Tuesday, February 02, 2010

Case For Talent Attraction

Even if your region could retain all of its graduates, that would still put your hometown at an economic disadvantage. Consultants travelling around the country telling towns, cities and even states how to keep natives closer to home are offering bad advice. Renaissance Chicago is a good example of the talent attraction imperative:

Chicago’s turnaround following the 1980s was remarkable in that a fundamental restructuring supported it. Specifically, though the metropolitan area shed much of its manufacturing base, its work force shifted increasingly into professional and business services. In response, many Chicagoans crafted a new image of their metropolitan region: Instead of being a “hog butcher for the world” and the regional locus for manufacturing and transportation, Chicago (at least in the mind of its citizens) was moving into a new role as a global city, one whose economic connections were being forged with other world business capitals. Chicago was seen as a city casting off its roots for something better.

During this time, a central city revival contributed greatly to the wider metro economy. For example, Chicago became a magnet for young educated workers who occupied jobs in the rapidly growing business and professional services sectors. The central city’s quality of life and amenities reputedly brought in “knowledge workers,” in turn attracting companies or those parts of companies that desired access to the young, highly skilled labor pool. The number of central area jobs in professional and business and financial services grew robustly; and the city’s unemployment rate improved, gaining ground on that of its suburbs from the early 1990s onward. The central city gained population during the 1990s for the first time (counting the decade’s total) since the 1940s, although immigration of lower-skilled workers from Central America accounted for a majority of the gains.

I highlighted the key sentence. In order to grow and prosper, Chicago first needed to destroy itself. I would call this a greenfield proxy in a classic brownfield city. But Chicago didn't become a big player on the global stage as a result of holding onto more graduates. It did so by expelling them and "casting off its roots." In effect, the Inner Loop transformed into a global space and Real Chicago retreated to isolated neighborhoods that would see little of the prosperity. Such is the urban geography of globalization.

I think Pittsburgh is at the same crossroads Chicago was in the 1980s. However, there seems to be little interest in "casting off its roots". Perhaps Pittsburgh is the harbinger of a new economic redevelopment paradigm. I doubt it.

Now more than ever, trade follows migration. The most dynamic companies chase deep talent pools, not the reverse. The inspiration for this blog post is a study titled, “The Trade Creation Effect of Immigrants: Evidence from the Remarkable Case of Spain”. There is a handy summary here, along with key references to the supporting research literature. The results:

We argue that there is evidence of an export-creation effect of immigrants in Spain so that part of the increase in exports was caused by immigrants themselves. Through business and social networks, expatriates increase the diffusion of information and reduce the cost of doing business with their “mother” country. The presence of immigrants has increased the number of exporting Spanish firms, has promoted exports of sophisticated manufacturing goods and has increased exports with countries “culturally” different from Spain. This is an important and rarely considered benefit from immigration for the host country.

Chicago aggressively imported export opportunities. A parochial city such as Pittsburgh will not generate such a dividend. In fact, I would go so far as to argue that the balance of migration takes a back seat to functional talent churn. Better to shrink and attract more outsiders than to grow via better retention.


Mark Arsenal said...

"Better to shrink and attract more outsiders than to grow via better retention."

Exactly. Bottom-line population numbers matter less than their constituent subtotals. This is why I'm still skeptical on Boomerangs being a solution. Immigration reform, new PR ideas are needed.

Larger employers already partner with governments to advertize the city and the company in foreign trade journals and expat websites. How could we extend this to the small business community and to foreign entrepreneurs to improve their exposure to outside talent?

Jim Russell said...

Actually, boomerangs are already the solution in Pittsburgh. Yes, that undermines my main point to some extent. But I still think parochially charming Pittsburgh must be sacrificed for the city to boom.

Perhaps the price is too steep.

Mark Arsenal said...

Heh, well, the parochial part doesn't exactly charm me. I almost always get charmed solely on aesthetics. But I'm a rather anti-social git.

Define "boom". I've always thought of that word as derogatory across all use cases.

Jim Russell said...

Boom in terms of job creation that results in robust growth of per capita income. In other words, pull a Chicago.