Economic Development: Our Choices for Our Future

Round Table Discussion

by Randy Weckman

Economic development—For years, Kentucky leaders have grappled with this issue. What really is economic development? Is it trading tax incentives for jobs? Are all jobs created equal, or are some jobs better than other jobs? Who can create an atmosphere in which economic development is possible? If economic development can be accomplished, should the initiatives comes from the local, state, or federal level?

Our panel of experts discussing this wide-ranging issue includes:
Larry Jones is an agricultural economist who has been with the University of Kentucky since 1973, except for two years when he was at Chase Econometrics in Philadelphia . He served as chairman of the Agricultural Economics Department from 1986 to 1996. He currently serves as director of the College's Philip Morris Agricultural Leadership Program.	Julie Zimmerman joined the faculty of the Rural Sociology Department in 1997. Her area of specialization is rural development and inequality. She completed her doctorate at Cornell University in 1997. Her appointment includes both Cooperative Extension work and research with the Kentucky Agricultural Experiment Station.	Rick Maurer is assistant director of the Cooperative Extension Service for Rural and Economic Development. He joined the rural sociology faculty in 1977. He currently is a member of the Certified Communities Partnership Program and is a member of the program leadership committee of the national Extension Committee on Organization and Policy.	Ron Catchen serves as Montgomery County Extension Agent for Agriculture and Natural Resources. He previously served as County Extension Agent for 4-H and youth development in Bath County . He joined the College of Agriculture in 1971.

What is economic development?

Larry Jones (agricultural economist): Economic development is anything that improves the quality of life for citizens. Period.

Rick Maurer (rural sociologist): This is a good definition. Agency types and some others use economic development strictly in terms of jobs and dollars. I think we have to remember that economic development fundamentally is quality of life and we can't separate out just economic numbers from other factors.

Ron Catchen ( county Extension agent): I agree with that. What we [as county Extension agents] do out in the county every day, a lot of people wouldn't identify as economic development, but it certainly is. Agricultural development and natural resources development have been taken for granted for so long that a lot of people don't identify either as economic development. But they are.

Jones: Agriculture is one part of economic development. Economic development has to be unique to each county. Quality of life is an indicator of economic development. And it can differ from community to community. Access to cable television or satellite television would enhance the quality of life for me, but my father, for example, couldn't care less about those. That wouldn't be important to him.

Julie Zimmerman (rural sociologist): Job growth is only a part of the big picture. Some agencies may define economic development strictly in terms of job growth, but even that doesn't occur in a vacuum. In communities, it is hard to grow jobs if you don't have adequate housing or if you don't have adequate educational and recreational opportunities. And so quality of life is part of the holistic picture and, because of that, it will vary from place to place.

Maurer: Larry made a good point about allowing local people to decide what economic development will be. We went through a time—maybe during the last 20 to 25 years—when it was widely assumed that we had a prescription for what economic development was and how to get there. It was assumed that people at the state level or national level could tell people in the local area what economic development is: build an industrial park and have a plant move in. That's pretty unrealistic. I think we've come to a point where we've had to let the local community decide how its citizens want to develop economically and otherwise.

Zimmerman: A top-down approach like that may change things in the short run, but to have sustainable economic change over the long run requires that the community have a vision for the future that comes from the bottom up; a vision from above just won't work.

What would it take to improve economic development?

Catchen: From my perspective, I think it would take an assessment of what we were talking about earlier—where are you now and where do you want to go? I believe the Commonwealth of Kentucky needs to take that approach. And we need to be more proactive rather than reactive. We have to assess, come together and develop a plan, establish some points in the future, and see if we're on target; if we're not, we then make adjustments.

Maurer: Many of our faculty and Extension agents are using an approach now that is about asset mapping or asset assessment. Instead of saying what's the problem? or what do we need? or what's wrong with us?, we ask, what is good? what do we have to build upon? what are the assets and resources that we have in our community that we could use to move forward? I think this approach has been a positive one and has helped a lot of places to move forward realistically.

Catchen: That approach also takes into account the fact that we can measure what the people value.

Zimmerman: It's unfortunate that a lot of funding for economic development is premised on what we don't have, filling in the needs and filling gaps. That philosophy has helped to produce these very attitudes of looking at what we don't have. One person put the asset map and approach in perspective beautifully when he said : “When I go into the kitchen, I don't determine what to have for dinner by saying what I don't have in my cupboard.”

Jones: From a dollars and cents perspective, I think this approach is quite compatible. It depends on what the particular community wants. For example, I read many editorials about chicken processing plants, questioning whether Kentucky wants those low-paying jobs. I really think it is up to the local community to determine that. A colleague of mine in ag economics, wrote a paper several years ago titled, “Good Jobs, Bad Jobs and No Jobs.” Well, if you have no job, maybe a lower-paying job in whatever industry is pretty darn attractive.

Maurer: I think education is necessary for economic development—education by whatever definition you want to use— whether education implies the school system or Extension education or higher education, technical support, adult ed or informal education on life skills. I think we need to work on ourselves from lots of different levels.

Jones: What's often used to describe that is the term human capital. How do we develop education to improve our human capital? I think it's key and I am hoping that the KERA revolution is one of the answers. Everything I've seen says that in order for a community to attract higher paying jobs, it's got to have a better educated workforce. In rural areas, those who have an educated workforce have prospered historically.

One of the challenges for rural areas is: how do we develop the human capital to participate fully in the digital revolution? I'm thinking of the Gateway Computer company in rural South Dakota as a perfect example of a major firm in a rural area.

Zimmerman: Retention and expansion of existing businesses also are important parts of economic development. Communities need to create an environment conducive for businesses already there to expand and stay in the community, as opposed to moving to another community.

Maurer: One of the strategies to keep local businesses is to make sure communications technology is up to date. Banks are an obvious example. If they don't have access to electronic technology capabilities, they aren't going to be able to stay in business. So, just the fact that we have such capabilities in rural areas will help keep a lot of those businesses we depend on from closing up and moving away.

Jones: In preparing for this discussion I discovered that virtually all population growth (and growth in jobs in rural counties) is occurring in only 40 percent of the counties. And those counties typically are those close to metropolitan areas and to natural vacation spots—coastal waters and the like—and so the growth occurring in rural areas is really occurring in a very limited number of counties. But when we think of the future and the digital revolution, I think we are going to see a huge growth across a broader area.

Rural communities need to think about where their jobs are going to be in the future. There are not going to be too many more jobs in manufacturing in this state or any other state. I am being very candid. Jobs will be in the services area. The digital revolution—or whatever you want to call it—will have the fast growth in jobs. So communities need to think about their ability to meet the human capital needs of this growth area.

Zimmerman: The issue of technology is critical; but on the other hand, when we talk about economic development we often talk about seeking a silver bullet. And in the end, there are no silver bullets.

To a large extent, success depends on our agencies, organizations, and systems being built in such a way as to be responsive to whatever the local visions are. The question for rural communities is: Are we situated in a way to respond to that diversity of visions out there?

Maurer: The fact is, some communities will benefit and some will really struggle. We've got a lot of both kinds. Not every community will be able to jump in and take advantage of everything right away. In Kentucky , the changes going on in agriculture will have lots of impacts for rural communities, and some communities will have tough times. They're going to have to be as prepared as they can, and it's still going to be tough.

Zimmerman: Communities can make real progress by coming together around the table and talking not just about where the jobs are or about education, but including in that discussion things like the status of our housing and whether we have other opportunities in our communities to attract new businesses. So, economic development is part of a much broader conversation. How we define progress also affects how we talk about these issues.

Catchen: I will give you an example of what Julie's talking about. It happened in the community I live in. We had two major industries and they left about the same time. For several years the community was in chaos until the leadership got together and built an infrastructure that is pretty much all inclusive of what you were talking about. We're still lacking in a couple of amenities, but you can't have a perfect world. I think what happened in my community is basically a good example of what you're talking about.

Now, community leaders are looking at the quality of life and improving it. It's now a great place to work and raise your family. Now, we have such a diversified economy that one industry's leaving wouldn't be a major disruption.

Jones: I think that's an interesting point. Diversification. If you look back at a lot of rural areas, you'll see a heavy reliance on mining and agriculture and to some degree a reliance on manufacturing. All these can change very rapidly. The fact is that services is the fastest growing segment of Kentucky 's economy. That's very clear.

Maurer: I think another point related at both the state and local level is this issue of collaboration of people, groups, and organizations. But I don't think we necessarily had as much in the past; we all tended to our own programs. Communities are finding they have to work together; the government and civic groups and different agencies and programs as well as the general population have to collaborate.

We're finding the same thing at the state level as well. Different programs in economic development or community development have to work together. We've got a lot more collaboration than we did when I began working here. Successful communities are finding that they have to work together, just like Ron said.

And that's a role that the Cooperative Extension Service finds itself playing—bringing together various leaders to talk about an issue in a non-threatening way. Providing information and being a facilitator are among the roles we play.

Zimmerman: You've raised an important point. In working together, collaboration may really sound good on paper, but in reality it is hard work. It certainly is not the easy way of going about doing things. It's a lot easier to say, “Let's go out and attract a certain type of firm.”

But in the long run, working together collectively and collaborating means you are able to respond to change. Today, we are seeing growth moving away from factories to services. And it may change again. But if we have a history of working together, then we can move forward regardless of the changes.

Catchen: One other thing. People who are in the decision-making process need to maintain a certain amount of discretion, but, in general, they need to let their plan be known to the general public.

What role can higher education play in economic development?

Jones: Certainly one area in which the universities have a major role to play is in the development of human capital, educating not only students in classrooms, but also through outreach programs. I am intrigued by what we can do to foster entrepreneurship. My thinking hasn't jelled on that, but I think that it's extremely important. A lot of jobs are created by new firms and also in small firms.

We have an important role as an institution in the area of fostering entrepreneurship. I think we in the College of Agriculture know that certain changes are going to happen. I often make the statement that production agriculture will undergo more change in the next 10 years than it has in the last 50. So how we react to what we perceive as increasingly concentrated production is important. And the time frame is pretty short.

Catchen: Some of our key leaders in our communities have already identified education as a major area of emphasis and are moving to make educational outreach programs available. It's a little slower than I'd like to see, but at least it is happening.

Maurer: The University needs to do this, and this College has a great history of responding to change. We may need some collaboration with other parts of the University. And I think our College is in a really good place to do that.

Jones: About two million people in this state live in rural areas, but only five percent are farmers and farm families. Our department has done some work that shows that farming itself is only about three percent of our gross product, and about six percent of the jobs when you add processing and the like. My point is the College of Agriculture may increasingly need to devote itself to helping enhance the quality of life in communities.

As an institution, we're in the business to enhance the economic vitality of rural citizens; farmers are important to us, but there's another 1.7 million rural citizens with whom we need to work more in the future. This College is uniquely positioned to do that.

Strategies for Economic Development

• Economic development needs to be locally defined in terms of larger concerns dealing with the quality of life.
• Sustainable economic change over the long run requires the community have a vision for the future that comes from the bottom up, not a vision from above.
• Local leaders need to work together to assess their strengths, instead of concentrating on their community's deficits.
• Plans for development need to be shared widely within the community.
• New communications technologies may change the pattern of economic development, bolstering rural development initiatives if local leaders have a communications grid in place.

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