Does Economic Development Work?
Interesting article by Rick Haglund in Dome Magazine. Its a brief history of the state’s economic development efforts from Milliken to Granholm. What struck me most in reading the article is how little we got for all the time and resources we spent trying to grow and diversify the state’s economy.
The pattern that the Michigan economy is driven by the fortunes of the domestic auto industry held true in each of the four administrations – two Republicans and two Democrats – covered in the article. And the long term trend of decline compared to the nation also held true in each of the four.
The article also demonstrates how similar the approach each of the four governors took over the past three decades. Each pursued some combination of special supports for manufacturing – particularly in the auto industry – as well as programs and subsidies for new industries – largely technology based. Add in business tax cuts and regulatory relief as well.
It sure raises the question whether focusing on providing incentives for business investment – either targeted to specific favored industries or making the state more “business friendly” – works. There sure isn’t a lot of evidence here that it does. The levers that states have to change business investment decisions may be too weak to make much difference.
Its time to, at least, think about a new strategy. As we have argued, the better option may well be to focus on human capital development. That the most prosperous places in the future will be those where talent concentrates. That means making the foundation of your economic growth strategy preparing, retaining and attracting talent.