Why You Should Care About Inclusive Economic Development, Even If You Don’t Care About Inclusive Economic Development

May 24, 2018

By John Rees, Research Director

In March, an anonymous group in Atlanta began plastering flyers throughout town lamenting the city’s quest to land Amazon’s HQ2. In addition to the flyers, graffiti critical of Amazon popped up in several locations throughout Atlanta. On their website, the activists railed against the Amazon search process, likening it to “a televised Hunger Games death-match.” According to a survey conducted by the Business Journals, a majority of residents in just three of the 20 finalist cities strongly support Amazon locating its second headquarters in their communities (somewhat surprisingly, this includes Atlanta, Pittsburgh and Indianapolis).

The pushback against Amazon’s search for a second headquarters is at least partially driven by the prospect of a community delivering billions of dollars in incentives to a company helmed by the world’s richest person. Although the use of economic incentives to lure new companies to a community is nothing new, the Amazon HQ2 selection process has reignited criticism of the practice. In March, urbanist Richard Florida launched an online petition calling for a “non-aggression pact” among finalists for Amazon’s HQ2. The appeal quickly garnered 16,000 signatures, including several city council members in Amazon finalist communities such as Austin, Dallas, and New York.

Both champions and critics of economic incentives, however, frequently place too great an emphasis on their importance. For the past 10 years, Avalanche Consulting has led the ED Index, our survey of more than 100 economic development organizations on economic activity. In our 2018 survey, published in March, just 3% of respondents believed that economic incentives have become more important in the site selection process during the past year. In contrast, more than 95% of those surveyed believe that talent availability has become a more pressing factor in securing corporate expansions and new investment.

In many ways, public wariness of financial incentives is less about money and more about a disconnect between regional prosperity and individual fortunes. Too often, regional economic growth has failed to deliver tangible benefits to individual residents. According to analysis by the Brookings Institution, during the past decade just three metropolitan areas ranked in the top 10 in both economic growth and economic inclusion—McAllen, TX; Austin, TX; and Charleston, SC. All of which begs the question—What are these communities getting right?

If the economic development efforts of communities throughout the US are to maintain political support, they must become more inclusive and increase the ability of all residents to take advantage of regional opportunities. By focusing on people, an inclusive strategy can simultaneously contribute to a globally competitive economy while also enriching residents. Our recent CATLYST Strategy for the metro Atlanta region is an example of how a CEDS can focus on economic mobility. By delivering a workforce that is happy, healthy, connected, and skilled, for example, communities can increase opportunities for local residents while also making other site selection considerations such as financial incentives less divisive. Such communities will be best positioned to thrive economically in the years ahead—with or without Amazon. As they say in The Hunger Games, “May the odds be ever in your favor.”