How does a region create a more prosperous future? Through more jobs? A growing community? A better environment? The 1990s have seen considerable economic growth, but this growth has not been balanced between rural and urban communities, or the urban centers and the suburban enclaves.
As we're there to enter the new millennium, there is greater recognition that prosperity encompasses more than jobs and higher incomes; sustainability and quality of life issues have become increasingly important to communities. And communities are beginning to approach these growth issues with a new spirit of cooperation and strategic thinking.
In October 1999, the National Leadership Forum on Regional Strategies was held in Memphis, involving professionals from across the country who are concerned with planning and growth issues. This conference, partially sponsored by the Shelby County government and several corporations with local headquarters, looked at the full range of social and economic activities that make a region a better and more prosperous place to live. With introductions from the governors of the three contiguous states—Arkansas, Mississippi and Tennessee—and a major address by the chairman and CEO of FDX (the parent company of Federal Express), the tone of regional cooperation to achieve prosperity through common goals was set.
Speakers and panel discussions touched on a wide variety of topics that support the concept of regionalism. Key issues were smart growth plans, inclusiveness, regional economic development, private sector leadership in community development, housing and sustainability. These issues can be summed up in four major themes: livable communities, economic prosperity, social capital and industry clusters.
How can a diverse population live comfortably and safely in a modern metropolitan area? This question is key to building livable communities. Over the past decade, economic growth in the form of more jobs and higher incomes has occurred in most major metropolitan areas. Yet these same cities are not always favored as places to live. As many Americans move to ever-newer suburbs, they tend to commute from that residential base back to the center of wealth creation—in the city.
The problems created by this cycle are now spreading to the older suburbs. Yesterday's newest bedroom community is now an aging community that faces concerns, such as crime, older populations and a depreciating housing stock. These communities often do not have the resources, business base or governmental infrastructure to deal with such problems.
Urban sprawl has created a "hyper-decentralized" society that is making the economy less efficient, daily travel more time-consuming and neighborhoods more isolated and fragmented. The challenge for each segment of a metropolitan area—inner city, aging suburbs and new bedroom communities—is similar to that of small rural towns: how to link with the greater community to address current social and economic problems common to all.
While the development of these peripheral communities often came by chance—the bedroom suburb was linked by roads to the center city, or the small town had good water access for a new plant—the solution to today's problems must be by design to be successful. Communities must be re-engineered so their assets are used most efficiently and equitably.
Economic development is a vital component of building a prosperous community, but it needs to encompass more than just adding industry and jobs. True economic development builds a community, results in prosperity where everyone earns more and leads to the improvement of all kinds of amenities, from sports to museums.
Prosperity enables a community to improve its entire setting. Economic development can start a chain reaction that impacts education, health care and housing for an area's residents. Better jobs mean citizens will spend more on education. Higher levels of education mean people work more productively, earn higher incomes and contribute more to the community. Yet too often, regions approach economic development as a competition, rather than a cooperative effort that can lead to increased opportunities and improved quality of life throughout the region.
A comprehensive regional approach to economic development creates opportunities. It means connecting workers to jobs and residents to amenities throughout a region. It means understanding the role each business cycle plays in a region's quest for prosperity. Will new industries bring technological and employment challenges to the region, and will mature businesses bring sustainable employment with above-average wages? And it means building on the assets of each community to create a stronger region that then becomes more competitive in the global economy.
There is a web of social contacts, held together by community trust, that enables people to interact in a variety of ways in an atmosphere of mutual respect. This is called "social capital." In developing social capital, communities can begin to assess themselves according to their assets, rather than their deficits.
Mapping the capacity of a community to support housing, education or business development creates a catalog of assets to build on for future prosperity. Including diverse interests and groups and fostering communication among those groups is key to success. Regional policies that support a positive environment for the elderly or promote quality of life for families build social capital that helps the entire region. That social capital gives a region an advantage in dealing with issues and problems because citizens are already connected to each other. The community can then come together to find mutually beneficial solutions.
Each region has a specialty. Specialization enables an area to take advantage of its unique characteristics and gain skill in a business activity. The area then achieves a competitive advantage in its labor force, institutions and businesses as it perfects its specialization in the larger global economy. This specialization, known as a "cluster" of industries or "growth pole," is a prerequisite to regional prosperity.
A cutting-edge industry cluster—whether it's transportation services, medical services or gaming and entertainment—can impact the entire population of a region. As the work force develops the skills needed by an industry, it benefits that industry cluster, leading to further specialization and competitive advantage. Educational institutions, other businesses and even local consumers all benefit from an industry cluster and enhance it as well. Thus, the whole business climate is enhanced, not just through traditional avenues, such as tax abatements and infrastructure improvements, but also through the dynamic use of business opportunities available from a cluster of leading-edge companies.
Creating a prosperous community is not an easy task; it is an outcome that occurs by design, not by chance. A regional approach to development means considering complex issues, involving diverse populations and breaking from traditional boundaries that foster isolation and competition.
Experts at the National Leadership Forum on Regional Strategies emphasized communication and involvement as key to this approach—building a better region requires work by government, business and community leaders. As communities enter a new century, this regional approach can help them achieve the viability they are seeking and find new solutions for some old problems.
Keep up with what’s new and noteworthy at the St. Louis Fed. Sign up now to have this free monthly e-newsletter emailed to you.
Fed in Print: An index of the economic research conducted by the Fed.
FedCommunities.org is a portal to community development resources from all 12 Federal Reserve Banks and the Federal Reserve Board of Governors.