Musings on Entrepreneurship and Innovation
Thursday, December 09, 2004Economic Development: It's About Balanced Systems
Ed Morrison, in his EDPro Weblog, makes an important, but underappreciated point:
Economic development used to be about "things": developing an industrial park, recruiting a business, building a spec building.
Increasingly, we are coming to understand that this "thing theory" of economic development is inadequate. Sustainable economic development requires balanced investment in a range of areas. EDPRos need a deeper, systems view of their economies.
Here's a report that illustrates importance of understanding interdependencies. A report that will be released this week in Albany notes that if EDPros are successful in recruiting high tech companies, there are not enough skilled people around to fill the jobs. Read more.
A few weeks ago, I had the pleasure of participating on a panel hosted by California State University, Fresno on the inter-relationships among economic development, entrepreneurship, and geography. In my opening remarks (PDF), I made the following assertion:
We need economic development decision-making tools that
- Account for resource gains, losses, and interdependencies
- Consider time and delays
- Are based on facts and explicit, testable assumptions
- Are understandable
I then shared a simulating system dynamics model to tell a story of how the very success my hometown has experienced in increasing the rate of new venture creation can be expected to seriously strain the local resource of sufficiently trained, experienced workers. For a time, companies here have enjoyed the benefits of high labor productivity -- not because labor output is particularly high, but because the cost of output has been low. That's likely to change, which has important implications for the kinds of business models that are most likely to succeed here.
If you are interested in seeing the model in action, please contact me. I'd be happy to share it via webconference.
