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A Smart Read On How To Fix The Local Economy

A lot of reports and think pieces cross my desk, which, as my colleagues will attest, looks like a landfill. A particularly good paper, detailing a strategic economic development plan for the region, arrived via e-mail a few weeks back, which I am sharing here.

It was written four years ago by Jim Allen of the Amherst IDA and John Sheffer of the Institute for Regional Governance. It didn't gain any traction with the local powers that be. The paper remains relevant and I found sections dealing with entrepreneurship to be of particular interest, including a proposal floated a year ago by Sue McCartney, head of the small business development center at Buffalo State College.

The upshot: small and medium sized businesses are the ticket.

"The rapid pace of change in the new economy has given small and medium sized firms opportunities to compete with larger, better-capitalized firms. Today, over 50 percent of U.S. exports are created by companies with fewer than 19 employees ... Since 1980, the United States has added 34 million new jobs despite the fact that Fortune 500 firms lost more than 5 million jobs during that same period."

WNY is behind the curve, however:

"The National Commission on Entrepreneurship has devised a measurement tool called the 'Growth Company Index' which measures the ratio of high growth firms (at least 15 percent growth per year for five years) with all firms started in 1992 or 1993 that had at least 20 employees by 1997.  The GCI for Buffalo Niagara is 77, with 100 being the national average.  In comparison to other comparably sized regions, Phoenix had the highest GCI of 197; Salt Lake City - 196; Dallas - 195; Atlanta - 190; Grand Rapids - 171; Cleveland - 156; and, Pittsburgh - 98.  In fact, the only regions having a lower GCI than Buffalo Niagara are Tampa, West Palm Beach, Albany, and Syracuse ...

"The Buffalo-Niagara Falls MSA has a relatively low number of new startups and failures, an indicator of job churning ... Between 1998-1999, the robust years of the recently deceased economic boom, Buffalo created negative 28.6 firms per 100,000 in the population."

What it will take to turn things around:

"To become an entrepreneurial region, Buffalo Niagara must continue to develop diversified sources of capital through the following means:
• Expand its small network of “angel” investors;
• Find new sources of seed, or early-stage capital;
• Encourage a more flexible, less risk-averse banking system;
• Encourage the creation of new public-private partnerships;
• Create or expand state and regional venture funds; and
• Seek and encourage additional venture capital.

Strengths to work from:

"The Buffalo region has a wealth of higher education institutions, including the University of Buffalo, the flagship institution of the SUNY system and a major research center, and excellent smaller liberal arts colleges such as Canisius College and Niagara University.  Research and development, which yields new product innovations and adds to the knowledge base of industry and the marketplace as a whole, is a key driver of economic growth.  Both PPI and Beacon Hill rank the Buffalo MSA in the top 15 MSAs in Academic R&D funding.  Likewise, The Buffalo MSA ranks 7th out of the 50 largest MSAs in National Institute of Health funding dollars per capita.   

"The Buffalo MSA has a relatively large number of the population enrolled in degree granting institutions, which is an indicator of an educated workforce ... PPI ranks Buffalo 18th in workforce education. Also, both PPI and Beacon Hill rank the region 4th in degrees granted in scientific and technical fields as a share of the workforce."

Weaknesses to overcome:

"Buffalo Niagara’s innovation and entrepreneurship weaknesses are linked to the inability of the region to capitalize on academic research being conducted at various universities, failure to hold on to young, educated individuals, and its inability to promote entrepreneurship. "

"Steps must be taken to change the conservative and risk-averse culture that currently exists within the region. Furthermore, the region must become more tolerant and open to diversity in order to retain or attract the creative class that has propelled other regions of the country into the new economy."

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Economic Development | Recommended reading
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