Erie Economic Development

Jim Berlin, part of the GlobalErie blog team, once posted about a project called "Highway H2O:"

Highway H20 is a wonderful “back to the future” effort to alleviate the growing congestion/backlog in our ocean port cities, on our highways, bridges and rails, and to utilize a largely underutilized resource (the Great Lakes and the St. Lawrence Seaway) to move containers in a more environmentally-friendly manner.

This would not only take trucks off of our highways, spew less gas into the environment and save fuel, but it would create jobs and viability by making the inland port cities such as Montreal, Toronto, Hamilton Buffalo, Erie, Cleveland, Toledo, Detroit, Milwaukee, Chicago, Duluth more active once again.

Heeding John Austin's suggestion, Toledo is exploring its own transportation assets. Is Toledo's gain Erie's loss? Toledo's competition is, according to the article, Columbus and North Baltimore (south of Toledo on I-75). I would guess that the development of the port city (i.e. Toledo) would benefit other port cities such as Erie. While the success of inland transportation hubs might marginalize the advantage of sitting on one of the Great Lakes. Regardless, what is going on in Toledo should concern businesses based in Erie.

Highway H2O is just part of Erie's economic development portfolio. As the Great Lakes go green, America's North Coast should see a boost in tourism:

When Kevin Molloy gazes out the windows of the $110 million glass-encased Erie convention center he doesn't see the vacant, decaying buildings along the lake's shores and downtown.

Instead, the center's general manager envisions business travelers dressed down and crowding the city's seven miles of pristine beaches, sailboat-packed marinas and a glittering casino that are still usually patronized by a more local set. He imagines those businessmen and women returning with their families, bringing their children to frolic in an indoor water park and to shop at local stores.

His dreams are shared by Erie's mayor, a new tourism bureau, hotel owners and investors, all of whom are determined to turn this once prosperous industrial northwestern Pennsylvania city into a tourist destination that will rival Niagara Falls just two hours away.

Instead of getting a larger share of the regional tourist pie, Erie should try to help increase tourism to all of the lower Great Lakes. What concerns me is the zero-sum game attitude: Rust Belt city versus Rust Belt city. The above Toledo story is a good example of the problem. John Austin, promoter of Great Lakes collaboration, recognizes an opportunity for Toledo. But the competition for the development project is other cities within the same mega-region (actually, within the same state). Such an initiative is, ultimately, counterproductive. If Erie is competing with Toledo or Cleveland or Buffalo, then we all lose.

Corridors of Opportunity

A bunch of items in the blog hopper after spending the past week exploring immigration issues. The Columburgh Corridor is making news again and threatens to overtake Cleveburgh in terms of realized economic development:

There was praise for Edward Florak, outgoing interim director of Progress Alliance, and welcoming comments for new executive director Ed Looman during Tuesday’s meeting of the Community Improvement Corp. board of trustees.

Looman, a native of Steubenville, had a long career in the newspaper industry as well as a stint in the Growth Partnership for Ashtabula County, which performs a similar economic development function in Northeastern Ohio as Progress Alliance.

Looman told the board he’s set to work on developing a Jefferson County resource guide to have it ready for the June 12 Corridors of Opportunity event being held at St. Florian Hall by the Pittsburgh Business Times. The event will see potentially hundreds of real estate professionals, developers and site selection persons from Western Pennsylvania to hear presentations on what’s available for development and growth in Jefferson County.

Actually, Pittsburgh's western frontier is framed as the last direction for the region to explore. Cranberry, Monroeville, Southpointe, and now Steubenville? Connecting to innovation in Columbus strikes me as a good idea, with Cleveland completing the economic corridor triangle.

Within this triangle are strong links to LA entertainment, NYC creativity, and DC talent. There are ample water and energy resources available, not to mention the excess of human capital (much more than the regional economy can currently absorb). Yet interstate collaboration is easier said than done. I figure that the Postindustrial Heartland will continue to forge ahead with projects such as the I-Q Corridor, which are much more manageable than a Great Lakes Union.

Urban Economic Corridors

Richard Longworth figures prominently in this opinion piece about promoting the I-Q Corridor:

Only 400 or so miles separate Chicago from the Twin Cities of Minnesota, with Wisconsin sandwiched in between along the I-90 and I-94 highways. Along that path can be found some of the world's leading research universities, federal laboratories, major tech companies, an educated workforce and ample financial capital. As branded by the Wisconsin Technology Council, the “I” stands for interstate, innovation, intellectual property and investment, and the “Q” for quality of life, education, workforce and more. It's a tool that could help people outside the Midwest, in the United States or abroad, recognize the wealth of resources in the Upper Midwest. There are similar corridor efforts in other parts of the Midwest.

The author goes on to list a few existing instances of interstate cooperation between Illinois, Wisconsin and Minnesota. But the takeaway is that not nearly enough is being done and that the I-Q Corridor is a large reserve of untapped resources. What this tells me is that top-down connectivity won't work. Novel regional linkages must be more organic, bottom-up.

I contend this is where Richard Longworth and John Austin get it wrong. Unleashing innovation is not a function of a mega-regional think tank or an intergovernmental organization. The traditional political geography is now so dysfunctional as to create unique spaces of opportunity for entrepreneurs of all kinds to thrive. The fiction of Cleveburgh is a citizen initiative and the groundwork for this corridor is already in place.

Regional Immigration Policy

Buffalo Ideas responds to the Cleveland EB-5 visa initiative:

[Vivek] Wadhwa is encouraging Cleveland to put together a marketing pitch to immigrants located in tech heavy areas like the Silicon Valley and Boston to encourage them to take advantage of low cost of living, without 2 hour commutes, access to universities and quality labor, incubator space and venture capital combined with the benefit of obtaining a green card.

The effort needs a champion, whose sole job is to drive recruitment and line up the necessary resources. Imagine the impact of subsidizing an effort to attract the energy and talents of individual entrepreneurs instead of spending millions as we do now on pursuing an individual company.

I like the idea of pursuing this approach in Buffalo, what do you think?

I'll tell you what I think. Western New York should get together with Western Pennsylvania, Eastern Ohio, and Northern West Virginia in crafting a comprehensive human capital attraction strategy that includes high skilled immigrants. Congress is considering a fast track Green Card program and the US Representatives (e.g. Tim Ryan) from the above areas should be involved in this legislation.

The benefits of high skilled immigrants to a regional economy are well documented. But you don't have to take my word for it. The American Immigration Law Foundation, among other policy analysts, has studied the issue. Your US Representative can take action today to help your shrinking city. I would think that legislation improving mega-regional job creation would interest every Rust Belt citizen.

EB-5 Cleveburgh

Pushing immigration reform through Congress is a daunting prospect. Concerning Rust Belt economic development, exploiting existing programs can still yield positive results. Surprisingly, Cleveland is emerging as a leading example of innovative approaches to attracting human capital:

[Vivek] Wadhwa's research indicates that upwards of 1 million highly educated and skilled immigrants are in the United States legally on visas that they hope will lead to green cards and permanent resident status. But because the federal government issues so few green cards each year, many of these people face a decade or more in legal limbo; they can't even change jobs lest they go to the back of the line.

As a result, a lot of these immigrants are becoming frustrated and talking of returning home to places like India or China, where opportunities are exponentially greater than when they left. If they do, many will take back top-shelf educations, business know-how and high-tech patents developed while here. Not to mention a substantial amount of money.

"The U.S. is headed for a massive, reverse brain drain," Wadhwa warns.

But there is a legal way to jump the green card line. The EB-5, or investor visa, program offers foreign nationals a chance to get provisional green cards for themselves and their immediate family members if they invest $500,000 in a high-unemployment area. If those investments create at least 10 jobs for American workers, the green cards become permanent. Under the law, 10,000 green cards a year are available through this program - yet in Fiscal 2007, the agency that administers the program awarded only 803 conditional green cards.

Beginning with a meeting Aggarwahl hosted in Akron during the winter, Wadhwa and the local network have been considering a marketing pitch to immigrants in techheavy areas such as California’s Silicon Valley and metro Boston that would go something like this: Invest in Northeast Ohio. Join a tech scene that’s beginning to attract serious money from venture capitalists and offers access to major universities and first-tier research centers. Tap an array of services, including BioEnterprise and JumpStart, designed to help startups grow to scale. Enjoy an enviable quality of life at a fraction of what you’d pay on either coast. Put your family on the priceless road to American citizenship.

Pittsburgh (I recall seeing the city as one of the listed "regional centers" eligible for the visa program) could do something similar. The State of Vermont is already benefiting. I would think that the Mayor of Braddock (John Fetterman) would be interested. Does Youngstown qualify?

Currently missing from the Cleveland equation is a "champion" dedicated to taking full advantage of the EB-5 visa incentive. This kind of human capital management is the frontier of immigration policy and Rust Belt cities are just beginning to scramble in order to catch up with the geography of talent migration. But I'm wary of the parochial attitudes prevalent in the mega-region. I suggest a Cleveburgh collaboration, an office minding the issues of migration weighing on economic development throughout the corridor.

Immigrant Network Economy

Say Richard Herman and the Great Lakes cohort convince Congress to create a Rust Belt High Skilled Immigration Zone. Then what? One problem facing the Postindustrial Heartland is the abundance of highly risk averse residents. Not only is there a lack of entrepreneurs, venture capital is still notoriously conservative. (Might Youngstown emerge as a notable exception to the rule?) Enter The Indus Entrepreneurs (TiE), a networking group of India-born international migrants:

TiE quickly became the one-stop source for Indo-Americans who wanted to launch a start-up, but were repeatedly turned away from Sand Hill Road. In the early 1980s, Kanwal Rekhi cracked through this resistance when he received funding for his start-up, Excelan, a computer networking company, which went public and eventually merged with Novell.

"They made over 100 times their investment," said Rekhi, a TiE co-founder. "We produced over 100 millionaires."

Nonetheless, Indians in the valley still struggled to get funding well into the late 1990s.

"When I'd send them to VCs, they'd all get turned down. They were seen as people who could design and write software," recalled Rekhi. "But to run a company and manage people - there was no history of that."

Venture capital used to be tight in Silicon Valley as well, but TiE managed to loosen the purse strings. TiE already has chapters in Pittsburgh, Detroit, and Chicago. Might this group be able to break open Rust Belt banks as they did a decade ago in the Bay Area?

Vivek Wadhwa told the City Club of Cleveland to unleash immigrant entrepreneurs in Northeast Ohio. The carrot to attract these innovation dynamos is a Green Card. Byzantine immigration regulations are a significant drag on the American knowledge economy and Indians are lined up for 5-10 years seeking permanent residency. This legal limbo is not conducive to a start-up, but the United States is still dragging its feet in crafting a better economic immigration policy. The European Union is rushing in to fill the void.

What all of the above spells is a tremendous economic opportunity (e.g. Fast Track Green Cards) for shrinking cities, which I will detail tomorrow.

Globalization Illinois

Interrupting the scheduled blog post about Rust Belt immigration, Richard Longworth spoke at the University of Illinois at Springfield and there is video of his talk. When I find some time to watch it, I'll provide some commentary on what he said.

Edit: I watched the video, which is very short and offers just a few sound bytes from Dick's talk. The clip does capture his overall message. The Midwest is failing to deal with globalization and something has to change.

Economic Immigration

Yesterday, I wrote about the coming battle royale between the United States and the European Union over talent. I want to make two points of clarification concerning that post. First, while nation-states make and enforce immigration policy, sub-national entities such as world cities are trying to wrest some control over the flows of human capital. The economic opportunities that proximity affords make certain urban regions the draw, not nation-states. The scales of immigration policy and economic development are at odds.

Second, Rust Belt cities haven't turned a blind eye towards immigration. Managing talent assets is relatively new to the urban policy agenda, but mitigating brain drain (in terms of out-migration) is dominating the discourse. However, I'm beginning to notice a shift in the debate about H-1B visa reform. A recent article in the Pittsburgh Post-Gazette is a good example of a regional-scale conversation about national immigration policy:

Carnegie Mellon is at ground zero in the H-1B debate. Nearly 25 percent of its students come from other countries -- primarily India, China and South Korea -- and at the advanced-degree level, 40 percent to 45 percent of master's students and nearly 65 percent of Ph.D. students are foreign-born, said Lisa Krieg, director of the school's Office of International Education.

This term, Ms. Krieg's office surveyed 137 graduating international students, and found that a majority had "a very high or high level of anxiety" about their visa status. Of the 68 who had received job offers by early April, more than a third were told by employers that they either would have to work for the firm outside the United States until visa issues were resolved, or would not get the offer at all until a visa was obtained.

While the number of international students winning jobs undoubtedly has improved in the last six weeks, said Paul Fowler, director of the school's Career Center, the visa restrictions are still a major concern.

Putting aside the intriguing tension between the needs of CMU graduates and the City of Pittsburgh, the region has a stake in any kind of immigration reform. I've labeled this problem the "Mobility Paradox." As regions invest in local human capital, the likelihood of more of the population leaving in search of opportunity increases. As education increases, geographic mobility increases. This migration dynamic (education as a push factor) emphasizes the importance of attracting new people to the region. For Pittsburgh, universities such as CMU are vital engines of in-migration (just as they are a powerful force for out-migration). The current H-1B visa program curtails Pittsburgh's ability to reap the talent rewards from CMU and the University of Pittsburgh.

If you will, US immigration policy is partly responsible for shrinking cities and the debt burden they typically shoulder.

Green Card, Blue Card

Over the past week, I've been collecting articles on immigration, the theme for this week's series of blog posts. I'll start off framing the debate. Raghav Singh, partner at The A-List in Minneapolis, looks at "The New War for Talent" between the United States and Europe (along with other countries starved for human capital):

Currently, 85% of global unskilled labor goes to the European Union and only 5% to the United States. In contrast, 55% of qualified immigrants head for the United States and only 5% to Europe. With the Blue Card, the EU hopes to reduce the imbalance.

The EU and other countries may well succeed because their criteria for handing out permanent residency permits and work visas are much more liberal than those in the U.S., and the procedures will be simpler. Some allow employers to hand out residency permits along with offer letters.

In the EU, for jobs where a citizen is not available, an immigrant would only need to show a degree and three years of experience. Recognizing the need to attract young talent to Europe, immigrants under age 30 would have even easier requirements in qualifying for Blue Card status.

Demographically speaking, Europe is already where the United States is heading: An aging population and a shortage of young, skilled workers. A preview of the looming crisis exists in shrinking cities such as Pittsburgh. Regardless, US immigration policy is falling behind the rest of the world.

Rust Belt cities should be leading the charge to implement an economic strategy for immigration. But Richard Herman's suggestion for a Rust Belt High Skill Immigration Zone has yet to capture the imagination of the voters. I have a theory that might explain the apathy. The popular perception of the problem in the Postindustrial Heartland is that all the young talent is still leaving the region in huge numbers. The hope is to solve local problems with local people. Therefore, most new policies are framed in terms of retaining residents, not attracting new ones. The irony is that one of the glaring gaps in US immigration policy is the lack of a coherent approach to keeping well-educated immigrants in the United States after they graduate from American universities. In the one case when retaining talent might actually work, citizens and politicians alike are strangely silent.

Our inertia will be a boon to Europe's economy.

Interurban Economics

Contrast Youngstown with Allentown. The economic histories of the two cities are similar. However, Allentown is now thriving and Youngstown is still struggling to make the postindustrial turn. What's the difference? A Youngstown Vindicator article offers up the proximity rationale:

Youngstown, like Allentown, is close in proximity to major cities. “But unlike Philadelphia and D.C., Cleveland and Pittsburgh are also [depressed] rust belt cities,” [Bill Lawson, the Mahoning Valley Historical Society’s executive director,] says. “They just don’t have the economic power to influence Youngstown.”

I don't entirely agree with Mr. Lawson's assessment, but I understand his point. There isn't enough economic development in either Cleveland or Pittsburgh to spillover into the Mahoning Valley. I think this shortcoming highlights the need for inter-regional cooperation. If Cleveburgh cities could act in concert, instead of competing, then Youngstown could make the economic transition more quickly.

Youngstown State University (YSU) is the keystone to economic connectivity between Cleveland and Pittsburgh:

YSU is constantly looking for ways to offer added value to products made by local manufacturers, he said, pointing to ties with the local aluminum extrusion business, one of the largest in the country, as an example.

The university is also looking to step into the “tech belt” between Pittsburgh and Cleveland, a goal being pushed by U.S. Rep. Tim Ryan of Niles, D-17th, Humphries said.

YSU opened its College of Science, Technology, Engineering and Mathematics last fall, developing the STEM program as a way to address the future economic well-being of the region, state and nation. School officials said at the time that it was important to align academic programs to address those growing fields.

If the fortunes do indeed flip for the Cleveburgh Corridor, the Allentown lesson teaches us that cities such as Johnstown, Erie, and Buffalo would benefit. And what NYC and Philadelphia are doing for Rust Belt cities in Eastern Pennsylvania, Chicago is not doing for Rust Belt cities in Eastern Ohio. In fact, I suspect that Washington, DC asserts a greater positive influence. I recommend splitting the Great Lakes Union into two mega-regions: Upper Great Lakes and Lower Great Lakes. I believe Cleveburgh could be the center of the Lower Great Lakes Economic Initiative. Chicago is the obvious center for the Upper Great Lakes Economic Initiative. But that's merely my Cleveburgh-centric perspective.