Econ Dev Tour 2007!

I apologize for the skipped week(s), but June was hectic in kicking off the economic development conferences that accompany the summertime. I spent the last few weeks in Europe, namely the UK and Portugal, in various cities meeting with folks in economic development and university technology transfer. Let me recap some of the highlights and my reactions from the start of my trip, a few days in central-western England, the UK’s Black County, for a conference on entrepreneurship and economic development. I had the opportunity to speak with a number of great folks from the area, who were quite gracious hosts, I should add. I strongly recommend a visit, especially the Great Western Pub.

The conference embodied many of the themes I have encountered across the U.S., particularly at conferences on entrepreneurship and economic development. Here’s the most prominent 4 themes I found:

1. Real Estate = Economic Development. Much of the conference was targeted at real estate development, which was largely used synonymously with entrepreneurship and economic development. This is not unique to this conference, and many cities have mixed supporting start-ups with building renovation and land reuse. The interesting aspect of this mix is that rarely is the question asked: are new malls, train stations turned loft offices, and the like what our start-ups most principally need?

2. Where’s the Entrepreneurs? I was one of two people whom I could find at the conference who had previously started a technology company. It was interesting to sit through a large conference about encouraging entrepreneurship when there are virtually no entrepreneurs in attendance. This is how one gets back to point 1 above.

3. What makes you different? The question I like to ask first to everyone I meet at such a venue is “What’s your strengths as a city?” The answer is generally “livability, an educated work force, and technology.” But ever city says that. A regional development strategy has to account for uniquely valuable assets in the region. Its that simple.

4. Profit driven economic development. Growing up in the 70’s and 80’s, I embodied Alex P. Keaton’s ideals. As I went off to college, I knew my eventual studies had to be a mix of economics and business. I joined the College Republicans. As you might imagine, I’m as much a free-market capitalist as the next guy.

All that said… it is tricky to mix profit motives with economic development. Specifically, throughout Europe (and the U.S.) I ran into a number of incubators and support organizations who charge high rent or take sizeable portions of their companies. Not all such organizations did, but many. Advocates of such an approach rightly argue that there needs to be some cost or any person will start a company to take advantage of the free space. I generally agree with the idea, but not the implementation. First, isn’t encouraging anyone to start a company the idea? Second, there’s other ways to screen that don’t take ownership and money out of the company.

Lastly, and most importantly, the debate is in the outcomes. Throughout my travels, I have observed that the more you charge in rent (or the costlier you make it), the more incubator spaces you have that house local R&D branches of big companies and small, stable (often service-oriented) companies. These are the two types of companies that can actually pay rent but don’t need to have their own large space.