Wednesday, April 9, 2014

Meeting Global Demand & Creating Local Demand

One of the more disturbing possible explanations for widening economic inequity is that innovation in the global economy is reducing demand for labor. If -- and I emphasize the word if -- this is the case, this poses an unprecedented challenge for the economic development community.

Economic development efforts today are almost entirely designed around improving a community's ability to meet global demand for goods and services. Entrepreneurial assistance programs are designed to assist start-up businesses serving global markets. Business attraction efforts target companies that are growing because of increased global demand for their products. Business retention and expansion efforts are focused on helping companies innovate and address the ever-changing demands of global markets.

But if all of that effort to help companies meet global demand actually results in fewer people working, what is the civic justification for these efforts?

If what we are seeing in the post-Great Recession economy is a global reduction in demand for labor the mantra of traditional economic development efforts could no longer be "jobs, jobs, jobs." No governor is going to seek re-election touting the growth in their state's economy if that growth resulted in fewer jobs.

Such a dramatic shift in global economics would require economic developers accustomed to helping companies meet global demand to help entrepreneurs create local demand. Perhaps the best example of this is the burgeoning local foods sector. Much of the food market is globalized -- we buy berries from Chile and chicken from China. But as plenty of communities have demonstrated, there is growing demand for local foods -- everything from farmer's markets to local restaurants that rely on locally-sourced food. The entrepreneurs propelling these efforts aren't trying to meet global market demand, they are striving to create local demand. And this local demand is -- relatively speaking -- labor intensive.

What's exciting is there is growing evidence that despite the globalization of our economy, entrepreneurs are able to create local demand. And these entrepreneurs are deserving of assistance from economic development organizations. While no more food is being consumed in a no-growth region like Northeast Ohio, more food is being produced by local labor -- whether that is by farmers affiliated with the Countryside Conservancy or the plethora of new businesses surrounding the West Side Market in Ohio City. Obviously the question is how much of the global economy can be shifted to a local economy and would that shift result in more vibrant communities? Advocates of locally-sourced clothing, furniture and even cars will tell you that huge chunks of our economy can be shifted from the global to local markets.

The good news for economic developers is that the strategies to meet global demand and to create local demand aren't mutually exclusive. The most resilient communities will find ways to support strategies that increase local demand, in addition to maximizing the value generated by helping companies meet global demand.

No comments:

Post a Comment