Regional Economic Connectivity
A Strategy to Build Opportunity in Distressed Communities
Economic development is primarily a generative activity whose goal is to expand the economic “pie.” However, some people and communities benefit much more than others and some people’s slices may even become smaller as the pie expands. Equity-oriented policies, on the other hand, are primarily distributive. They are designed to ensure that people with the smallest slices of the pie receive bigger slices, regardless of what happens to the size of the entire pie.
Regional Economic Connectivity: A Strategy to Build Opportunity in Distressed Communities, which was generously funded by the Kresge Foundation and the Robert Wood Johnson Foundation, explores another option—regional economic connectivity strategies that ensure distressed communities benefit from the expansion of the regional economic pie. Regional economic connectivity is an emerging strategy for place-based economic development in under-resourced communities (URCs)—highly populated areas of concentrated poverty and low income located in central cities and suburbs within metropolitan areas. Regional economic connectivity occurs when an industry cluster driving growth and competitiveness in a broader metropolitan region also has a strong presence in URCs. Regional economic connectivity indicates that cluster benefits and opportunities are not isolated within the region but bring jobs to distressed communities. Economic developers and their partners can promote regional economic connectivity by identifying cluster opportunities for URCs and targeting asset development and other strategic investments that support the growth of regionally strong clusters within URCs.
Implications for Economic Development Policy and Practice
Prior research has shown that when cluster-related activities in distressed communities are aligned with specialized clusters in the broader region, clusters in distressed communities exhibit stronger wage and employment growth. This suggests that a connectivity-based development strategy can be a pathway for opportunity in URCs. The report builds on that insight using a combination of data analysis and case study evidence. The report describes the basic features of economic connectivity, identifies how connectivity has been achieved for a diverse set of industry clusters in five metropolitan areas, and draws conclusions for economic development policy and practice:
- Production Technology and Heavy Machinery in Cleveland-Elyria, OH.
- Communications Equipment and Services in Hickory-Lenoir-Morganton, NC.
- Education and Knowledge Creation in Fresno, CA.
- Insurance Services in Miami-Fort Lauderdale-West Palm Beach, FL.
- Information Technology and Analytical Instruments in Austin-Round Rock, TX.
These cases offer the following insights for economic development policy and practice:
State and local governments and regional organizations should consider incentives and strategies structured to attract and retain cluster-related firms in URCs. Incentives, including workforce development, small business technical assistance, infrastructure improvements, and site preparation, should be targeted toward fundamental business development challenges within URCs, toward firms that are part of strong regional clusters, and toward those that are located or planning to locate in URCs.
Attracting investment in URCs to develop regional economic connectivity requires special approaches for anchor institutions. If anchors, whether nonprofit or for-profit, are driving connectivity (as are higher education institutions in Fresno), they have special roles and responsibilities to train and hire URC residents, contract with URC businesses, and avoid or minimize gentrification and displacement of current URC residents. In so doing, they can attract other businesses and jobs to URCs.
Related clusters, especially those that include professional and business services or infrastructure, can be the basis for connectivity of other clusters. Some clusters support the growth of related clusters. In the Miami region, the Financial Services has grown recently as businesses relocated from northeastern major metros post-COVID. The growth of Financial Services helped spur the growth of the related Insurance Services cluster. Key strategies to support the development and connectivity of these complementary clusters are access to small business support services and programs such as Accelerate Miami-Dade to bridge the digital skills divide and expand access to job opportunities across industries.
By itself, the presence of regional cluster employment in URCs does not guarantee greater prosperity or opportunity for URC residents. To ensure that jobs in URCs are accessible to URC residents, a combination of workforce development, wrap-around services (such as child care, transportation, and career counseling) and employer commitments to hire residents is necessary. Many of the industries we profiled are tech- and innovation intensive, with opportunities for those with skills but less than a college degree. Employer-led workforce programs, such as CommScope University in Hickory, NC, support employment for local residents.
Because the nationwide findings may not hold for all metro areas or all clusters, an economic connectivity dashboard accompanies the report. It shows the features of connectivity in each of the analyzed metro areas and clusters. Economic developers can use the dashboard to identify the locations and clusters that offer the best opportunities to improve connectivity.
Read Regional Economic Connectivity: A Strategy to Build Opportunity in Distressed Communities for a deeper dive into the analysis and findings.