Community and Economic Development

States and localities that aggressively use incentives in the “job wars” may win big—but at what cost and toward what end? Does a government give more than it gets in recruiting businesses? Popular Government offers a practical assessment of the pros and the cons of common incentives.

North Carolina is widely recognized as a hub of international commerce and “transnational population movements” (movements of people from other countries, especially Mexico and other parts of Latin America). Emblematic of its enlarged role in the world economy, the state’s aggressive efforts to recruit U.S.–based multinational corporations and to attract direct investment from foreign companies reportedly harnessed $41 billion in new investment during the 1990s, including $6.1 billion from foreign companies. Moreover, during the same decade, large numbers of native- and foreign-born migrants flocked to the state to take advantage of the burgeoning employment opportunities. The state’s jobless rate hovered around 4 percent for most of the 1990s. That rate was indicative of a full-employment economy, one that was creating far more jobs than there were people to fill them. Under such tight labor-market conditions, wage rates typically rise as employers compete for available workers. That appears to have happened in North Carolina in the 1990s. Real personal income per capita (in 2001 dollars) grew from $23,600 at the beginning of the decade to $27,935 at the end, an 18 percent increase.

However, the 2000 Census revealed that the incidence of poverty in North Carolina also increased during the 1990s, by 15.5 percent (compared with a 6.8 percent increase nationally), creating
what some have called a “poverty paradox.” How could poverty increase so sharply amid such prosperity?

This article answers that question by analyzing post-1990 changes in the incidence of poverty and describing current manifestations of poverty in North Carolina. In this article, “poverty” is defined as insufficient family income to cover basic needs. The article assesses North Carolina’s contemporary poverty problem on three geographic scales (state, region, and place of residence) and on three demographic dimensions (age, family type, and race or ethnicity), using data compiled by the U.S. Census Bureau. As background, it begins with a brief review of the recent history of the poor in America.

Industry clusters have become increasingly popular as a tool for localities, states, and regions to use in understanding their economies and taking actions to become more competitive. Indeed, industry clusters are becoming a dominant paradigm in economic development. Policy makers around the world are commissioning cluster initiatives and adopting a cluster-based approach to creating economic growth and prosperity.

North Carolina’s economy appears to be undergoing a sea change. In fact, the ship of state seems to have lost its economic moorings. But is this actually the case? This article examines the state’s changing economy and lays out a framework for thinking about economic development policy. It describes traditional economic development policies and their achievements. Then it surveys innovative policies and programs of the past decade. It concludes with a framework for integrating traditional and innovative policies into a matrix for planning and action.

What kinds of capital does a community need to thrive in today's economy, and how can North Carolina communities acquire them? A keen observer of the national scene describes the necessary assets and offers an action plan.

Marshall is the county seat of Madison County, right in the middle of southern Appalachia. Poverty, isolation, and lack of formal education and worldly experiences are harsh realities in sections of this and other North Carolina mountain counties. Television, movies, and cartoons have stereotyped residents of these mountains as “hillbillies,” projecting images that often are derogatory. They expect that audiences and readers will laugh at Lil’ Abner, Snuffy Smith, and the Beverly Hillbillies. Some characteristics of mountain people touch close to the image: independent, isolated, poor. Yet on closer observation the reality is broader and multidimensional. The richness of the history, culture, landscape, and people creates a distinctive warp and woof of social fabric. There is wisdom, pride, sensibility, self-sufficiency, ingenuity, artistry, music, and story here.

North Carolina's policies of the past were not made with a view to dealing with the rapid urban growth that the state is now experiencing. Today's policy makers face difficult challenges in developing diverse strategies to meet the needs of both fast- and slower-growing areas.

A recent study found that North Carolina’s child care industry has a total economic impact of $7.5 billion. That and other study findings reported in this article underscore the importance of viewing child care as a critical component of the state’s economic infrastructure.

Eastern North Carolina’s small business sector bore a disproportionate share of the damage caused by Hurricane Floyd in fall 1999. Together federal and state government mounted a major recovery effort. The state, with the assistance of the Small Business and Technology Development Center, played an unusually aggressive role.

Strategic planning is one of the most frequently discussed topics in the management literature, yet many organizations find it difficult to put into practice. Using navigational tools as a metaphor, this article describes some limitations of strategic planning and suggests why public organizations should consider visioning as an alternative.

An increasing number of voices, including academics, policy makers, and members of the popular press, suggest that an intangible asset called “social capital” is the missing link between poverty and prosperity. Social capital refers to relations among individuals, organizations, communities, and other social units that result in tangible economic benefits such as jobs, and social capital’s advocates claim that these relationships or networks are key to providing greater economic opportunity for residents of impoverished communities.

North Carolina needs new vision and leadership in the public, private, and academic sectors to build a competitive economy in the face of complex economic and social change. Achieving this vision and leadership will require unparalleled collaboration across sectors and a no-holds-barred attitude toward education and business. If the state continues to tolerate the loss of human capital and business opportunities—that is, if it continues tosee itself as a victim—economic decline may become a self-fulfilling prophecy.

This article discusses various indicators of globalization and describes North Carolina’s status on each one. It then discusses the role of one key player, higher education, in mobilizing action.

Situated on a quiet peninsula flanked by the Albemarle and Pamlico sounds in northeastern North Carolina, Tyrrell County once was called Place of the Sweet Bay Tree by local Indians. Today it is home to protected wildlife sanctuaries, fertile farmland—and one of the highest poverty rates in the state. For generations of families, poverty has come to be a devastating, disheartening way of life, permeating nearly every segment of the community and leaving an indelible mark not only on the 23 percent of county residents who live in poverty but on everyone else as well.

A major part of the problem is jobs, or rather, the lack of jobs in a county that still relies heavily on traditional farming, fishing, and forestry trades while the world increasingly becomes more technology driven. With virtually no industry except a seafood processing company in Columbia, nearly 38 percent of Tyrrell County workers commute each day to jobs in neighboring counties. Graduating high school seniors searching for job opportunities often choose to relocate, making it all the more unlikely that potential business investors will find Tyrrell County attractive.

Asheville’s director of downtown development in the 1980s and 1990s joins with other School staff to tell the story of the city’s remarkable transformation and identify general lessons for leading a change initiative.

Advanced industrial countries such as the United States are moving away from producing things—or at least from producing easily made goods, with lower value added—toward producing value from knowledge. What does this mean for postsecondary educational institutions, which undoubtedly are key players for regions striving to succeed in a new economic landscape? How are they responding to a multitude of challenges and opportunities?

What have other states done to promote smart growth? A review of the spectrum of state programs provides a sense of the possibilities in North Carolina.

Although a few innovative management tools may not be authorized under North Carolina law, the smart growth toolbox for local governments is robust. Local citizens and their elected leaders have a diversity of options for influencing the direction and the impact of growth.

According to business economist David Birch, every community loses 7 to 8 percent of its jobs each year from a combination of bankruptcy, death, acquisition, and other causes. About 55 percent of all new jobs arise from expansions of existing businesses. Only 1 percent of net new jobs occur as a result of business relocations. As a result, approximately 44 percent of new jobs are created by start-up companies, usually one-person undertakings that begin with zero or a handful of employees and—if things go well—grow into larger, successful enterprises.

Recent research shows that entrepreneurial activity is strongly associated with overall economic growth in a community or a region. However, the benefits of entrepreneurship are not evenly spread throughout the United States. Compared with urban and suburban areas, rural communities and distressed inner-city neighborhoods are home to fewer and less-successful entrepreneurial ventures.

This article provides advice for local government officials who want to encourage entrepreneurship in their communities.

This article explains that, in addition to helping communities attract external resources, strategic visioning helps build within the community resources that are critical to economic development success. These resources are collectively referred to as “community capacity.”