Private-sector involvement needed for economic development
In the United States, economic development programs at the state level generally fall into three categories: purely public-sector agencies, public-sector agencies with a separate public-private marketing and recruitment arm, and public-private economic development partnerships. Delaware currently uses the first approach – with all economic development efforts solely under the state Department of Economic Development Office (DEDO).
The Business Roundtable believes Gov.-elect John Carney and the new General Assembly must fundamentally change Delaware’s approach to economic development by establishing a public-private organization that crafts a new comprehensive strategic plan backed by a marketing campaign that pursues new investment and jobs in key industries.
This will bring Delaware in line with the approach increasingly taken by other states, including Arizona, Florida and North Carolina, where public-private partnerships have been credited with attracting tens of thousands of jobs, significant capital investments, and billions of new dollars in sales and payroll.
The Roundtable believes the new economic development organization should be funded by multiple sources and governed by an independent board with a core mission to facilitate new and expanded investment in Delaware that retains and grows jobs; to encourage the development of infrastructure and enhance the business climate; and to nurture a culture of entrepreneurship and innovation that enables the state to grow the industries, technologies and jobs of the future.
But what would this new organization actually do? We believe it should:
- Recruit businesses to the state, with a special emphasis on putting together deals that attract companies and jobs in key industries, including financial services, business services, health care, education and knowledge creation, manufacturing, and distribution.
- Lead marketing and promotion activities that leverage the businesses already incorporated in Delaware.
- Consolidate international and foreign direct investment attraction activities.
- Conduct competitive analysis and research to serve business recruitment.
- Align economic development activities with workforce development programs.
- Identify real estate for potential businesses.
- Support economic development efforts at the local level.
DEDO’s most recent budget includes about $3.8 million in state funding for operations, with another $10 million in the strategic fund. A new public-private organization should set a goal of raising sufficient private contributions to match up to half of the existing operations budget – or another $1.9 million.
The payoff for the state can be seen in the experiences of other states. Florida, for example, was the first to convert its Department of Commerce into a public-private organization responsible for growing the state’s economy. Enterprise Florida, which receives funding directly from the state and corporate investors, reported that its efforts in fiscal year 2014-15 created or retained more than 33,500 jobs, led to export sales of $675 million and led to $2.7 billion in capital investment.
The story is much the same in North Carolina and Arizona. But a new organization alone will not turn Delaware’s economic fortunes around.
That is why the Roundtable has included this recommendation in the comprehensive Delaware Growth Agenda, a broad strategic framework for pursuing a new long-term approach to economic development in Delaware that makes the state a global magnet for leading-edge technologies, talent, and investment.
Working together, the new administration, the General Assembly and the business community can make this goal a reality.
Robert Perkins is the executive director of the Delaware Business Roundtable.