Prospering From Within: Identifying and Nurturing Local Assets

I first met Aaron McKethan when he was a consultant with the e-NC Authority, a quasi state agency in NC focusing on economic development and technology policy. Last summer he led a project to identify and address impediments to economic development that are specific to the counties at the geographic borders of North Carolina and the neighboring states of South Carolina and Virginia. I was impressed with his vision and his leadership.

Recently I came upon an article he wrote, Prospering From Within: Identifying and Nurturing Local AssetsHe writes:

External recruitment of business has been the dominant economic development strategy of the southern U.S. in the postwar era. Political and development leaders have emphasized the state’s low production costs, resulting from low taxes, cheap land and low-cost labor. While the South was successful in establishing a branch plant economy in the past half century, an over-reliance on external recruitment left the region vulnerable to rapid changes in international competition and technology.

Today, the region is experiencing a significant economic transition largely fueled by global outsourcing. Just as firms were initially attracted to the South by relatively low production costs, firms are increasingly re-locating plants and jobs to Asia and Latin America where production is even cheaper. In addition, productivity gains have also contributed to worker displacement in the region. Firms have leveraged new technologies to maintain or increase output without adding new workers by developing a more specialized and productive labor force.

As plants close and old-economy jobs disappear, development and political leaders are experimenting with new strategies to enhance regional competitiveness. While external recruitment strategies continue, and efforts are underway to transition into a more knowledge-based economy, many leaders are increasingly focusing on demand-side initiatives. They are promoting local entrepreneurship, building new markets for products and services, expanding markets for local products that already exist, transforming the local skills base, increasing access of local businesses to new capital and focusing on new business formation.

Ahh, a man after my own heart. You'll appreciate the rest of his insights into the economy of the future.