We need an alternative approach to regional economic development
Regardless of the name (Tri-Cities, Upper East Tennessee or Appalachian Highlands), we live or die as one region. However, we have been unable to formulate a coherent story that incorporates and mutually benefits the disparate political entities. As a result, we remain a region of largely untapped potential hindered by the obstacles that have thus far prevented a unified approach.
Our economic development programs are primarily based on traditional industrial and retail/hospitality recruiting. Attempts to create regionalism have focused on combining existing legacy organizations. These efforts have had some success but have been hindered by recent setbacks in efforts to combine programs. Ultimately, the present “top-down approach” has been unable to generate perceived equitable benefits for several reasons.
The first is the result of Tennessee’s site-based tax system. Location matters! If retail sales or property tax are involved, the revenue accrues to the locality in which the property is situated. Fundamentally there is nothing we can do about this situation. It drives parochialism and each government fights against the others to get their share. This is a rational approach, but it undermines the incentive to act together.
Second, we view opportunities as monolithic. Business prospects parceled out by the State, are a “one of a kind” proposition. In essence we are left with trying to find a way to “split the pie” so that everyone is happy with their slice. This is virtually impossible.
Finally, community identity is much stronger than our collective vision. Our hometown sports’ rivalries correspond to and reinforce competition rather than shared identities. In a microcosm, we suffer from the same “us versus them” mentality that hinders national policy consensus.
We must find an alternative approach that mitigates these obstacles. It starts with recognizing that each part of our region has unique characteristics, and those attributes drive the desirability of that location. For example: Kingsport is a center of manufacturing; Johnson City has a critical mass of healthcarerelated activity; and Bristol is developing as a center of entertainment, retail and hospitality.
These relative strengths are what is known as “Comparative Advantage.” Economic theory postulates that for maximum overall benefit, each entity should focus on what it is better at relative to the its competitors, even if the others have similar capabilities or characteristics. This seems self-evident, but we are reluctant admit that someone else may be better at something than we are. For regionalism to truly succeed, we need to nurture and enhance these differences to our mutual benefit rather than try
to homogenize ourselves.
This new concept does not render the current Industrial/retail recruiting process obsolete. That is a game that must be played. It is how the State program works and if it is successful the payoff can be significant. The efforts to combine the current operations are worthy and essential. They should be continued, but it does not affect the proposed alternative. In fact, the new Comparative Advantage Model can demonstrate a concrete way for the different political entities to cooperate to their mutual benefit which can make integration of the existing traditional industrial recruiting efforts easier. Success breeds success.
Focusing on comparative advantages, allows each locality to do what it does best, while building a comprehensive whole without directly competing against each other. It allows us to cost effectively focus resources by developing our individual strengths while simultaneously building up the region. Perhaps more important, it highlights the totality of our capabilities rather than underscoring our shortcomings.
For example, in outdoor adventure sports we have mountain biking trails at Bays Mountain (Kingsport) and Tannery Knobs (Johnson City), as well as the Creeper Trail in SW Virginia. Together this begins to establish a compelling story that any individual venue cannot create. The approach identifies and highlights existing resources and utilizes them to their maximum potential; it does not try to reinvent the wheel and duplicate capabilities that are already available within the region.
A logical place to start this paradigm shift is with Entrepreneurship. Startup and early stage companies are focused on needed resources not location. In today’s virtual world of remote working, location becomes even less important. We should work to establish our region as a recognized Center of Innovation for Rural Entrepreneurship oriented around each community’s relative strengths. This is in concert with efforts by the State of Tennessee to promote areas outside the major urban areas. The objective is to integrate key components of startup and early-stage companies’ operations into the economic fabric of our community, not necessarily to have them move here. This reduces the emphasis on site-based competition within the region that has here-to-for hampered growth.
It is imperative that regional partners (individual leaders, private sector companies, educational institutions, and political entities) understand and endorse this new economic development model based on “comparative advantage” that allows for a bottom-up approach to build regionalism. In addition, these partners should support the efforts currently being undertaken to build a robust regional entrepreneurial ecosystem as fundamental component of the overall economic development efforts
within the region.