Last week The Wall Street Journal chronicled a burgeoning trend in states with conservative governors or legislatures — outsourcing economic development to the private sector.
Seven states, including Michigan and Florida, already have some form of private group filling the economic-development role. Critics say handing this power to a private entity can create conflicts of interest, because the nonprofits usually have boards made up of public officials and private business leaders. This can create conflicts as these boards help steer tax breaks and incentives.
Also, in many cases private economic-development agencies aren’t subject to the same standards for public disclosure as government agencies, even though they receive government money. In Ohio, where newly elected Gov. John Kasich has proposed dissolving the state’s Department of Development and creating an entity called JobsOhio, lawmakers have pushed to increase disclosures and allow the state’s inspector general to investigate the proposed entity.
Beyond what’s mentioned in the WSJ article, there are other examples of this playing out across the country. Iowa, for example, has proposed ditching its Department of Economic Development and replacing it with a private-public partnership called the Iowa Partnership for Economic Progress.
The Iowa Partnership for Economic Progress, which they’re calling I-PEP, would accept money from private companies to finance things like advertising campaigns to market the state or travel to other states to recruit new businesses.
Whether this is all about money is debatable. As the Wall Street Journal pointed out, it may be just as much about economic philosophies than anything. But no matter if a state’s economic development comes from the public or private sector, there’s always going to be the need for strong partnerships and innovative programs that don’t always cost lots of money to get off the ground.
GrowFL provides technical assistance to second stage companies under the premise that, as economic gardening pioneer Chris Gibbons put it, “economic gardening” is a better approach than “economic hunting.” The idea isn’t just catching on in Florida and Colorado — Michigan is also putting a renewed emphasis on nurturing existing companies, as new Gov. Rick Snyder has outlined.
Gibbons, in an interview with Florida Today, shared the following thought back in November, but it seems fitting with the movement toward privatization of state EDCs: “This is not a political program. It’s a scientific program,” he said of economic gardening. “The public sector role is to make the private sector work better. We can build a nurturing environment for the private sector.”