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Opening Up the Black Box of Economic Development

Economic development offices around the country have a transparency problem.
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Youngstown, Ohio's Central Square. (Photo: Blue80/Wikimedia Commons)

Youngstown, Ohio's Central Square. (Photo: Blue80/Wikimedia Commons)

Beware of certified professionals. Such presumed bona fides usually masks an exercise of throwing darts. If the results of efforts are obviously positive, then why does an economic development practitioner bear a testimonial certificate? A few years ago, residents of the Mahoning Valley in Ohio asked to see a cost-benefit analysis:

The Youngstown Office of Economic Development claimed to have created 553 jobs during the past five years. Salaries for three members of the YOED staff in 2009 totaled $144,589, including fringe benefits.

Sarah Lown, incentive manager for the YOED, could not provide the office’s budgets from 2005 through 2008.

“We fold our budget into the finance office in our audited statement, so it gets watered down,” she said via e-mail.

Lown said, in most cases, those 553 jobs are still in place in businesses such as Coronado Steel, DiRusso Sausage, Cedar’s Lounge, Blackline Materials Inc. and A-1 Concrete.

“The city’s strategy is to assist those companies who have already been vetted by the banks,” she said. “The term ‘job creation’ is used mostly in follow-up monitoring.”

The job creation numbers are as humble as the salary and benefits for the staff. But we still don't know if the YOED is worth the expenditure. The constituency complains and no one has satisfactory answers for them. The results of efforts are not obviously positive. Such is the nature of the economic development profession. Get certified here.

Economic development offices around the country do not have a certification problem. They have a transparency problem. Trot out those job creation numbers. Do another ribbon cutting. The emperor has no clothes and the people are wise to the shenanigans. What's an economic developer to do?

Before uttering "plastics" or some other petrochemical boondoggle, consider the decline of the Silicon Valley economy like the Detroit economy before it. For each next Silicon Valley, the real Silicon Valley economy diffuses. For each next Silicon Valley, the actual Silicon Valley economy dilutes. Some day soon we will ask if certain communities can bring back innovation as we hoped for manufacturing.