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Urban Economic Development

Insights and strategies for leaders in urban economic development

For more than 15 years

ICIC has advised cities about cluster-led economic development and growing inner city businesses.

Learn more about ICIC

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Strategies and best practices for growing inner city economies and creating jobs

ICIC has studied inner city economies in 100 U.S. metropolitan areas since 1994 and conducted on-the-ground consulting engagements in 20 inner cities. We have identified a set of strategies and best practices for growing inner city economies and creating jobs:

  • Utilize a cluster-led approach to identify market opportunities and focus business attraction and retention efforts.
  • Promote and leverage anchor institutions as key economic and community drivers.
  • Accelerate inner city business development by improving access to capital, providing business and management education for business owners and connecting businesses to procurement and supply chain networks. 

Cluster-Led Economic Development

A cluster is a group of companies and industries in a geographic area whose activities are interrelated enough to function as an economic “ecosystem.” Transportation and Logistics is an example of an industry cluster. So are Education, Business Services and Healthcare.

Cities that utilize a cluster-led approach to economic development make their clusters the center of business development investment and execution. ICIC has identified a set of initiatives that are effectively employing a cluster-led approach:

  • New York City’s Department of Small Business Services (SBS) utilizes a sector-led strategy to manage its career centers located in the five boroughs of New York City. The centers serve businesses in three target sectors - transportation, healthcare and manufacturing - and are led by experts with ties to the private-sector industries they support.
  • U.S. Economic Development Agency Innovation Clusters is a federally funded effort to promote and execute cluster-led economic development strategies throughout the U.S. The initiative is being supported by the development of a national research center for business clusters and a grant program to support cluster-led initiatives across the country.
  • Boston Back Streets Program is a cluster-led business development and retention program developed to support Boston’s industrial and commercial businesses. The city provides support ranging from solving space and industrial land needs to educating Boston’s industrial firms about the permitting and licensing processes.
  • Opportunity Newark is the comprehensive city-led cluster approach to economic development for Newark. Opportunity Newark has developed and executed corresponding business and workforce development action plans for four target clusters: Transportation, Logistics and Distribution; Health Services; Education and Knowledge Creation; and Entertainment, Arts and Retail.
  • Cluster Mapping Project, developed by the Institute for Strategy and Competitiveness at Harvard Business School and funded by the U.S. Economic Development Adminstration (EDA), provides cluster profiles and performance for various geographic areas.
  • Economic Investment Opportunity Study of Southeast Louisiana This study analyzes the cluster development priorities of Southeast Louisiana post-Katrina and assesses how well the activities of the region’s local capital markets are aligned with the region’s economic development goals. The study provides recommendations on the role that Seedco Financial-Louisiana can play in bridging the gaps that may hinder the region’s growth and cluster development.

Leverage Anchor Institutions

Inner cities are home to more than their share of America’s greatest anchor institutions, universities, medical centers and cultural facilities, which spend billions on goods and services. As engines of local economic growth, anchors play several distinct roles within their communities, including purchaser, workforce developer and community infrastructure builder.

These roles present cities with the opportunity to leverage their anchor institutions as key economic drivers for their communities. ICIC has uncovered a set of papers, initiatives and resources for cities that want to work with their local anchors.

Accelerants of inner city business growth

Business growth is a core driver of urban economic development. Understanding what firms need to grow and thrive in urban communities will ultimately help drive the success of inner city economies. ICIC has identified three accelerants of inner city business growth -- improving access to capital, providing management  and business education for business owners and connecting businesses to procurement and supply chain networks. ICIC has provided a set of key papers and initiatives for economic development practitioners wanting to learn more about each.

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Access to capital

  • Capital Availability in Inner Cities: What Role for Federal Policy,  developed by ICIC, examines capital availability in America's inner cities and the role of federal policy. The paper received the KFS Promising Paper Award for 2011, which is bestowed on the authors of working papers with promising potential for impacting the understanding of entrepreneurship and innovation using the Kauffman Firm Survey (KFS).
  • A History of Emerging Domestic Markets, issued by the Center for Capital Access and Job Formation at the Milken Institute, summarizes the current research on Emerging Domestic Markets (EDM) and offers recommendations on improving EDM capital access.The piece calls for the development of a "data consortium," or database, that leverages existing private and public resources to provide opportunities for improved analysis, policymaking and product development.
  • NEXT American Opportunity, authored by Opportunity Finance Network, a network of private financial intermediaries with over $11 billion invested to date, offers policy recommendations to extend the reach and scale of the following: Community Development Financial Institutions (CDFI) through research-led innovations and increased federal funding; the Community Reinvestment Act (CRA) by including all segments of the financial industry; New Market Tax Credit by making it permanent. The piece also calls for the development of a federal capital access program (CAP) for a loan loss reserve for small businesses.
  • Patterns of Financing: A Comparison between White- and African-American Young Firms, released by the Kauffman Foundation as part of a research series utilizing the Kauffman Firm Survey, provides a look at how African-American firms access capital markets in their early stages and shows the disparities in the level of access by race. The report recommends a further look at the differences in capital access among minority-owned businesses in order to improve business growth and performance.
  • Capital and Job Creation: Driving Investment into America's Inner Cities,  developed by ICIC and Bank of America, examines the impact of the Inner City Capital Connections program, designed to match inner city businesses with capital providers. Since its inception, participating companies have raised more than $372 million in capital. Mayors and business and economic development officials can nominate companies for the program.

Management education

  • Inner City 100: A Ten-Year Perspective, written by ICIC, examines the characteristics of Inner City 100 firms and the factors influencing their successes. The report notes that firms with CEOs that have higher education levels and exposure to business mentors and examples have companies with higher annual revenues.
  • Interise is a management education program for urban entrepreneurs. City officials and economic development practioners can nominate growing small businesses for the program and read more about the impact and results from the program's annual report.
  • Goldman Sachs' 10,000 Small Businesses Initiative, offers education, mentoring, technical assistance and capital access to underserved businesses and their CEOs through community colleges and community development financial institutions. In select cities across the country, economic development officials and business development professionals can nominate companies for the program.

Access to networks, supply chains and procurement

As a leading authority on urban economies, ICIC advises cities and anchor institutions how they can leverage one another's resources to spark economic development and create local jobs. Read more about ICIC's advising services.

CEO Insights

Yerba Buena Engineering & Construction, San Francisco, CA

Miguel Galarza, CEO, Yerba Buena Engineering & Construction

ICIC Advises Anchor Institutions

As a leading authority on urban economies, ICIC advises anchor institutions on how they create a shared value with their local communities.

Read more about ICIC's advising services.

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