Michael Hicks is is the George and Frances Ball Distinguished Professor of Economics and the director of the Center for Business and Economic Research at Ball State. His column appears in Indiana newspapers.
This week, the state is expected to announce the communities who will receive funding in the first round of the Regional Cities Initiative. I have already discussed the individual plans, but now would like to lay out the larger context of the Regional Cities Initiative, what it is and is not, and why it is important to Indiana.
First, I want to dispel the notion that the regional economic development plans use traditional central planning. If that were true, I would wish to be the first to speak against them. Regional economic development plans of the type proposed in the Regional Cities Initiative are primarily priority lists drawn from the expressed interests of voters. What is striking in these plans is that most of the things listed are simply what successful Hoosier cities did a century ago to attract people into their communities.
Second, the regional nature of the effort is important. Working within regions is critical because we live in a world of scarce resources and household location decisions are heavily influenced by regional variety. It is not important that every small community have every asset, for they surely cannot. What does matter is that every region have a variety of different amenities.
Moreover, not every place has the same strengths and weaknesses. So getting together to talk through them should help city leaders discern priorities that would help them and their neighbors. The truth of this observation is best proven by the opposition to these efforts. From what I can tell, most resistance to regional participation was motivated by the desire to avoid being associated with poorer, less successful cities nearby. And that leads me to my third point.
The Regional Cities Initiative is a significant departure from traditional local economic development policies of marketing and business attraction. This should be welcomed because those policies have woefully and almost universally failed Indiana communities and families. Since at least the 1980s, Indiana has fruitlessly chased success by attempting to lure the next factory by commoditizing its communities and workers.
So called ‘investments’ in speculative shell buildings and heavily incentivized businesses have been the siren song of many, though not all, local economic developers for far too long. It isn’t just that policies failed to deliver prosperity. Rather in many places they made the economy worse by diverting scarce resources away from more critical needs; like schools, parks and downtowns.
Places that have focused on attracting people have fared well; think Columbus, Fishers, Kokomo, Batesville and Ft. Wayne. The prospects for all these places are good and improving. The Regional Cities Initiative will help tell the story of Hoosier cities that are not only good places to do business but also good places to make a life.
My only worry is that cities will look to this first round of funding as critical to their long-term success. In reality, the only cities that lose are those that don't continue at the hard business of making themselves places people want to move to and grow old in.