A Collaborative Approach to Urban Economic Development

After decades of declining economic conditions and a mass population exodus from its urban center, St. Louis responded by forming a regional economic development system. Developed in early 2016, InveSTL is a unique collaboration among local community development organizations that aims to provide a coordinated, regional approach to fostering economic revitalization investment from public, private, and philanthropic partners. Like St. Louis, many American cities and their environs suffer from unsuccessful, uncoordinated, and decentralized efforts to promote economic development. Collaborative, region-wide approaches, like InveSTL, may offer an ideal solution to these problems.

The concept of regional economic development partnerships (REDPs) is centered on the notion that metropolitan areas require collaboration across local government, nonprofits, and businesses in order to successfully stimulate large-scale economic growth. By working with local partners, larger regions can benefit from a consistent economic development strategy, eliminate duplicative service provision, and enhance the exchange of relevant information within communities. Historically, cities have taken an independent approach to economic development, competing with their neighbors to attract businesses to their specific localities. However, larger regions can benefit from one city’s economic development efforts, as the entire metropolitan area draws from the same talent pool, faces the same tax regulations, and utilizes similar infrastructure.

In order to determine whether a collaborative or independent development approach more optimally stimulates urban economies, a recent study in the Journal of Urban Affairs evaluates the effectiveness of the REDP model. According to data collected in a previous study, 191 of the 244 metropolitan areas in the United States have REDPs. The authors evaluate quantitative measures of economic development, such as per capita income levels, the number of businesses, and employment rates over a 30-year period to determine how REDPs impacted economic outcomes.

In general, metropolitan areas with REDPs were more likely to have larger populations and higher levels of expenditures at the state level. However, a city’s unique make-up largely impacted the effectiveness of REDPs. Most notably, metros with highly fragmented and unorganized local governing bodies most benefitted from the organizational efforts of REDPs by way of increased business growth, income per capita, and decreased rates of unemployment.

Put simply, the integration of smaller, more decentralized economic development efforts into a larger, coordinated effort achieved significant economies of scale for fragmented metropolitan areas by promoting economic development on a larger scale. Furthermore, REDPs provide an ideal platform to ensure that economic issues, such as joblessness and business loss, do not go unaddressed.

While REDPs offer efficiency in American metropolitan areas with highly decentralized local governments, this collaborative approach will not solve all of the urban economic development issues such regions face. By looking at other measures of economic development in a region, such as consumption per capita and population growth, further research could add perspective on the effectiveness of the REDP model. Evaluating the success of REDPs in terms of the key economic development measures in states with diverse industries and geographic locations could also be useful. Overall, REDPs have the most success in stimulating local economic development when they receive support from all levels of government and relevant community development organizations.

Article source: Chen, Ssu-Hsien, Feiock, Richard, and Hsieh, Jun Yi. “Regional Partnerships and Metropolitan Economic Development.” Journal of Urban Affairs, 2016.

Feature photo: cc/(HIgs2006, photo ID: 78841095, from iStock by Getty Images)