Urban Economic Development
Insights and strategies for leaders in urban economic development
Creating Equity Does Regionalism Have an Answer for Urban Poverty? Can It?
Broad regional approaches to economic development tend to be ineffective when it comes to addressing urban poverty. With this in mind, ICIC issued a research paper examining the impact of regional approaches on distressed urban communities. ICIC offers recommendations on how regional policies can most effectively incorporate the needs and assets associated with inner cities.
The Importance of Inner City Job Creation
- Over the past decade, poverty grew more quickly in already-distressed urban neighborhoods than in other parts of the metro areas.
- Inner cities are home to 20% of the national poverty and nearly one-third of minority poverty
- Job creation in the distressed portions of the 100 largest cities has significantly trailed that of the rest of their regions.
- Inner city residents are frequently unable to access jobs in the rest of the region. Creating 100 new jobs for inner city residents requires 450 jobs in the inner city, 850 jobs in the rest of the central city and 1,450 jobs in the rest of the region.
The Relationship Between Inner City and Regional Economies
- Inner city economic growth is largely independent of regional economic growth. Regional growth explains only 20% of the change in inner city growth, and this is likely due to shared characteristics (such as weather).
- Inner cities have different growth drivers and therefore should be treated as their own economic and policy units.
- Regions matter to cities; inner cities rarely grow in declining regions. But regional growth is not enough to address urban poverty.
- Regions of the 21st century will require inner city assets. Inner city population density supports regional retail, personal service and other investment. Inner city employment density facilitates communication, knowledge spillovers and the innovation that drives U.S. competitiveness. High concentrations of key “eds and meds” and transportation infrastructure assets in the inner city drive regional growth.
Factors Affecting Inner City, Central City and Regional Growth
- Inner city job creation is lower than that of the rest of the region for several reasons including weak linkages between regional and inner city firms, insufficient access to capital, a shortage of suitable buildings and sites and poor infrastructure.
- While population growth is positively correlated with central city and regional economic growth, there is no such relationship with inner city economic growth. Simply attracting people to a certain area is insufficient to increase the job base in inner cities.
- When adding regional growth to our model of inner city growth, the impact on the model’s predictive power is negligible, while adding inner city growth to the regional model causes it to improve slightly. Even the possibility that inner city growth affects regional growth as much as, if not more than, regional growth influences inner city growth is stunning given the size of the economies of each.
Can Regional Structures Deliver Equity?
- In the absence of specific commitments to distressed urban areas, regionalism will deliver sub-par performance in terms of both growth and equity.
- Traditional regional approaches systematically undervalue the economic assets of cities and specifically tend to overlook the assets and opportunities in distressed urban neighborhoods.
- There are currently no political structures in place to transmit the gains of regional economic growth equitably to inner cities. In fact, there seem to be inherent political policy biases against low-income urban areas.
The Future of Regional Governance: What’s Possible and What’s Likely?
- Effective strategies will recognize and build upon complementarity between inner cities and the rest of thier region.
- Regional governing bodies would be well-served to focus on inclusion, with an emphasis on low-income communities and historically underrepresented groups.
- At times, there is a general mismatch between the interests of inner city residents and suburban residents, which can hinder regional efforts.
A More Equitable Regionalism: The Example of Cluster Policy
- Capital strategies can be used to encourage inclusive growth. There are several ways to do this, including locating financial institutions in under-served areas, linking capital strategies to cluster strategies and revisiting information gaps when capital and service providers claim it is difficult to find credit-worthy firms.
- Efforts led by economic actors and their coalitions to strengthen clusters can help to foster relationships across social and political barriers.
Cluster policy, because it addresses economic organization at the micro level, has the potential to strengthen relationships between inner city and regional firms.