A Brand New World: Why Sustainability Matters in Modern Economic Development

January 27, 2010

Moderator: Welcome to the Federal Reserve Bank of Atlanta's Economic Development podcast series. I'm Todd Greene with the Federal Reserve Bank of Atlanta. Today we're talking with Edward Blakely, professor of Urban Policy in the United States Study Centre at the University of Sydney, Australia.

In 2009, Dr. Blakely and co-author Nancy Green Leigh, professor at the Georgia Institute of Technology, released the fourth edition of Planning Local Economic Development: Theory and Practice. This new edition explores how climate change and goals of sustainability influence the practice of local economic development. Today, we're going to talk about some of the issues and opportunities facing economic developers throughout the country. Welcome, Dr. Blakely.

Edward Blakely: Thank you. I'm glad to be here.

Moderator: Let's get right to it. What kinds of practical strategies have changed since the last edition of the book, and how have trends and best practices improved over time?

Blakely: Well, there've been four editions of the book, and each edition has focused on something slightly different. The first edition was on endogenous, or local development—that is, what do you have in your local community that you can make a difference with? The second edition focused on the milieu, the places where technology was emerging and so forth, and there was a theory at the time that some places produced more jobs than other places. The third was on global, quite naturally. And then this edition is more on sustainability, and by sustainability we're wrapping in the other three terms—that is, "What do you have locally that you can produce?"; "How is your milieu changing to adapt to the global circumstances?"; and then, "How are you connected globally, and how can you sustain that over time and make an environmentally rich environment at the same time?"

Moderator: Well, what is the relationship between economic development and community development? Has this evolved over time? Have you seen this change?

Blakely: Well, community development is a very old field, started in agriculture. And the impetus for community development was just that—the focus on the people in the community, their needs, their aspirations, and how you can make the local resources fit those people and ensure that some people were getting the same returns as others. So, in the early farm communities, there was a concern the small farmers weren't getting the same shake as the big farmers. So how could you make those differences? And community development grew up with this notion of disparities. We still have disparities. So, as the economy grows, particularly as it moves into more advanced techniques and technologies, the disparities grow. So community development is there to grow the other community—the community that has the disparities—so it will no longer have disparities, so the economies will be more equal, there'll be more equity in the economic development practice.

Moderator: Economic development frequently runs into conflict with communities. How might economic developers better respond to communities, especially low- and moderate-income communities?

Blakely: Well, sometimes the economic development activity comes as a surprise to the community, and that shouldn't happen. First there should be consistent education, training, and development of people in the neighborhood and the community about the economic development options. And that's where the community developers should work, and the economic development experts should work with them to say, "Here are the options we have in our community, and here's some of the language of economic development." Well, when people start talking about setbacks and high rise and this and that, the local communities have to understand what that means, what it means for them.

Also, the local community has to have its own list of things it needs and wants, and it has to be organized. If you can bring those things together, then you might come up with a benefits agreement or something so when the economic development activity—be it a plant or a new set of apartment buildings—comes in, the local community is welcoming because they're going to get something out of it. Most of the time, their requests are very modest—they want a street light fixed, or they want their bus stop redone, or they would like some job training for people in the community, which may have happened anyway, but if they don't know about it they can't participate in it.

Moderator: You have a chapter devoted to state and federal policies that influence local economies. How are the policies that impact local jurisdictions changing? Do you see this is as a cyclical phenomenon, or are economic developers entering a new era?

Blakely: Well, economic development practitioners are entering a new era for certain. What we have now is a set of old policies and new ones that are layered on top of one another. The federal government started out with a number of things like "enterprise zones" and things like this, then the cities started doing—the states, rather—started doing enterprise zones, and they started doing tax increment financing districts and the like. Now we have a global area where a company can go anywhere in the world; we're competing with the world. So the state, the feds, and the locality have to be on the same page. What is our offer here? And it has to be an offer where you're providing better infrastructure than anyone else—both human infrastructure, that is, highly skilled people, and physical infrastructure, like better connectivity, better bandwidth, and so on, and a more livable community.

Moderator: As the country struggles out of the recession, how can economic developers support sustainable recovery?

Blakely: Well, economic developers, the best ones, saw it coming, in a sense. They're preparing their community for a number of different scenarios. Atlanta's certainly been in the forefront in that, looking at what could be done. [And] firms were already beginning to move, and people saw the capital flight beginning already. And so, the best places have been prepared for this. Now, for places that […] are not prepared, we have to go back to the basics. How much real estate development do we need in a community? How much new incubation of firms and industries? How can we put the right sets of firms and industries together, and put them in the right spaces? So, we're now talking about re-industrialization. What kind of things can we make in a new globalized era that would fit people overseas? Maybe we make a better solar collector. Maybe we make a better hot water heater. Maybe we make something better that lowers energy costs. So, a local economic developer now is not just bringing in industry, they're creating them.

Moderator: How have communities responded to climate change?

Blakely: Well, very few communities have done the things that need to be done—and that is, you have to start out with a vulnerability analysis. What kind of climate change are you vulnerable to? Here in Atlanta and many other places, you're vulnerable to heat, you're vulnerable to flooding, but you're also vulnerable to droughts. And you're going to have all of them. So you have to run through the vulnerability analysis, and then what sites have to be hardened against that vulnerability analysis? Maybe you have to start looking at your water supply more closely. Maybe you have to start thinking about, when you build your buildings, how they're going to be insulated, and the like, with the heat. And, when it's raining a lot, how do you capture that water? It's not the rain that's the problem, it's where it goes. So the smart communities are already beginning to look at that vulnerability analysis, look at the resources they have, and how they assemble those resources so they can make something good out of them rather than a tragedy.

Moderator: The title of the final chapter of your book is intriguing: "Local Economic Development Planning's Response to the Flatter and Climate-Challenged World." Do you agree with Thomas Friedman's notion of a "flatter world," where a more level playing field is possible between developing and developed nations?

Blakely: Well, if you take that too literally, no. But if you take the notion that anyone in the world can penetrate any location in any space, yes. For example, I'm working with a person who's selling things that he brings out of the Amazon to high-end department stores in the United States. So, this developing world can penetrate the space of the already-developed world, or the best societies can utilize the resources of other societies. We have a situation now where we are able to extract more resources from the developing world. They have minerals. They have other things that we can extract: gold, silver, and so on. How can we turn that around so they can start smelting some of that, so they can start creating some jobs in their places, and we can invent the machines? So, the world can now be more connected and we don't have to have so many "haves" and "have nots."

Moderator: Dr. Blakely, thank you for joining us today. We've been speaking with Edward Blakely from the University of Sydney. This concludes our podcast. For more podcasts on this topic and others, visit the Atlanta Fed's Web site at www.frbatlanta.org. Thanks for listening. If you have comments or questions, please e-mail podcast@frbatlanta.org.