regional EDOs offer to counties through pooled resources and coordinated efforts, and various other economic development best practices. The major findings of this work is summarized below, followed by a case study of Beaufort County, SC, which recently went through a process to investigate whether a regional EDO can offer them value through membership.
What is a regional EDO?
Regional EDOs are a public-private partnership with stakeholders often from government, non-government organizations, businesses, and academia. Each regional EDO’s governance structure and funding is determined through internal negotiation and balance of power. Funding typically is formatted with the public sector contributing on a per capita basis and the private sector matching that contribution. Regional EDOs craft economic development strategies and implement projects based on the region’s collective opportunities and advantages.
Advantages of Regional EDOs
The major advantage of a regional approach is that communities can achieve more by working together. Regional EDOs allow for increased coordination and communication, resulting in more efficient use of resources. Regions are able to pool and leverage limited resources to ensure the broad region is appropriately served. This collaboration facilitates an environment where stakeholders can address issues that once put them at odds with each other. Additionally, larger groups are more effective at voicing issues of a collective concern than smaller local divisions; thus, maximizing political influence.
What is working
Among regional EDO’s there are three common themes that have been attributed to success: collaboration, organization and transparency.
- Collaboration – True collaboration among all stakeholders results in more effective, engaged decision making. Successful regional EDOs maintain an open dialogue with local leaders and stakeholders to advise their all-encompassing objectives and strategies. Collaboration allows the regional EDO to proceed with projects that will best increase economic wellbeing and quality of life for the region.
- Organization – Organizations is consistent throughout the collaboration process; all stakeholders needs and concerns are identified and taken into consideration. Regions develop a strategic plan that clearly identifies collective goals and steps to achieve them. Successful regions systematically set attainable goals and measure success.
- Transparency – Information, including goals and measurements of success, regarding a region’s strategic plan and projects should be made accessible to the public and other regional EDOs. Transparency cultivates public trust and strengthens the partnership between local and regional EDOs.
Challenges of Regional EDOs
Like most organizational structures, there are a number of challenges that can impede success. As mentioned previously, regional EDOs depend on collaboration. Without collaboration, a number of issues can arise such as duplicate and uncoordinated programs and services, which can create unnecessary costs and frustration. Lack of long-term planning can lead to reactive use of funds towards a short-term challenge or threat. Collaboration along will long-term strategic planning can ensure that limited resources are allocated towards projects with the greatest potential.
- New York State Economic Development Councils – In 2010, ten regional economic development councils were established. Each council was compromised if roughly 20 members from business. Academia, local government and non-governmental organizations. Approximately 30 agencies provide funding in the forms of grants, tax credits, and tax exempt bonds, which are then distributed throughout the councils. After five NYSEDC rounds, the regional economic development councils have received almost $4 billion for 4,100 projects, which is anticipated to create and retain over 200,000 jobs.
- Michigan Economic Development Corporation – Established in 1999, the Michigan Economic Development Corporation is comprised of ten regions focused on job creation, encouraging tourism and fostering business relocation. The MEDC aligns with the Collaborative Development Council (CDC) to encourage new regional initiatives as well as, streamline services, improve customer service, and coordinate resources among communities and professionals. Through the work of the MEDC companies such as Dow Chemical, Optech and Kalitta AIR have relocated to Michigan and have been making a positive difference in the community.
- North Carolina’s Economic Development Organization – North Carolina was the first state to develop a regional approach to economic development. In 1993, North Carolina Legislature established seven economic development organizations. The regions target specific industries based on their resources such as tourism, real estate or workforce development.
“The North and South of the Broad” is a term in Beaufort County referring to not just a geographic division, but an institutional divide.
The county is bisected by the massive Broad River, an aptly-named tributary that flows into the Atlantic Ocean at the county’s eastern end. This physical boundary has in many ways also served as an economic and demographic boundary, with residents on either side living in separate economic spheres. One end is predominantly home to older executives and second homeowners, while the other skews toward middle-income households and working families.
Beaufort’s unique geographic layout makes for a complex political and demographic dialogue, including the process of determining whether they should join a regional EDO. At present, the two major regional alliances near Beaufort County are the Southern Carolina Regional Development Alliance (SCRDA) and the Charleston Regional Development Alliance (CRDA). One half of the county aspires to see Beaufort build for itself a new base of professional tech-sector enterprise, while the other wants to capitalize on the existing tourism industry to promote growth in middle-income families. This bifurcation in public opinion extends to choice of regional alliances based on economic connections and development focus. These disagreements posed an interesting challenge for Beaufort’s residents and leaders: how can the county develop a cohesive regional EDO alliance strategy that integrates the (in some cases) polarized needs of its stakeholders? Yet before we can answer this, we must step back further and ask: by joining an alliance, would the county even benefit at all?
Assessing the Benefits of a Regional EDO
The most strongly emphasized benefit of regional EDOs as discussed in the IEDC paper is their ability to pool and leverage limited marketing resources. By taking advantage of scale and pooling resources, regional EDOs can develop more sophisticated branding and marketing campaigns than local EDOs. This is where Beaufort has reached its second hurdle to regional EDO membership. The county currently suffers from a lack of competitive shovel-ready sites necessary to attract business investment. Most available industrial real estate in the county requires significant investment in terms of rehabilitation and redevelopment. By joining a regional alliance, Beaufort County would essentially be paying for marketing from which it would not benefit. This lack of competitive shovel-ready sites calls into question the need for the County to join an alliance that primarily focuses on business attraction.
Turning Problems to Possibilities
Presently, the two regional EDOs have more to gain from Beaufort joining than Beaufort does. The SCRDA in particular stands to benefit significantly from Beaufort’s participation, as it allows them to combine Beaufort’s resources with those of the $4.5 billion Jasper Ocean Terminal currently under construction by the adjacent Jasper County. Camoin Associates worked with Beaufort to leverage these benefit asymmetries to potentially reduce membership costs or (preferably) negotiate for the regional EDO to help subsidize development of shovel-ready sites in Beaufort. On this basis, Beaufort’s options are to either earmark the savings from reduced fees for site rehabilitation, or pay full price on the agreement that the regional EDO would coordinate with the County to invest in site rehabilitation.
Taking this approach, Beaufort County is currently in negotiations with SCRDA leadership. This solution provides a mutually beneficial avenue for developing a cohesive vision for Beaufort. As discussed in IEDC’s paper: “[regional economic development] requires all parties to set aside sentiments of ‘turfism’ and begin thinking beyond individual mandates.” Beaufort is experiencing this first hand. Aligning the County with a regional alliance’s overall objectives is driving the segmented areas of the county to compromise on political decision-making.