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#ICICSummit: Professor Porter Points to Harsh Economic Realities, Opportunities
This morning, Harvard Business School Professor and ICIC founder Michael Porter provided a keynote address titled “Key Drivers for Inner City Growth.”
He began with a primer on economic development, and the challenges ahead. One of the key takeaways is the emphasis on inclusive development, ensuring benefit for the whole, which reinforces what the panelists from previous sessions have said. In his definition, part of true economic development and competitiveness is ensuring that people earn a decent, increasing wage over time. In doing so, companies and people, not one or the other, both prosper.
Dr. Porter was frank in his assessment of the current state, noting that this is a “depressing time” for America. Things will not get better quickly, as another recent disappointing jobs report will attest to. He is not alone in making this assessment. About five years after the 2008 crash and Great Recession, there are still structural challenges that remain unmet. Thought leaders like Richard Florida (in his book “The Great Reset”) and former President Bill Clinton have similarly argued that the recovery will take a long time, and is likely to be part of a major economic realignment.
The most stunning fact that Dr. Porter shared is that in the past 20 years, the United States has created no net jobs in industries which are exposed to international competition. This highlights the need to invest in infrastructure, and to ensure that regulation provides for a competitive environment, and that citizens have the skills to be productive. He had harsh words for decision-makers in Washington, who have focused on partisan battles and let the country’s competitive advantage deteriorate.
Despite challenges faced by inner cities – they are overrepresented in their unemployment rate (15%), and are home to a disproportionate concentration of poverty and, in particular, minority poverty – there are also opportunities and matching success stories. Once we acknowledge that inner cities have different needs than the region as a whole, and may not always prosper as the overall region does, we begin to see progress. A focus on inclusive development, and ensuring that economic growth serves those in inner cities who need a hand up, are key.
Dr. Porter notes that, over ICIC's history, it's identified six key levers for inner city growth:
- Pursue and anchor instutition strategy to capture shared value opportunities;
- Invest in the local business environments (e.g., infrastructure, workforce);
- Strengthen existing and emerging clusters;
- Increase recognition, networking and contracting opportunities for inner city companies;
- Connect companies to growth capital; and
- Capacity building, leadership and management education for companies.
When these levers are utilized, inner cities become more competitive. Newark, New Jersey is one of those success stories – outgoing Mayor Cory Booker was recognized by ICIC just last year for his commitment to urban economic development and lifting residents out of poverty. In the greater New York City area, the Bronx and Brooklyn have also seen growth, as have Los Angeles and Long Beach in Southern California.
Porter’s keynote should serve as a wake-up call. While good work is happening locally, and specifically in inner cities, there is a lot of work to do. Structural changes are necessary not just to create overall economic growth, but to ensure that people benefit too, and see their job prospects and quality of life improve.
Blog written by Alex Abboud. Follow Alex on Twitter at @alexabboud
October 24th, 2013