Gov. Beebe releases five-year economic development strategy

Injecting an increase of more than $25 million a year into job recruitment and retention programs is a key component of a new five-year economic development strategy proposed by Gov. Mike Beebe and the Arkansas Economic Development Commission.

The new strategy contained in a 108-page document recently was sent to elected officials, economic development and chamber officials around the state. The AEDC intends to make it public later today (Jan. 9).

To better fund AEDC operations, including the agency’s Economic Infrastructure Fund, the new strategy proposes to boost annual spending from about $97 million in 2008 to $122.5 million annually for 2009 and 2010.

Also, a $30 million fund is recommended that would support — using a matching fund method to help fund community projects — technology-based initiatives and would be modeled after the Governor’s quick action closing fund. This new fund and the increased annual budget would boost economic development support by more than $80 million in the biennium.

The report makes a case for the success of the Governor’s quick action closing fund — which received $50 million in 2007. The AEDC suggests that 6,616 “projected direct jobs” landed by the AEDC in 2007 with the help of the quick closing fund are “helping to increase the wealth of Arkansans. … Most importantly, the years in which the average wage of jobs created by the AEDC is above the state average can directly be attributed to the availability of infrastructure funding through either the Economic Infrastructure Fund or the (Quick Action Closing Fund), or both.”

AEDC Executive Director Maria Haley created a strategy team in June 2007 at the request of Beebe. The team built a plan around five principles laid out by Beebe.

The five principles are:
• Increase the incomes of Arkansas at a growth pace greater than the national average
• Expand entrepreneurship, focusing on knowledge-based enterprises
• Compete more effectively in the global marketplace for new business and jobs, and create a business retention strategy to reduce closures
• Economic development will meet the special needs and take advantage of the extraordinary assets of various areas of the state. It will not be a one-size-fits-all.
• Increase the number of workers with post-secondary training so they are prepared when they enter the workforce and equipped for new jobs in the future.

“The five Guiding Principles outlined in the plan are intended to create more income growth opportunities for Arkansans throughout the state,” noted Haley in an introductory letter. “These principles are focused on Governor Beebe’s vision for economic improvement, which is to raise the incomes of all Arkansans through educational improvements and job creation. Greater employment opportunities in the 21st Century economy will become available as a result of aligning education and economic development initiatives with the needs of the business community.”

First year goals of the five-year strategy include communicating the new strategy, drafting the necessary legislation to implement the new initiatives, develop the path to reach all goals within the five-year period, enacting “substantial changes” that lead to effective regional economic development and improving private funding options through a review of the Arkansas Economic Development Foundation.

The report spends many pages and words outlining what many Arkansans already know and have known for years: We operate in a global economy and our old approach to economic development — primarily built around manufacturing recruitment and retention — has resulted in a state economy that is positioned poorly to take advantage of knowledge-based job growth.

Action items related to the five principles include hints as to a real change of direction proposed by Gov. Beebe and his economic development agency.

EDUCATION
With respect to education, many of the action items center on connecting programs and policies of the state’s education departments to economic development programs and policies. And not all of those of connections come in the form of four-year college degrees.

One action item seeks to “ensure optimum development of programs that meet regional economic growth opportunities. For example, regional centers of excellence modeled after the University of Arkansas at Fort Smith’s Western Arkansas Technical Center and Mid-South Community College’s ADTEC could focus on sectors such as aviation, metal fabrication and industrial technology throughout the state.”

In what will be a tremendous task, the report recommends that the Governor’s Workforce Cabinet “propose consolidation of all workforce development programs under the auspices of one agency director who is directly accountable to Governor Beebe. This new entity would be process — not program — driven, and would have a primary goal of providing people with easy access to training that equips them with skills relevant and marketable in today’s economy.”

The AEDC recommends streamlining the state Workforce Investment Board, which now consists of almost 400 board members. “A streamlined board with more meaningful business and industry participation would enhance service delivery.”

REGIONALISM
The report stresses the need to encourage economic development activities at the regional level. A common theme in this area is enacting legislation or constitutional changes that give communities within a region new ways to raise funds for economic development purposes. In fact, the report stops short of suggesting that a regional economic development approach will be a necessity for communities wanting support from the AEDC.

HIGH-WAGE, HIGH-TECH
On the matter of supporting higher-wage, higher tech jobs, the new strategy lists several action items. Those include: efforts to foster the development of regional innovation and entrepreneur centers in Arkansas; proposing incentive legislation to promote the formation of regionally based investment groups to provide small business early stage funding; and working with state and federal groups to “develop additional private laboratory space.”

MANUFACTURING
And what about manufacturing? It’s not forgotten.

“The AEDC will convene a meeting with Arkansas Manufacturing Solutions to develop a plan to ensure that manufacturers are continuously upgrading technologies and commercializing new products to remain globally competitive.”

TOURISM/ENTERTAINMENT INDUSTRY
The AEDC will evaluate how its film office can better work with the Arkansas Department of Parks and Tourism to improve opportunities for tourism and film industry development. Also, the AEDC will review the Arkansas Film Industry Analysis submitted by Economic Research Associates to determine if legislation should be proposed in 2009 to encourage more film industry production in the state.