| | Remarks of Assistant Secretary of Commerce for Economic Development David A. Sampson - New York State Economic Development Council Annual Meeting May 24, 2002 | Back |
| Thank you Michael (Michael Reese, Executive Director, Mohawk Valley EDD) for the kind introduction. I thank the New York State Economic Development Council for inviting me to address this distinguished gathering of economic development professionals. Good morning to all of you.
Cooperstown is a wonderful place - since working on the development of the Texas Ranger's ballpark in Arlington, professional baseball has been a very big part of my life. It is a great honor to serve as President Bush's Assistant Secretary of Commerce for Economic Development. He is a man of faith and integrity.
We meet at a time of great national concern. Terrorist attacks have raised the level of apprehension of all Americans about their safety, economic well-being and future. Partly as a result, our national economy slipped into a recession is now in the early stages of recovery. Government revenues have declined as well.
The eyes of the world have been focused on this State and its people. New York's response to the attack against the World Trade Center has displayed to everyone the true character of the people of New York.
No one could help but feel how great a people, how great a nation, we have the honor to belong to. How sensitive, compassionate, and resilient the society we have built over the last 225 years is - and how capable our country is of withstanding the most unexpected strain.
Those of us gathered here are on the front lines of federal, state, and local economic development efforts which are absolutely key to improving and sustaining our national economic prospects. This was an attack on our economy and our way of life. Our focus must be a forward one and during your conference you will have a chance to exchange views on a wide variety of ideas relating to the interaction among governments at all levels, our institutions of higher education and research and our vibrant entrepreneurial community. You will discuss ways and means to help fashion specific strategies to further economic growth and create the new future-oriented job opportunities necessary to provide a better quality of life for all our citizens. In this I wish you well.
Many of you I'm sure are wondering: Where do we go from here, some 8 months after September 11?
Will the U.S. economy bounce back? Will global trade remain an engine of growth and prosperity? What about public confidence? Will America regain its footing and sense of purpose? And, of course, how does New York fit into the picture?
I believe things are starting to look up. There are encouraging signs that the economy is beginning to recover.
The economy registered a sizzling 5.8 percent annual growth rate during the first quarter - expanding at its fastest pace since the fourth quarter of 1999.
U.S. factories were busier in April and consumers - the lifeblood of the economy - pushed retail sales up by 1.2 percent - the biggest increase in six months.
Worker productivity, a key ingredient to the economy's long-term vitality, shot up at an annual rate of 8.6 percent in the first quarter, the best performance in nearly 19 years.
These are all signs that the downturn that hit the economy after September 11 is slowly liftinng.
However, caution remains the watchword in Washington concerning the recovery. Consider the following:
The New York-based Conference Board reported its Index of Leading Economic Indicators declined 0.4% last month after rising 0.1% in March. Analysts had forecast a 0.1% decrease. Conference Board economist Ken Goldstein said, "The signal from the indicators is that recovery is developing quite slowly. Despite the strong growth in Gross Domestic Product in the first quarter, the recovery in the industrial core remains week."
Glen Hubbard, Chairman of the White House Council of Economic Advisors, said: "The key to long-term economic expansion is a sustained turnaround in business investment."
Treasury Secretary O'Neil said recently that "It's probably going to be a few months before we see positive job growth in the employed labor force."
Unfortunately, positive growth figures and up ticks in the market mean little to Americans who are out of work - those that are trying to support their families and pay their mortgages, that you and I are most concerned about.
So, where does the Economic Development Administration - EDA - fit in? And all the work that you do?
I know that EDA and New York have a very long and very deep history. Since 1965 ... when the partnership began ... EDA has co-financed more than 2,500 development projects in the State - investing over $1.4 billion dollars.
Just think how many jobs that has created or saved over the years. By some estimates that's more than 345,000 jobs.
EDA is now partnering in a number of New York communities to continue to help boost business development and job growth.
But is this enough? Do the people of New York have all the economic opportunity they need to build long-term prosperity?
Clearly, the answer is "No."
I know that you've been hit hard by the recession.
So there's much to be done.
As President Bush has also said - jobs are more than a source of income, they are also a source of dignity. Therefore, President Bush believes the role of government is to create the conditions in which business creates jobs, and people can find jobs. This is a powerful strategy because private business creates wealth, not government.
This administration rejects the notion of "big government" vs. "indifferent government." Instead, the President believes that government should be focused, effective and close to the people - a government that does a few things, and does them well.
At EDA, we are committed to bringing the agency closer to you, our customers, by moving critically needed resources into the regions where they can do the most good. We are committed to transform EDA into an effective, results-oriented agency.
President Bush's mandate is that we will "leave no geographic area or demographic sector behind" ... as we work with communities to attract private investment and to create higher-skill, higher-wage jobs.
Dick Thornburg, former U.S. Attorney General, former Governor of Pennsylvania and current chairman of the State Science and Technology Institute, recently provided an excellent historical context for our considerations regarding economic development strategies in the 21st century. "In the last two decades of the 20th century the U.S. economy was transformed in a way and at a speed that few could have anticipated. The 19th century's long-term transition from an agrarian based economy to a manufacturing based economy was replicated in an accelerated transition from a manufacturing based economy to a technology based economy. While traditional agriculture and manufacturing will always be important economic sectors in our economy, today's new economic growth is being driven far more by technology industries and their influence on traditional economic sectors than ever could have been foreseen."
Today's economy has been dubbed the new economy, the digital economy, the knowledge based economy and the technology based economy. All are accurate descriptions on our lesser dependence on making and growing things and our greater reliance on ideas and innovations, and of the at least partial eclipse of an economy that is reliant on natural resources rather than human resources.
While this change is a product of national, indeed international forces at work, it manifests itself community by community. No master plan or industrial policy directed out of Washington, DC can effectively stimulate these new opportunities for economic growth and future-oriented jobs. Nor should it attempt to do so.
Governor Thornburg concluded, "The challenge for today's state and local officials and policy makers is to fashion strategies for each state to ensure they are positioned not to just compete, but to thrive in the new economy." Fortunately they can draw on what we already know about how to promote sustained regional economic growth and prosperity. EDA funded research done by ICF, International in 1998 which has identified four basic rules for economic development in the 21st century:
Rule number one: Think regionally to compete globally.
Competing in the global market requires the resources of all businesses, academic institutions, and communities within a region. That is today's reality.
More and more, certain regions tend to have specialized knowledge and capacity that is of a scale and form that distinguishes them from other areas.
Industry no longer cares about political boundaries - except when they're a barrier to business. What they do care about is competitive advantages. And that's where EDA and all of us in economic development come into play. We must cooperate regionally think regionally to avoid fragmentation of resources and build a strong economic platform for growth.
So thinking regional should be the key point of departure for defining economic development needs and goals.
Rule number two: industrial clusters drive regional performance.
Industrial clusters are groupings of industries, suppliers and supporting institutions within a region that export to national and global markets. They are a set of industries that have a lot in common in terms of technology, worker skills, finance, and logistical inputs.
As a result, they tend to congregate near one another, sharing innovative practices and economies of scale.
Industrial clusters are very important to a region because while they typically account for only 25% of the employment base, their economic multipliers account for much of the balance of the region's employment. This makes them the driving force of economic development.
So, you need to understand how cluster development is taking shape in the competitive market place if you are going to have an economic strategy that promotes long-term prosperity.
I am proud of EDA's $300,000 investment partnership with the New York State Department of Economic Development to help the State develop an economic development strategy based on industrial clusters.
New York State's 13 major industry clusters and each geographic region was analyzed based on the integration of companies, labor pools, and schools within those industries that are major sources of jobs in the area.
The EDA investment concentrated on workforce skill development needs, and also included transportation and telecommunications improvements and the economic impact of population migrations.
Rule number three: Economic input-advantage fuels cluster competition.
The rise in competitive clusters is due to the ability of regions to provide them with distinctive sources of economic input advantage - for examples adequate financing, available infrastructure, advanced communications, etc...In other words, clusters won't come to, or expand in, regions that fail to provide at least one input advantage - whether for design, production, or distribution.
Finally, rule number four: Collaboration achieves economic advantage.
If industrial clusters are the center of action in the global economy, how do they become, and how do they remain, competitive? By collaborating. Citizen leaders, both public and private, must agree on a long-term development strategy that creates a competitive climate.
They need to agree on the investments in regional assets ... education ... research ... physical infrastructure ... and, perhaps most importantly, quality of life over time. With such a strategy in place, you will attract private investment and employment. And you will build a "platform for economic growth."
In the next generation economy that regions are seeking to build, the hallmark of vitality will be the agility of institutions and their leaders to recognize and to collaborate in the improvement of existing - or creation of new sources of economic input advantages.
Communities that fail to realize this, that fail to come up with a long-term development strategy, will either decline, or they will stagnate.
Our job at EDA ... working with you, the economic development professionals, is to capitalize on this market-based strategy to seize the economic opportunities of tomorrow. I believe our regional approach to development will work. It's based on solid research and it reflects what's happening in the global market place.
Our funding priorities and investment policy guidelines are based on this new strategy. And we take them seriously as our regional offices evaluate and score grant proposals.
Let me end by saying I see this as an interesting journey...with many opportunities for people to embrace the future. I look forward to taking this journey with you as we work to build long-term economic opportunity for all Americans.
Thank you very much. |
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