REMARKS AS PREPARED FOR DELIVERY - SANDY K. BARUAH, ASSISTANT SECRETARY OF COMMERCE FOR ECONOMIC DEVELOPMENT UNIVERSITY OF OKLAHOMA, ECONOMIC DEVELOPMENT INSTITUTE OKLAHOMA CITY, OKLAHOMA

MONDAY, APRIL 3, 2006

AS PREPARED FOR DELIVERY

Introduction by Dr. Richard Little, Associate Vice President of Outreach, University of Oklahoma

Thank you, Dr. Little, for that kind introduction, and thank you also for the invitation to be here. On behalf of President Bush and Commerce Secretary Carlos Gutierrez, it is an honor to be here in Oklahoma City to discuss 21st Century economic development.

During our time together today, I’d like to do two things: First, lay some groundwork for the conditions we face as a nation and as economic development professionals; and Second, to discuss, what at least I think, is critical in our shared quest to continue to raise the standard of living for all parts of America.

President Bush is passionate about strengthening America’s edge as the most competitive and innovative economy in the world. He understands that to accomplish this, the U.S. must be the “first choice” for businesses to invest, grow and to create jobs. This means that we must be the world leader in creating and implementing strategies that keep us competitive.

He also understands that, while the Federal government plays a role in supporting economic development, it is the private sector that must be ready, willing and able to invest in order for economic growth to occur. Economic development professionals like you can help this process greatly by serving as a critical link between the public sector, the private sector, the key institutions in a region, and even the public.

Programs like those here at the University of Oklahoma’s Economic Development Institute that provide cutting-edge tools and knowledge for economic developers are critical to our Nation’s future. These are world-class examples of moving economic development from the strategy phase to the execution phase.

As we meet here today, we have good reason to be optimistic about the business environment in which we do our jobs. Our economy is strong, and it is getting stronger.

Businesses are thriving, investing, and hiring. The economy has created over 2 million jobs in the last year, and nearly 5 million since May 2003 – more than Japan and the European Union combined. Unemployment remains low at 4.8%, a level that many economists consider full employment.

The economy has been growing for 17 straight quarters, demonstrating that, despite the challenges of unprecedented hurricanes, high energy costs and a global war on terror, the American economy is strong, growing and resilient. And this resiliency is evidenced by the strong surge seen in consumer spending and consumer confidence as recently reported by the Conference Board, which now stands at a four-year high.

President Bush understands that, even while the economy is strong and gaining steam, we cannot be complacent. Other countries, like China and India, are rapidly catching up in areas where we have traditionally been strong. They are opening their markets, strengthening their financial, legal and other public institutions, and making both public and private investments that are making them more competitive.

Our challenge today is how do we maintain and strengthen our leadership role in an increasingly competitive global economy?

To address this challenge, the Economic Development Administration is advancing three fundamental principles of economic development in the 21st Century:

1. Innovation. Innovation is our country’s – in fact, any country’s – only sustainable competitive advantage. Increases in innovation – the fuel for economic growth – contribute 50% of U.S. annual GDP growth.

Innovation drives productivity, and a nation’s productivity directly impacts its economic growth and overall standard of living. Groundbreaking ideas generated by innovative minds have paid enormous dividends – improving the lives and livelihoods of generations of Americans.

The future belongs to the innovators. In the 21st Century, change will come faster not slower. As the world grows ”flatter” more nations will become more capable and this will generate more, not less, competition in the marketplace. The individuals, organizations, businesses, and government organizations that are best able to adapt and innovate are the ones that will succeed in the 21st Century.

That’s why President Bush announced the American Competitiveness Initiative – the ACI – an ambitious new strategy to strengthen America’s position as the world’s leading innovator. The ACI commits $5.9 billion in FY 2007, and more than $136 billion over 10 years, to increase investments in research and development, strengthen education, and encourage innovation. This level of Federal commitment to R&D matches the level seen during the Apollo Space program. The ACI is a big deal.

2. Entrepreneurship. If innovation is the fuel for economic growth, then entrepreneurs are the engine. Entrepreneurship is in our blood as Americans. Entrepreneurship is such a part of the fabric of our Nation it can be easily overlooked. As economic development professionals, it is imperative that we not overlook the role of entrepreneurship and not take it for granted.

Small businesses create nearly three-quarters of all new jobs in the United States, and produce 50% of the Gross Domestic Product. Additionally, small business manufacturers constitute over 98% of our nation’s manufacturing enterprises, employ 12 million people, and supply more than 50% of the value-add in U.S. manufacturing. We should never forget that jobs are created by entrepreneurs, not government.

And…

3. Regional Competitiveness: President Bush understands – as I am sure you do – that the competitiveness of our Nation will increasingly depend on the competitiveness of America’s regions. In order for America’s companies to be fully competitive, the regions in which they do business must be competitive as well – in other words, the business environment of our economic regions has a direct impact on our national competitiveness.

The topic of Regional Competitiveness is near and dear to my heart.

The Federal Reserve Bank of Kansas City recently concluded, “Regions can develop only by exploiting their distinct economic assets, seizing unique opportunities in rapidly shifting markets, and fostering the entrepreneurs that make both happen at once.”

What the Federal Reserve Bank folks know, and what you and I know, is that in our global economy, our competition is not next-door. The areas around us are our strength, not our competitors. Regional competitiveness is simply the Tom Friedman, The World is Flat, 21st Century version of what we all learned on the school playgrounds of our youth: There is no “I” in T – E – A – M and we are stronger working together than when we stand alone.

Let’s look at a local example. The ten counties that make up Greater Oklahoma City create a population of more than 1.25 million, and provide a labor force of over 600,000. While the counties each have unique characteristics and advantages, they are inextricably connected by their economic activities.

By thinking of ourselves as part of a broader economic region, we can build on our strengths to better align a critical mass of local resources to spur innovation and offer more to employers and employees than any one community standing alone could hope to offer.

The University of Oklahoma and Oklahoma State University, Oklahoma's two premier public research universities, are only two of 19 colleges and universities in the region. And, Greater Oklahoma City has 10 technology centers that deliver high-quality, customized training to both new and expanding companies. These are tremendous regional resources for innovation and entrepreneurship, and I know many people are working hard in this region to ensure that all these assets are used to best advantage.

Of course, this is far easier said than done. As I travel this great nation, I see communities that are bifurcated from each other; either by a river, a line on a map or generations-old rivalries. These are ways of thinking that die hard – but must be challenged in order for areas, especially rural areas, to come together on the shared challenge of building regional competitive advantage.

To understand and capitalize on our regional competitive advantages, regions need effective governance – governance, not government – an important distinction. Government is an official public body representing distinct constituents. Governance is the process, and structure – at times informal – of how governments, institutions and the private sector come together and work together towards common goals.

The goal of regional governance is to emphasize regional competitiveness by focusing on the following:

• Developing a sense of “place,” helping communities begin to identify themselves with a larger economic region;

• Engagement by higher education;

• An entrepreneurial culture;

• Collaboration and cooperation among leaders at the local, regional and even state level;

• Strong governance leadership;

• Financial investment from multiple sectors;

• Economic infrastructure that provides the opportunity for growth;

• Educational and training programs that are linked to regional strengths and industry needs; and

• A robust pubic-private partnership that effectively puts government and industry leaders “on the same page.”

The people in this room, as leading economic development professionals from across the Nation will play a crucial role in building effective regional governance.

President Bush is committed to building regional competitiveness and he backs up that commitment with a 2007 budget proposal that includes a $47 million increase for the Economic Development Administration. Should the Congress agree to the President’s funding request, EDA will use the additional funds to:

• Move the nation along the regional development continuum, acknowledging regions are the critical nexus for economic growth;

• Support innovation and entrepreneurship as critical components to achieving sustained economic prosperity;

And…

• Work to streamline and simplify the Federal delivery system for economic development resources, make the Federal Government more coordinated among the various development programs.

EDA can be an important contributor to our national economic competitiveness, and I take pride in the fact that EDA has been rated the most effective of the Federal economic development programs. President Bush’s call for increased funding for EDA is a welcome reward for a job well done – and that credit goes to the EDA professionals across the country. But at the end of the day, EDA – just as any government program – is a supporting player. When local government entities work across political jurisdictions, with the private sector and regional assets such as universities and research labs equally involved, is when the magic happens

And of course, it is you, the economic development professional, that often is the catalyst to make all this happen – it’s tough work – but you know it’s worth the effort, otherwise you wouldn’t be here today.

I am proud and pleased to be part of an Administration that understands:

• First, that our national economy must be healthy and robust and set the stage for future growth, which includes maintaining our National security;

• Second, that our competitiveness in the 21st Century increasingly depends on our ability to innovate and support entrepreneurs

• Third, the competitiveness of America as whole depends in large part on the competitiveness of America’s economic regions; and

• Fourth, the important role that the Economic Development Administration can play in helping create an environment that fosters regional competitiveness.

For perhaps the first time, a President highlighted in a State of the Union Address a far-reaching initiative that directly complements and bolsters the EDA mission. The President did this with his American Competitiveness Initiative, and we’re looking forward to working closely with our Federal partners to help implement this important Initiative.

On behalf of the President and Commerce Secretary Carlos Gutierrez, thank you for your kind invitation to be here today in Oklahoma, and thank you for your commitment to improving economic growth in all areas of America. It has been my pleasure to be here today and I look forward to our further discussion.

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