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A New Economy in Need of New Tools

image couresy of ICIC.org
At the Inner City Economic Summit, ICIC presented Newark Mayor Cory Booker with an award for his commitment to inner city economic revitalization.

A couple of weeks ago, ICIC convened 250 corporate, civic and city leaders from across the U.S. to address challenges facing our inner city economies. Practitioners discussed how to align systems – including land use, capital and small business technical assistance – around an inner city’s growth clusters to drive economic and business growth.

Throughout the two-day Inner City Economic Summit, important themes emerged:
 

Equity is an economic argument—not merely one of fairness. 
Equity is vital to the growth of our cities, regions and nation—not just our inner cities. Inequality within the region holds growth back for all residents and businesses.

Certainly, regions need to be growing in order for our inner cities to prosper. However, regional job growth is not sufficient for the revitalization of inner city economies. As ICIC research has shown, communities need specific strategies for growing the economies of inner cities.

This recession is atypical; our economy is facing systemic changes that require the alignment of economic development approaches to foster job creation. 
Jeff Fuhrer, Executive Vice President and Senior Policy Advisor at the Boston Fed, and Harvard Business School Professor and ICIC Founder Michael Porter both touched upon this theme. “We are facing a real competitiveness challenge; this is not a cyclical downturn – it’s something much deeper than that,” explained Porter.

The private and public sector must work together: the public sector creates the environment that stimulates private sector job growth. Finally, we must expand the tool-kit that economic developers use, while simultaneously aligning capital, business advisory services, land use planning and workforce development to growth industries.

Collaboration is key to affecting real change. Collaborative efforts are often most successful when a neutral, third party convenes stakeholders.
Community foundations often lead the charge, but anchor institutions and quasi-public agencies are other neutral conveners. Nearly each What Works panel participant cited collaboration as critical to pushing anchor, food cluster and workforce development projects forward. Moreover, those involved in the collaboration should be willing to give away credit for successes if it helps accomplish the group’s goals.

Cities have found unique ways to grow industrial activity; each city is different and should adapt solutions that complement its own assets and needs. 
There is no right way to promote industrial; what works in cities such as Boston or San Francisco will not necessarily work in cities like Saint Paul or Baltimore. The important thing is to find the solutions that minimize barriers in your city and maximize job creation.

Whether linking community capital to city growth clusters can be scaled remains to be seen. 
There was not consensus on the question. While there are successful models that can be replicated, these programs so far have reached a limited number of businesses. It does appear that there is a benefit of customizing loan vehicles and lending expertise to particular industries.

Often, underserved businesses need smaller loans that are too expensive for traditional lenders to provide due to high transaction costs. CDFIs, SBA lenders and alternative financing models present an opportunity to fill this capital gap and grow underserved businesses. There are learnings from traditional lenders and investors that can be applied to alternative lending.

Existing sources of data about underserved small businesses are insufficient.
Current sources of data tend to under-report or inaccurately report the needs of small businesses. We need to get it right: underserved businesses need access to networks, technical assistance, and capital—but there is no one size that fits all. If we had a better understanding of the business ecosystem, we can segment businesses by industry, revenue, number of employees and growth stage in order to better serve the business’s needs.

These are just a few of the many themes that surfaced throughout the two days.  To learn more about the content shared at the Inner City Economic Summit, view videos of the presentations, and download PowerPoints, visit icic.org. 


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