Tuesday, August 03, 2010

Talent Migration Theory

Any regional talent management policy is a shot in the dark. That's the lesson I learned reading "Rethinking Human Capital, Creativity and Urban Growth". Why people move where they do is still cloaked in mystery:

Many of the ideas about amenities, consumer cities, entertainment machines, and the creative class that we have outlined above are being increasingly invoked to justify certain types of urban policies and to de-emphasize others (see, for example, Florida, 2003, 2004, 2005; Glaeser, 2005a). All of them explicitly claim that strategies to provide amenities will raise rates of growth and per capita incomes. Glaeser (2005a) specifically recommends that policy-makers focus on investments in K-12 education, low tax rates, crime reduction and new housing development as ways of luring the highly skilled into particular cities; Florida advocates building ‘diverse, tolerant communities’; and Clark stresses the importance of facilities that provide amusement and distraction. All of these things may be worthwhile in and of themselves, but for all the reasons laid out above, they are unlikely to have purely autonomous effects on urban growth or per capita income.

Our analysis has identified three principal deficiencies of these theories that render them particularly suspect as foundations for policy formulation. First, they fail to pinpoint the basic sources of urban dynamism, which lie in the selective geographical matching of productive resources, skills and institutions of coordination. Second, and concomitantly, they mistakenly identify amenities as significant drivers of urban growth. Third, they are silent on the critical issue of the differentiated path dependent trajectories of urban systems, and so they radically depreciate the intertwined limitations (through localized lock in) and opportunities (through collective readjustment of accumulated assets) that policy-makers must take into account in seeking to guide future developments. In a nutshell, recourse to amenities-based theories as a guiding principle for urban growth policy is ill-advised because these theories manifestly fail to address the basic issues of building, sustaining and transforming regional ensembles of production activities and their attendant local labor markets. We have written at length elsewhere about the kinds of policy measures that we believe can contribute significantly to these goals (Storper and Scott, 1995). Our overall approach to these issues revolves around the central need to shore up agglomeration economies in both the static and dynamic sense, which entails, in turn, collective action to internalize externalities, to build effective norms of economic interdependence, and to avoid adverse path selection. Thus, detailed attention must be paid to actual and potential failures of the critical machinery of the urban production system as it is embodied above all in inter-firm networks, local labor markets and regional innovation processes. There can be no boilerplate approaches to the resolution of these failures, and each case needs to be treated with all due respect to its historical, geographical and sectoral specificity. Thus, policies directed to the upgrading of local productive forces need to be framed in relation to where we start in regard to productive capabilities, the availability of relevant factor supplies, and institutional arrangements in relation to wider economic conditions.

Buyer beware. Dangling urban amenities in front of Generation Y won't work. In fact, it may do harm to the regional economy. I now understand why Sean Safford insisted that we stop Richard Florida.

Playing critic is easy. If not the 3Ts, then what is a better model of talent migration? I would start with the unit of analysis. State level data is useless for the task. There's too much variance within states, let alone a collection of states (e.g. Sun Belt). This is the heart of the Brookings effort to better enable metropolitan areas to craft policy. It is also the driving force behind Peter Taylor's Globalization and World Cities project. Thanks to both, we have the data for a finer-grained analysis. I'm tired of all the nonsense concerning state tax policy and migration. It's nothing more than libertarian propaganda.

The fortunes of Rust Belt cities in the Sun Belt served as the catalyst for my own talent migration model. The idea that this region somehow did things better didn't wash. A better climate and a more business friendly state didn't do much good for cities with substantial industrial legacy costs. Talent seemed to move from brownfields to greenfields.

Urban policy in China seems to confirm my hypothesis. From a Reuters special report published today:

In the first phase of urbanisation, from the start of the country's post-Mao reform era in 1978 to the present, rural citizens began migrating to booming coastal towns from Tianjin in the north to Shenzhen in the south. About 140 million made the trek last year.

Few of these migrants stay on. The hukou system of residency registration deprives them of benefits, such as public education, away from their home villages. Only 19 percent of rural migrants had settled permanently in cities as of 2004, according to the National Bureau of Statistics.

In the new phase of urbanisation, the government's strategy is not to move farmers to big coastal cities, but to draw them to new urban areas in the hinterland. Its clearest expression came in the Communist Party's No. 1 Document in January, a policy blueprint for 2010. In it, China vowed to reform the hukou system by giving rural citizens the right to the same services as urbanites -- but only if they move to small cities within their own province.

The above reminds me of a time-compressed US domestic migration story. Rural South streams to Industrial North, fueling the rise of American economic might. As the Rust Belt crumbles under the weight of corruption and labor costs, the Sun Belt booms.

Now the bloom is off of the Sun Belt. Texas replaces California as the land of opportunity. New migration patterns emerge.

What does the brownfield-to-greenfield model mean for regional talent management policy? I recommend offering greenfield opportunities and trying to mitigate legacy costs. It's the urban frontier experience that is attractive to Generation Y. Many Rust Belt cities are rich with such assets. The resistance stems from parochial politics, something akin to Florida's tolerance variable. Cleveland is the poster child for this problem:

The voice of business in this region is muddled and, in the case of the Greater Cleveland Partnership, too often hijacked by narrow, Cleveland-centric real estate interests.

Ed Morrison's comment reminds me of Safford's "Why the Garden Club Couldn't Save Youngstown". The social network for economic development is too small and too tightly wound. The PBLN is an example of a greenfield policy solution to improve regional prosperity. Quite simply, it brings new voices to the table and generates more buy-in from the community. Also, I think it could help attract fresh blood to the area.

Convincing outsiders that there are greenfields in the Rust Belt is another matter. The vehicle for this campaign is Rust Belt Chic, the national/global marketing of urban frontiers. This is Youngstown's preferred brand strategy. It is being used to call home talented members of the diaspora. The Buffalo Expatriate Network (BEN) is another example of the application of the model and that the approach can work elsewhere:

"We're eager to roll up our sleeves and get some things done," said E. Frits Abell, 38, the founder of the Buffalo Expat Network, who moved away after high school.

Some group officers have visited Buffalo to introduce themselves to community organizers and to find out where to focus their efforts, even as they vowed to remain apolitical.

They plan future events in the area, and they hope eventually to take on preservation and business-development projects, encouraging investment and return trips to their hometown.

As far as I can ascertain, BEN has been able to insert its voice into the Buffalo economic redevelopment conversation. That's a great way to encourage talent to return. Give them a stake in the community, a sandbox where they can apply their experience and hometown passion. Unfortunately, that place is usually reserved for recent graduates so they don't leave in the first place.

Greenfields, where the grass is always greener.

1 comment:

Frits001 said...

Jim: many thanks for the mention. BEN looks forward to contributing to the dialogue on "Rust Belt Chic" and otherwise. A fantastic blog you have here. Frits