Tuesday, July 21, 2009

Loco Localism

Nativism fuels poverty. Economic crisis makes parochialism attractive. And the more we turtle, the worse it gets. In Ireland:

The McCarthy Report, also known as An Bord Snip, has questioned the benefits of relying on the strategy of spending on research and development as an engine to drive economic growth. One of the reasons it suggests cutting back on R&D spending is the prospect of newly-minted PhDs emigrating.

The policy summary is to reduce funding to programs that exacerbate brain drain. Since the local labor market cannot absorb all the PhDs, the response is to reduce the number minted. There's no sense in supporting research and development that benefits somewhere else.

Aaron Renn on "Race and the City" in the Rust Belt:

It starts with education. There is nothing more important to success in the modern economy than a quality education. I am reminded of research Richard Longworth cited in "Caught in the Middle" about how even in economically ravaged Michigan, most white people still don't see education as critical. The Midwest has never put a priority on education, even for its white majority. Hence its educational attainment levels. Imagine then the priority that has been put on urban districts with majority black populations? I think we are all familiar with the state of our inner city schools. I won't claim this is a Midwest specific problem, or that the school system is entirely to blame, but clearly education is the absolute first step on the road to success for anyone, black or white.

Why should any community invest in education if it benefits somewhere else? In a nutshell, that's the folly of localism. That's the mindset that created the Rust Belt.


Stephen Gross said...

The tricky thing--it seems to me--is that in the *absence* of additional economic development efforts, a heavy focus on R&D can indeed lead to long term brain drain.

That is, if your only economic development strategy is to fund education & R&D, then you may very well guarantee that your graduates will depart.

Rather, you need to couple such education & R&D efforts with corresponding business creation, attraction, and retention efforts.

Jim Russell said...

Workforce and economic development go hand-in-hand. But the local bias tends to plague both types of initiatives. The problem is attempting to do everything "in house". Either the region imports talent or it fails. Exporting talent is not the issue, though even that could be done more strategically.

Stephen Gross said...

All of which points us towards a multi-pronged approach to economic development:

* Develop in-house talent by improving educational opportunities (note that this includes scholarships to sending in-house talent abroad!)
* Bring in talent by encouraging in-migration
* Develop business startups by making it easy, providing good access to loans & business incubators, etc.
* Attract existing business to relocate in-house by offering incentives, better laborforce, etc.
* Retain existing business by being sensitive to changing business climate & challenges