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Pursue regional economic development

Pursue regional economic development

Advancements in information, transportation, and manufacturing technology are opening new market opportunities for the region’s diverse workforce and industries. Nonetheless, global trends are interacting with concerning regional trends in demographics and fiscal uncertainty to constrain economic growth for metropolitan Chicago. Economic data reveal prolonged slow growth,[1] a widening gap in performance between the region and its peers, and a significant share of residents with limited economic opportunities.[2] Given today’s economic realities, metropolitan Chicago must reassess conventional tactics and better coordinate strategies to help firms and industries compete globally.

 

[GRAPHIC TO COME: A series of data charts will provide information on the Chicago region’s of economic performance over time.]

 

In an evolving global economy, metropolitan areas are the unmatched engines of economic growth. In 2016, metropolitan economies generated more than 80 percent of the world’s output[3] and nearly 90 percent in the U.S.[4] Yet the Chicago region’s performance -- across productivity, employment, wages, opportunity, innovation, and other indicators -- remains mixed and in some cases lackluster.[5] Since 2001, the region has consistently lagged behind peers and the national average in overall economic and productivity growth, and its growth during 2009-16 ranked just 67th among the 100 largest U.S. metropolitan economies.[6] While the region’s industries have made significant strides in responding to global competition, research provides new insights into the forces -- such as persistent economic inequality -- that are hampering metropolitan Chicago’s ability to start and sustain stronger growth. Catching up to the pack requires a coalition of political, civic, and business leaders to implement strategies that will raise the region’s global competitiveness and economic vitality.

 

Many factors contribute to a region’s success, like the quality of its infrastructure, workforce, diverse and advanced industries, civic leadership, and institutions of education and research. These assets are at the core of our competitive advantage as a global economic center and serve as the foundation of future economic opportunity and growth. Today, people, goods, services, knowledge, and capital move across borders with growing frequency. Increasingly complex supply chains extend globally, and some employers can more easily access a worldwide workforce. Strategies to achieve the region’s economic goals must be similarly nimble and responsive in a changing global economy.

 

Despite our economy’s metropolitan breadth, many approaches and tools to support economic development remain siloed to local jurisdictions, limiting the potential of strategies for broad economic growth.[7] These tactics often neglect the position of individual communities in a larger economic landscape, with core assets flowing across state borders in a Midwestern megaregion. Coordination across jurisdictions can enhance traditional economic development services like business expansion, retention, and attraction. Improved analytical techniques and planning tools can supplement local knowledge, develop shared opportunities, and complement competitive interests among the region’s counties and municipalities. Ideally, these efforts would inform local and state policy reform. With sustained engagement, the State of Illinois could play a more effective role in leveraging its resources to support economic development that implements regional goals.

 

[GRAPHIC TO COME: An illustrated graphic will demonstrate an array of economic development activities that can be enhanced by regional coordination.]

 

Regional leaders have taken some steps to better coordinate and collaborate around strategies to grow the region’s economy. Launched in January 2018, the CRGC is an important first step toward collaboration among the county board chairs of Cook, DuPage, Kane, Kendall, Lake, McHenry, and Will counties and the Deputy Mayor of City of Chicago.[8] The organization’s initial scope includes a small staff, board of directors with region-wide representation from diverse businesses and economic development professionals, and financial commitments for the first three years. CRGC will need to identify initial opportunities for impactful work and to secure sustainable, long-term funding as a basis for continued multijurisdictional collaboration.

 

The following describes strategies and associated actions to implement this recommendation.

Support development of an entity with the mandate and resources to implement a regional economic growth strategy

Overcoming metropolitan Chicago’s prolonged slow growth and uneven access to opportunity will require a shared vision for the regional economy. Initial success under the CRGC can help demonstrate the benefits of collaboration among the region’s political and economic development leaders. With sustained private sector engagement and institutional support, CRGC can play a critical role in focusing economic development activities and marshaling resources to address issues that cut across the region’s diverse industries and communities. Such initiatives include improving freight movement in the region, integrating data and information systems for rigorous market analysis, and assembling support for prioritized, multijurisdictional infrastructure investments. Regional coordination among economic development organizations (EDOs) should especially emphasize cluster-oriented strategies by convening business leaders and partners like anchor institutions to address shared, sector-specific challenges. This strategy also appears in the Governance chapter, under the recommendation to Use collaborative leadership to address regional challenges.

 

CMAP and partners should continue to support CRGC’s initial endeavors by assisting in convening regional stakeholders, providing research and data, and securing financial support, as appropriate.

 

County and municipal EDOs should develop a shared vision for the regional economy that articulates our strongest economic assets and competitive advantages in support of regional marketing and branding. CRGC or similar entity can help to facilitate related analysis and strategy development.

 

CRGC or a similar entity should help county and municipal officials pursue shared goals across jurisdictional boundaries that complement their respective strengths and competitive advantages.

 

CMAP should continue to research and articulate the benefits of intergovernmental collaboration through responsive data and analysis on the regional economy’s performance.

Expand global market reach

The majority of economic growth is occurring abroad and opening new market opportunities that can support prosperity at home. Like peer regions, metropolitan Chicago has relied on exports and foreign investment to help sharpen its economic competitiveness since the 2007-09 recession.[9] The region’s manufacturing exports increased by nearly 37 percent during 2005-16, beating growth rates in New York and Los Angeles.[10] Yet many small- and medium-sized businesses here do not currently export their specialized or high quality products and services. Foreign direct investment can also fortify the region’s connections to global markets. Coordinated efforts have already yielded positive results in expanding, retaining, and attracting such investments, which improve businesses’ access to capital and global markets.[11]

 

In responding to the pressures of global competition, the Chicago region must enhance its credibility and saliency as a center for international business development. Research has found that racial and ethnic diversity and openness to immigrants strongly contribute to regional growth in employment and productivity by broadening the talent pool available to businesses.[12] Metropolitan Chicago should leverage not only its diverse industry mix and institutions, but also its diverse residents who have formal and informal connections worldwide.

 

CRGC or a similar entity should facilitate ongoing analysis and strategy development for reaching global markets that builds consensus among the region’s many stakeholders.

 

CRGC or a similar entity should support the development of a comprehensive foreign trade and investment strategy for the region, including leveraging existing export relationships and positioning the region strategically for foreign direct investments, mergers, and acquisitions.

 

CRGC or a similar entity -- in partnership with economic development organizations, business associations, and chambers of commerce -- should coordinate efforts to market the region and convey its dynamic economy, infrastructure, and institutional assets; diverse and skilled workforce; and other assets.

CRGC or a similar entity -- in partnership with counties and municipalities -- should expand technical assistance and other supports for export activity by small- and medium-    sized businesses, such as assistance in navigating the customs process, access to global customers, and export financing.

The State of Illinois should collaborate with regional stakeholders to implement a strategy for the region’s economic growth

The State of Illinois and metropolitan Chicago can do more to align economic development efforts across units of government, consistent with rigorous market analysis.[12] In 2013, the Illinois General Assembly passed a law requiring the Department of Commerce and Economic Opportunity (DCEO) to develop a statewide, five-year strategic plan for economic development that leverages and enhances existing programs and incentives.[13] The initial plan was developed with minimal engagement of stakeholders from our region despite its outsized role in the state’s economy. Meaningful engagement of local leaders from across the state could improve future planning processes and implementation. Ongoing strategic planning can identify where stakeholders should focus public investments based on the region’s priorities, unique assets, and complex challenges. Moreover, the plan and subsequent implementation could be strengthened by differentiating supports to the very diverse economies across Illinois. Emerging challenges and opportunities may warrant new or expanded economic development activities. However, the State should work to alleviate and reduce challenges that administrative processes and regulatory actions can address. Examples may include regulatory barriers, fiscal and tax policies, permitting processes, education and workforce development, and physical infrastructure. Activities should be tailored as appropriate to sustain a more stable and reliable environment for business.

 

The State of Illinois should identify and plan for the distinct needs of its regional economies, allocating resources and developing policies to reflect their unique scale, opportunities, and challenges.

 

The State of Illinois should coordinate the delivery of its direct services, programs, and financial assistance for economic development with regional organizations and stakeholders.

 

The State of Illinois should pursue transparent, accountable practices that ensure investments for economic development produce improved results.

 

The State of Illinois and regional organizations should seek opportunities to collaborate for economic development across state boundaries, as appropriate.

Footnotes

[1] Chicago Metropolitan Agency for Planning ON TO 2050 snapshot, “Regional Economy and Clusters: Building on Our Strengths,” 2017, http://www.cmap.illinois.gov/onto2050/snapshot-reports/economic-clusters.

[2] Chicago Metropolitan Agency for Planning ON TO 2050 strategy paper, “Inclusive Growth,” 2017, http://www.cmap.illinois.gov/onto2050/strategy-papers/inclusive-growth.

[3] Jesus Leal Trujillo and Joseph Parilla, “Redefining Global cities: The seven types of global metro economies,” Brookings Institution (2016), https://www.brookings.edu/wp-content/uploads/2016/09/metro_20160928_gcitypes.pdf.

[4] Chicago Metropolitan Agency for Planning analysis of Bureau of Economic Analysis data on GDP per metropolitan area, 1-year estimates, 2016.

[5] Chicago Metropolitan Agency for Planning Regional Economic Indicators website, 2017, http://www.cmap.illinois.gov/programs/regional-economic-indicators/trends.

[6] Chicago Metropolitan Agency for Planning analysis of U.S. Bureau of Economic Analysis data.

[7] Organization for Economic Co-operation and Development, OECD Territorial Reviews: The Chicago Tri-State Metropolitan Area, United States, 2012, http://www.oecd.org/unitedstates/oecdterritorialreviewsthechicagotri-statemetropolitanarea.htm.

[8] Cook County, “Chicago Regional Growth Initiatives,” 2013, https://www.cookcountyil.gov/content/regional-initiatives.

[9] Brad McDearman and Ryan Donahue, “The 10 Lessons from Global Trade and Investment Planning in U.S. Metro Areas,” Brookings Institution (2015), https://www.brookings.edu/wp-content/uploads/2016/06/TenLessons.pdf.

[10] Chicago Metropolitan Agency for Planning Regional Economic Indicators website, 2017, http://www.cmap.illinois.gov/economy/regional-economic-indicators/trends/.

[11] The Chicago Council on Global Affairs, “Foreign Direct Investment: Globalizing Chicago’s Economic Development Plans,” (2012): 34.

[12] Randall Eberts, George Erickcek, and Jack Kleinhenz, “Dashboard Indicators for the Northeast Ohio Economy: Prepared for the Fund for Our Economic Future,” Federal Reserve Bank of Cleveland Working Paper 20 (2006).

[13] Chicago Metropolitan Agency for Planning report, “Reorienting State and Regional Economic Development: Challenges and Opportunities for Metropolitan Chicago,” 2017, http://www.cmap.illinois.gov/programs/innovation/economic-development.

[14] Illinois General Assembly, Public Act 98-0397.




 
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