Rodrick Miller draws on his experiences in Arizona, Louisiana, Michigan, and Puerto Rico as he unpacks the U.S. economic development landscape .
Featuring RODRICK MILLER
This episode features a wide-ranging conversation with Rodrick Miller, currently a Visiting Fellow at Harvard Kennedy School, where he engages with a range of initiatives, including Reimagining the Economy. He is also the President & CEO of Ascendant Global Consulting. Miller has spent the last 20 years leading a range of economic development agencies across the U.S. - as CEO of Invest Puerto Rico, President and CEO of the Detroit Economic Growth Organization, founding President and CEO of the New Orleans Business Alliance, Executive Vice President of Baton Rouge Area Chamber, and Vice President of International Economic Development and Competitiveness at the Greater Phoenix Economic Council.
Drawing from these diverse experiences, Miller sheds light on the practice of economic development across the country, including the types of institutions and their incentives and political pressure on economic development. He also reflects on his experiences leading regions like Puerto Rico, Detroit, and New Orleans through and after periods of economic shock.
"In every market, I find that that the focus of economic development may be different. But what I try to bring is a comprehensive thinking to how do you actually drive economies that are inclusive, that are sustainable. And ultimately [economies] that provide the quality of life and options for economic participation that will lead to long-term economic sustainability."
This episode is available on Apple Podcasts, Spotify, and wherever you get your podcasts.
Note: This transcript was automatically generated and contains errors.
Rohan: Rod, welcome to the podcast.
Rod: Thanks for having me.
Rohan: What I actually want to start with is, tell me everything you know about economic development, given that you've worked across at least four US states and regions. But to give this some structure very high conceptual level what are the similarities and differences you've observed these different states and regions that you've worked in, terms of how they conceptualize and practice development?
Rod: Well, I appreciate that question. It's great to be here. One of the things that we find is that every community there tends to be this belief that economic development in their community is so different than it's in other communities, or that the challenges that their market faces are unique.
And the reality of it is that yes, there's some level of difference between one market and another. However, overall, the things that drive economic performance are the same. And so I really try in every market to look with those big drivers of economic performance, those big levers, the innovation and entrepreneurship ecosystem, quality of governance the clusters that are there. How does spatial efficiency work? How is human capital in those markets? And so looking at those things, those are the things that are actually going to drive the outcomes.
What's different in these markets is that economic development takes on a local flavor everywhere, depending on the realities of that market. So, for example, in Detroit, given a lot of the challenges that had happened related to urban decay , there was a lot of capacity around the structure of transactions for real estate deals. And normally when people talked about economic development there, that's what they were talking about, some real estate development project.
In the case of New Orleans, when I arrived New Orleans, there was very little retail and when people said economic development, they were talking about how can we get a grocery store in a community that needs it, or how can we get a Costco or a Walmart or whatever. So that there were amenities for people.
And so in each market. In Puerto Rico, when I brought up a question of economic development, people understood it's the attraction to companies but they thought everything revolved around the question of incentives. So in every market, I find is that, that the focus of economic development may be different. But what I try to bring is a comprehensive thinking to how do you actually drive economies that are inclusive, that are sustainable? And ultimately that provide the quality of life and options for economic participation that will lead to long term economic sustainability growth.
Rohan: So what I'm hearing from you is that there's a little bit of a difference between regions think about economic development in a transactional versus a more comprehensive, transformational manner. But then you're also pointing to the differences in assets and the cultures and these different regions. And that latter resonates a lot with, things I've heard from and repeated conversations where they often talk about the need to recognize that each region is unique with its own set of norms and cultures. As you move to a new place, do you seek to understand these unique codes? How do you try to make sense of the various institutional relationships, the assets as you try to figure out you can leverage these?
Rod: Yeah, that's great. One of the things that I do every community that I go through too, the first thing that I do is really try to get to know the community. And so I spend a good amount of time talking to business leaders, talking to civic leaders talking to the politicians, talking to community folks to try and understand what is it that people feel like they need for their economy to be stronger.
Most places people are going to say, well, we need jobs or we need jobs for this particular population. Or some places people are going to say we need workforce development. And so I spend a lot of time trying to really understand what it is that these communities need and really framing a question around how do you provide that kind of value with an eye towards elevating assets and ultimately raising their competitiveness over the long term. You spoke to the kind of tension, part of the tension is that there's an understanding of what people think that they need. And if somebody thinks that they need something, they probably need it. But the reality is that most of the time, it's not everything that's needed to actually make an economy grow. And so a big piece of the balancing act is trying to figure out how to make sure that you do enough of the local high priority things in the near term to show results while in the long term, focusing on a kind of a comprehensive strategy.
Rohan: That's super helpful. Again you point to how when you talk to communities, you hear a variety of different things, not all of which might be the mandate of an economic development organization, but also at the same time, economic development is such a catchall so many different things. Based in your experience, what is your understanding of the role of an economic developer?
Rod: Yeah, so at the core of economic development, it's about jobs and investment. Ensuring that a community has access to quality jobs. And I think about quality jobs in terms of level accessibility, in terms of pay, wages, those sorts of things. Quality jobs, quality, private investment. And so economic developers, their goal should be to figure out how do you make the economy more productive over time. And there's a lot of components to that.
The responsibility, I often say, it's not a values free role. You're constantly weighing different opportunities against one another. Yes, Project X is going to create a lot of jobs, but it may have this negative environmental impact. Project Y is not going to create as many jobs, but the caliber of the jobs might pay a whole lot more. But are those jobs accessible for different types of communities?
And so the real role with economic developers is to take all of that information and say, here are a variety of paths that we can go down, and here's what these things to our community in terms of not just jobs and investment, but jobs for who, investment where, over what period of time?
This is a question of, what the kind of indirect impact of these investments are. And so economic developers have to be lot more thoughtful than just saying: there's a transaction in front of me, how do I get it done?
Rohan: I have a lot of questions try and understand how to make that more tangible for our listeners. before I do that, sticking with the conceptual. You've also worked across different levels. You worked at the municipal level, the city level, the state level. How does economic development differ at these different levels? For instance, how have you had to approach your role differently each time you worked at these different levels? And what are the type of capacity constraints these organizations face?
Rod: Yeah, that's a great question. At the state level, in most organizations, it can be very challenging because state governments have to do a variety of functions. And one of the functions that state governments do, they have to deal with the big policy questions and serve as the liaison to the feds on the back policy stuff. So they have to do the, the policy stuff at the federal level, at the state level. There's also a lot of work at the state level because you don't really have the luxury of being very specific. Many state organizations. So they have to provide services to everyone, whether that's rural communities or that is metropolitan areas or that's different population groups. So at the state level, you get a lot of different things. And part of the challenge at state level is that the of course that politics of the governor, of the legislature, often drive kind of the direction of programming. And so it's very difficult at the state level to do the work and not have it be politicized. State governments tend to have the big budgets for marketing, tend to have the big budgets for incentives. So state organizations are very important in terms of regions and cities getting reach into other markets.
At the regional level, I'm biased toward s, lot of that is because these different structures, many partnerships, sector leadership. But at the regional level most of the time there is the tools to actually carry out economic development tend not to be in the organizations. They tend to be either with the state organization or with the local organization, which forces somewhat by default regional organizations to focus on big picture, strategic kind of programs and initiatives over time. Regional organizations also tend to have significant budgets for marketing, and you all, you generally want to market as a region for the biggest or best projects.
They normally look for regional, at least 2 million people. And so the regional, at the regional level, lots of strategy and it's lots of marketing as, as a rule. And if there's chamber ties, there can be some public policy lobbying stuff in there as well.
At the municipal level, I often say the municipal levels where you really get your hands dirty. Cause at the municipal level, it seems much more political than even at the state level because the mayors are calling you day and day out, and you live with the folks that are impacted by the projects that you're doing. So you get in real time feedback on how we're doing your job. And you're also really navigating local government and bureaucracy and really trying to deal with owners of sites and things that are very tangible. And I think the best place to really learn the nuts and bolts of the economic development space is at the municipal level.
Rohan: So continuing with this dimension of economic development organizations at different levels of government, you've written in the past: "economies function as regions, but many municipal strategies are not aligned with regional goals." And that's also a lot of what you've said, the previous answer. Can you help us understand how at different levels you've tried to bring around alignment between these different actors and what are the challenges in bringing about that alignment?
Rod: The reality is that there are different things driving decision making at the local, regional, and the state level. But I would argue that no one organization, local, regional, or state, can completely drive the direction of the economy, number one.
And I would argue that equally as important, even beyond the local-regional-state, is the role of the private sector and non-profits. So my theories of change is that the private sector really has to lead the larger discussion about where the economy is going, because the private sector tends to have a longer term view in terms of their money and where the market's going to be in 5 and 10, 15 years. So that's kind of part one, that private sector leadership is incredibly important on all levels.
Most of the time the most municipalities do not have big budgets to go out marketing, to go out and aggressively recruit companies. They just don't. And that's why our regional partnerships tend to be so important. In many cases, the regional groups really do a lot of the big targeted FDI attraction or other efforts around those big strategic initiatives that cities just don't have the budget to do cause they're too small. But by them all chipping, in many cases along with private sector investors, to have a organization that can do that.
And depending on the capacity, the city, most of the time those organizations go out and find deals that would be interested in their region and they work with municipalities in the area to actually be aggressive out how to close those deals. And the ability to close deals is a byproduct of the assets, of the municipality in terms of real estate, in terms of tax structure, et cetera, et cetera. And another big piece of that is going to just be a byproduct of the capacity of those municipalities in terms of do they have people that can work on a deal that has the tenants of manufacturing Project X or software company Y.
And so that's really important. And then I would say as it relates to doing that, it's relatively easy when once there is a grounding, then economies work as region regions. And there were many mayors historically that had pushed back and they said, Well, you just want what's good for our community.
But the regionalism reality is that communities by and large, unless they're a major city, really grapple to position themselves for investment as individual communities. And it's much just much more effective and much more successful if they can do it as regions. And then at the state level, I think the state relationship is important in that the states have the relationship with Feds. Bringing that money to local communities is incredibly valuable. As well as the state really leads a lot of the policy context of how companies are investing.
Rohan: You've alluded to a range of political well as public sector institutional constraints. What's interesting about your work is that you've also been a part of a range of public private partnership agencies. What is the unique role that you think such an agency, that has both public and private sector funding, plays in being able to be that orchestrator in economic development?
Rod: There's a few things that are particularly powerful about the public private partnership. I guess one part of it is, it depoliticizes the work. Ideally the question around where investment goes should not be a political question, should be one of economic impact, the communities cetera, et cetera. So the public private partnership is really valuable in terms of providing the cover to make these processes less political and more strategic. That's one.
A second benefit of public private partnerships is, without that public side in many cases it's very difficult to do transactions cause the public side may have property, may be able to provide certain incentives or other support. The public side may be able to make the permitting process easier. There are variety of things that the public sector controls that are absolutely vital to securing investment. And public private partnerships are good bridge to make sure that that long term private leadership is there and depoliticizing the process. But it's also important to having that public leadership there so that they can actually execute against some of the goals that have been set.
Rohan: So I'm hoping the next set of questions I ask you help illustrate and make some of this tangible. A common theme across many of your experiences has been your leadership of startup units. You first did that in New Orleans, then you did that in Puerto Rico. Let's take the example of the latter. Now, when you set up a coordinating unit, like the one you did with Invest Puerto Rico, what type of institutional re-engineering happens in bringing different departments, different agencies etc, to work together in some sort of mission mode?
Rod: Oh, that's a great question. I think the first, the first piece of that is really dissecting how transactions have happened historically in that market. So in the case of Puerto Rico, what I found was that historically they've just gone out and said: We've got great incentives; that's a reason that you should come here. That was kind of first layer. So there hasn't been a real value proposition that's been crafted that really elevates the ROI of a community coming here. And so that was an immediate marching order because I understood that this incentives conversation was kind of erased.
The second layer of that was to really understand, in that context, who brought the deal to the table and what were the roles? Who were the different players? What I found was that the state organization, the Department of Economic Development and Commerce, which had been around 50 years, their strategy really was: we've gotten these great incentives and that they would take companies through a decree process. Which essentially is like they're coming there and they had access to incentives. I found out that PRIDCO, the Puerto Rico Investor Development Corporation had 1700 properties across the island of Puerto Rico that represented opportunities to position the island for certain types of investment. And there are a bunch of other organizations., but in that process, I tried to figure out who had what assets, what authority, et cetera, that could facilitate and accelerate investment.
Rohan: And to interrupt here for just a moment, it's important to point out that your own organization not itself an implementer, but more of a convener or an orchestrator. So that's an important challenge underlining everything else here.
Rod: Yeah. So Invest Puerto Rico was not the organization that ultimately was responsible for those incentives or for the property. It was more so the organization that kind of grabbed companies by the arm and kind of took them, shepherd them through a process so that their investment would move forward on the island.
And so that meant that our companies got a higher level of touch because they were working with us, had a higher level of credibility because they were working with us. And ideally that would translate into their investment happening sooner and at a larger level because of the insight and perspective that we provided and the ability to kind of navigate through these different elements of government.
And so I think that's really at the core of the question. In these roles you have to figure out who, where the power, where the authority, where the tools lie to get transactions done. And you've got to bring those organizations to the table and figure out. I tend to get MOUs - memorandum of understanding - that outlines the responsibility of each party and how you share information and things. So that things are managed at a higher level, where there's clarity around what kind of pipeline there is and who touches the project at what point.
Rohan: That's really helpful. But here's the question. When you bring these different entities together, entities that might be unused to working together, entities that often have different incentives, there's a lot practitioners have talked about in terms of workforce development and economic development working with very different incentives at the front lines. What are the challenges then in getting all of these different entities, all of these different regional development organizations to actually work together towards common goals?
Rod: Yeah. I think the answer was embedded in kind of the last part of the question. Which is just the common goals. So in most cases, for example, if you're looking at workforce development agencies, their metrics tend to be around individuals. If you look at economic development organizations, those metrics tend to be around companies.
So how many companies can be supported, et cetera, et cetera, et cetera. For an economic developer. For a workforce development person, it's going to be how many people did we support and how did we help these people? The challenge of that approach, in my opinion, is that it's on an individual level versus a systems level, and that it's individual impacts versus system level impacts.
And so part of what I've done and I've been the vice chair of two different workforce development organizations, is really to center the question not on companies or individuals, but on economic growth and the role of human capital in driving economic growth. And then with the conversation centered around that, it becomes much easier to see you actually push the economy forward, if you can get a mass of people that can respond to the needs of sector X, Y, or Z in terms of workforce development. And then you've got something that you can go out and say: Not only did we get 50 or hundred people into new jobs, we got them into high paying job because we were able to tailor a program specifically for software developers, specifically for the healthcare industry and actually have systems level.
And so a lot of it's really trying to figure out how to define those areas, the commonality and recognize that just cause the goals aren't the same, that doesn't mean that they have to be in conflict.
Rohan: Now I'd be remiss to not dig deeper into one statement you just made about the incentive conversation being little bit of a race to the bottom. Research demonstrates that incentives alone aren't enough in creating jobs or generating that inclusive economy that we are after. And there's an increasing understanding, at least in the research community, that in industrial policy is about a range of public inputs and not just about incentives. Is that also something the economic developer community has begun to understand over the past couple of years? Is there broad consensus that economic development needs to go much beyond just the incentive game.
Rod: I think 95% of the economic developers would say that. And I think that's probably been the case for longer than a few years. I think the reality is though, when there is a project on the table, that's a very big project, and you've got Political leaders saying "Do whatever you need to do to get it done", a lot of times the conversation slides to incentives. But what I often say, it is the site selectors and companies that are really sophisticated about this stuff, the first layer of their decision making process is really about what market's going to be best for our company to actually make money and the kind of return. , yeah, they look at fiscal policy and incentives, but more importantly, they look at human capital, they look at the real estate environment, the strength of clusters in that market, how many ties there are to international communities, all those sorts of things.
And then once they've narrowed it down to three to five communities, then the incentives conversation becomes much more important. I think the incentives, and I want to be clear in saying I think are a very important and necessary tool. They're there to offset competitive disadvantages in the marketplace. But where the incentives have gone wrong historically is that incentives continue to grow but those economic, those competitiveness disadvantages are never fixed. And so I think there's more recognition now of the role of incentive should be. I also think there's a lot more sophistication about the other factors that drive investment decisions.
Now the problem is, The other factors that drive investment decisions take long term investment, long term focus, and unfortunately our political system which drives many of these processes, is not long term, does not eye towards the long term structure.
Rohan: At the outset, when you describe the role of an economic development agent, you use the word sustainability, inclusivity and so on. I want to dive into some of those aspects in my next set of questions. One of the common themes across your different experiences is that you've almost always had to work in the context of some sort of crisis. So in New Orleans, you led the economic recovery six years after Hurricane Katrina. You arrived in Detroit at a time when there was migration away from the city, bankruptcy and a general sense of economic collapse. And then you arrived in Puerto Rico after the approval of the Puerto Rico Oversight Management and Economic Stability Act, hurricane Maria and amid the Covid 19.
Maybe we pick one of these examples, but how do crises like these animate your job as an economic development leader? How do you begin to think about making economies of these regions and the lives of the people in these regions resilient to such shock?
Rod: That's a great question. I think part of what's been exciting working in this context is that many times things have to get, become very challenging for communities to make decisions. So in Puerto Rico and New Orleans and Detroit and all of those cases, I arrived at a time where they were willing to, I think, make different decisions or at least give consideration to different approaches that they wouldn't have considered in the past.
That's part of the strength of arriving in these kinds of scenarios. Unfortunately, and I'll say this is true in all of those cases, we think about specific events that push these communities over. But you can look at the last 50 years in any of them and see that there were a series of bad decisions. A lack of investment, a lack of investment, critical infrastructure, population decline, lack of diversification of industry sectors, a level of closeness to outside ideas of people. All those things contributed to getting to the point where there's this event that kind of pushes them over the ledge. And that was the time when I arrived. What one of the things that I had to realize in all of these cases is that there have been people for decades pushing to make things better. So when I arrived, there was a need, first of all, not just to survey the landscape but to also recognize the efforts of the people who had been fighting in the trenches, trying to figure out what a better lifestyle looked like for them.
And you have to know that after a major disaster, part of the process is getting folks to realize things will never, the community will never be the same community it was before. That doesn't necessarily mean that it can't pay homage to it. That doesn't mean that it can't actually be better in some ways.
And so trying to really understand what's at the soul of these communities. And focus on policies and programs that allow them to capture, not only the economic impacts, but really get people's sense of pride and dignity. It's been at the center of all the work.
Rohan: So let's move to an example of when you enter a crisis resolution mode. In 2013, your team in New Orleans launched a document called Prosperity Nola, the first ever comprehensive economic development plan for the city of New Orleans, written with an eye on ensuring that the plan would diversify the economy and present economic opportunities for all citizens of New Orleans. First, what does the process of writing such a document look like? do you begin this process? How do you initiate the behavior change process to ensure that people start thinking differently about their economy.
Rod: I've been through a few of these processes now, and the first question is really, why do you need a process like this? Because economic development is different in every community. When you try to get a understanding of where the economy is going from different business leaders and politicians and such, you get very different answers because they're all starting from a very different place around where the economy is at that particular point in time.
It's all of very personal means or an industry specific lens. And so in order to move forward, there has to be first clarity about where the economy is in that moment. And so a lot of the work is just in terms of the pure numbers. Here's our economy, growing or shrinking? What's the makeup from a sectoral perspective, of the sectors that are there in the economy? Are we adding new jobs each year? And if so, how many jobs and at what levels of wages? Are we in industries that have the right growth trajectory over time? What are the risks to our economy? So the first phase of this is really just being very clear about, let's get a snapshot of where we're the first.
The second phase of that planning process is really understanding where we can go. And part of where we can go is a conversation about the beliefs and the ambition, and even kind of the willingness to take risks of the market. The willingness to take risks and the size of investment that people, well, the level of commitment over time. And so that conversation, that is where the heart of the matter lies, in developing a strategic plan.
Because you're not only trying to say, Where can we go, but what are you willing to commit to get us there? And so in the process of Prosperity Nola, we engaged over 200-300 different business and community leaders throughout the city of New Orleans. And we actually got them to sign documents saying, Oh, I'm going to work on this particular plank of the strategy by providing these kinds of support services or by trying to push our strategy towards this or leading this new entity that we're going to run.
That piece of the process, it's the sausage making? And what's great about it is it allows everyone to kind of get their thoughts about what they would like to see on the table, and then depending on resources and assets that are in the community, things quickly rise at the top - that we should focus more on this or we should focus more on that.
And what's great about these process is, at the end of it nobody's going to agree with 100% of the strategy. But there are people who may. Most people will probably agree with 80 or 90 percent of it. And even the things that they don't agree with, they'll understand how you got there.
Rohan: We've been talking about this process of recalibrating an economy and writing such a document and recreating a strategy in the context of crisis. One of the things you've said to me in the past is that if you aren't facing a crisis right now, you probably will face the crisis in the future. So broadly, at a more conceptual level, how much of an economic developer's job is about recalibrating and coming up with such strategies and planning versus day-to-day transactions? And do economic developers do much of the former with a view of impending crises?
Rod: Unfortunately more of an economic developer's job should be about positioning communities to deal with crisis. I often say if you've never been hit in the mouth before, it will happen. And the example that I often give cause people will say, markets that are really strong, and I say Covid, it affected everyone.
So these bigger economic shocks will happen at some point. And there are a lot of things that economic developers can do in the near term and in the medium term to actually position their economies be more resilient. It's conversations with your manufacturing sector about risks.
So, for example, I know if something were to happen in Puerto Rico, most of the companies here have partners in other markets that could actually, if something were to happen in terms of environment here, where they services out, they have partners in other markets, and all of the facilities are built so that they can withstand hurricanes cause that's a risk.
In other markets, it might be really focusing on workforce development around a particular sector where you see there's growth that's happening, but you don't have enough people in that sector right now. All of those things are things to say, Hey, the market's going somewhere.
We can't just respond to the day in and day out transactions. We actually have to be much more strategic and figure out how to make our market strong, or our market resilient because some challenge is going to happen. Unfortunately, most economic developers have very little time and very little space to do that because of the realities of day-to-day deals and managing political risks as well.
Rohan: So let's move from thinking about the day to day to thinking about some of the most strategic questions. While working in New Orleans, you said: "When we bring high. wage jobs that are a hundred thousand dollars a year, that is the right thing to do. But a strong economy doesn't only have jobs high end. It has opportunities to move a person from $8 an hour to $10 an hour to $12 an hour." How have you been able to make this a priority? What is an economic development agency's role in ensuring that worker interests are safeguarded?
Rod: Worker interests have to be safeguarded. If economic developers are driving job growth and activity in a way where the people that are already in a market can't fully participate, then they're doing the wrong thing. I can't say really any clearer than that.
In the case of Puerto Rico, the average wage of the jobs that we brought over the last three, three and a half years, over 65000-66000 a year, in a market where the meaning household income is less than half of that. And we've been able to do it and ensure that there's an access for people who historically have not had access.
Why? Cause we've got quality workforce development programs, We've got quality programs to help entrepreneurs get access to contracts, those sorts of things. Because we've said, okay, we're not just building an economy to bring in people from the outside. We're building an economy for the people that are here today.
And so, being very cognizant of what your local workforce looks like, what services they can provide, what capacities they have, and how that fits into the global scheme of things. When economic developers have that perspective, they think very differently about the companies that they go after and, and who's going to be impacted by the jobs that are coming in.
In some communities that may look like one community that I'm working with is really grappling with whether or not they want to do industrial land in their community or whether they want to put a more affordable housing in. These are the kinds of value judgements that one has to make.
And of course, the advantage of more industrial property is that these are high quality jobs that tend to be accessible for BIPOC communities. But the other side of the equation is that this place is incredibly unaffordable as it is, has rising challenges of homelessness. So now the question is, we can put in the job creator, but can people access the jobs? Or we can put in housing, but there's no job centers nearby. And so these are the kinds of tensions that economic developers have to grapple with day in, day out.
Rohan: Yeah. And let's continue on that racial inequality aspect. Earlier this year, a survey from the Detroit Metro areas community study highlighted significant disparities in who is most affected by unemployment in Detroit. It finds that black and Latino Detroiters are nearly four times as likely to be unemployed as white Detroiters in the labor force. It additionally found that even employment is slower for people of color. Now, this is a survey about Detroit, but you've worked in other contexts where race has been a factor as well, whether Puerto Rico or New Orleans. In Detroit, you pushed for African American businesses to be a part of the city's revival. How have you tried to understand the specific racial aspects of employment and what are the set of interventions that are needed to make economic development more racially inclusive?
Rod: Oh that's wonderful. And I'm going to try to, try to answer that succinctly. I think the -
Rohan: And that can be the subject of an entire podcast.
Rod: Yeah, I would try to be succinct and thoughtful about how to frame this.
To really deal with the question of the kind of the racial challenges, of the racial realities of economic development, one has to start with an honest assessment of the economic history of the United States at every point in time. Through the modern day even, our economy's been built on racist practices. Whether you're talking about redlining, whether you're talking about access to contracts or opportunities, whether you're talking about infrastructure investment, whether you're talking about environmental racism. And so that line of disparity, it's not just about slavery. It's much deeper than that. It's not just about immigration or illegal versus illegal immigration. It's a much bigger question that goes to the very root and tenets of how wealth in the United States was created. And I think for economic developers, we have to be incredibly thoughtful and focused in terms of learning that racial history, so that we can understand why things are the way they are today.
In most cases, we find that the challenges that black and brown communities, the economic challenges, are oftentimes put back on the community. Well, the reason why blacks have all these challenges and Latinos is cause the number of single parent households or cause of this, that, or the other. And the reality is something very different. It's that the lack of access to opportunity has permeated our society forever. And until we actually take intentional steps to turn those around, which is why as much as I enjoyed conversations about poverty, we actually have to talk about it in racial terms.
We actually have to disaggregate information so that we can really understand the root causes of poverty and lack of access to opportunity in these communities.
And so, my approach to economic development has been one where the question of economic inclusion, not only along racial lines, the racial are important part of it, but also looking at veterans, looking at women, et cetera.
My focus in economic inclusion has been very thoughtful in saying, if these systems, whether it's local government or federal government or other, can actually contribute to the problems in the way that they have, these systems can also be part of the solution. And so being very thoughtful about how to ensure that there is access to jobs, access to opportunities to become entrepreneurs so on and so forth, so that communities of color can fully participate in the economy. And that's not going to happen by accident. It has to be an intentional calling out and an intentional focus. In many cases when the conversation of economic inclusion comes up, communities tend to put together a pot of money and say, We're going to provide small business loans for buy BIPOC businesses. And that's going to be the answer.
I will tell you that almost never works because it's not tailored. So what I say is that the solutions for economic development, they have to be tailored. This is in general, they have to be tailored, They have to be focused. So they should be focused on a sector, They should be focused on a particular type of business or a particular profile of an entrepreneur.
They should have clear outcomes and metrics tied to them, and there has to be enough of a focus on them for enough time. Nothing happens in a year. So if you're not committing to a new project or initiative or something to get more inclusive outcomes, it's at least two to three years, it's probably not even worth doing.
Rohan: And I was wondering, can you tell us a little bit more about your initiative in Detroit where you tried to push for African American businesses to be a part of the city's revival?
Rod: Oh, yeah. So I can talk through a few examples. Probably the most known as something called Motor City Match. And Motor City Match was a program where we identified that there were a lot of businesses, local businesses in Detroit, which were not in physical spaces that made sense for them, or they couldn't afford to find physical spaces.
We also had an issue with lots of blight in Detroit. So we had lots of buildings that were underutilized and through Motor City Match, what I was able to do was to raise a few million dollars a year that would be given out, on one side to businesses for expansion and growth opportunities. So for example, there was one lady who made donuts and she needed a bigger refrigerator to keep the donuts in the high season. And these grants would be anywhere from $5,000 to $100,000 to help these businesses.
And then on the other side of the equation with the Motor City Match, we were able to identify buildings that needed reinvestment, worked with those landlords to figure out how to get these companies into the buildings and even support the build out of the spaces so that they would be optimal and revitalize corridors in target neighborhoods around the city of Detroit.
Another thing that we did in Detroit was Paradise Valley. Paradise Valley was an area in the 1950s that was run through to make room for Highway 10 in Detroit. And it ran through an African American and Jewish business district. And when my organization, Detroit Economic Growth Corporation, in 2006, they saw that there was an area on the outskirts downtown that had gotten up to 80% vacancy. Drugs had crept in and honestly, things were just going down. Made a significant investment in that area in infrastructure, street scape buildings, so on and so forth. Got it up to about 90% occupancy. When I came in 2015, we were able to turn over all of our property there to about five developers, five or six developers that were African American, one was an immigrant and one was a woman. And we were able to do that. And they're bringing 50 plus million in private investment to that area. And it's done an inclusive fashion and it's paying homage to the old Paradise Valley.
And then, One other example I guess that I'll share is D to D program, which is the Detroit to Detroit Business program, which we got the 23 largest companies from around the Detroit region and pulled them together and said, If you could buy procure services or goods from local companies and get it at the same cost point and same value, would you do it?
Of course, they all said yes. Well, we work with those companies to make the contract smaller. We work with those companies to ensure that they that they had relationships with local small businesses. We did all that work, and we were able to grow the spend from 500 million to over 830 million dollars in just three years.
So all of those things supported businesses of color, but it was through very intentional pointed efforts.
Rohan: So when we speak about intent, in a panel discussion of business leaders in New Orleans, you've alluded to institutions not being inclusive. You said: "If you're expecting a profession that is overwhelmingly white to lead in restoring black communities, it'll never happen. That is not because people are bad, because they don't understand these communities." Can you help unpack this statement and tell me a little more about how we can address this dynamic?
Rod: Yeah, and I stand by that. People aren't inherently bad. But when someone doesn't know a community, doesn't have the relationships in the community, and all the challenges that they see seem insurmountable, it becomes a big, a big hurdle to put on their shoulders. Oh yeah, you should be leading the recovery of, of black communities.
Cause it's just not a realistic thing, in that they don't have the tools to do it and they don't know the community. And part of what I've done in every place where I've worked is figured out how do you bring decision makers and community together so that they can understand what's driving the rationale and the thinking behind where they need to go on both sides.
So helping the community understand what the profit motives are and what drives profit for companies and vice versa. Helping companies understand the value that communities can bring to the table. A big piece of the challenges historically, communities of color have been seen, seen as deficits. But the reality is that people, human capital, is the most important driver of economic progress.
So if you can get the business leadership to see people as this human capital as just that as an asset, the approach that they take to working with them changes dramatically. And if organizations can be equipped with the tools to actually do the analysis versus, this is what I think's happening in that community. Cause a lot of that happens even in very big and sophisticated markets where, where there's a political leader of business leader or city leader that says, Oh, I know the problem is X, Y, and Z. And then everybody's off in a direction. But to actually have the discipline of saying, you know what? We think we know, but let's actually look at what the data tells us and have a data based approach. Let's get to know people. And then let's co-create something works for everybody. That's, that's really the best push.
Rohan: Now, Rod, you're currently running your own economic development consulting firm. You're also visiting the scholar at the Harvard Kennedy School where you're trying to create a community of practice. Tell me a little bit about both these efforts. What are the gaps in the economic development market right now, and how are these efforts that you're currently involved in trying to address those gap?
Rod: There are a few gaps in this space, but I think the ones that I would want to punctuate is, number one, is that I think this question of economic inclusion is still something that economic developers and everyone else is trying to wrap their arms around. What does it mean? Economic growth and economic opportunity for who and how? And so the practice has come a long way over the last five or 10 years in recognizing that it has to actually focus on communities that have been disenfranchised and be intentional on building those communities and creating opportunities in those communities.
Part of that is because the demographics show that they're just not enough white people to drive the economy of the United States for over the long term. So ignoring those communities will be at the detriment of the greater economy of the United States. So I think the practices come a long way in recognizing that's something that needs to be addressed.
I think the jury's still out on what actually works, because I don't think there's been enough focus over the last few years for us to have definitive best practices. And I believe we're going to have to kind of do a lot more work to identify what's happening in the specific markets and how do we actually replicate those practices that work.
So that's an opportunity. Economic development practice also needs to just be more diverse in general. I think when I started in economic development 20 years ago, there was probably three or four African Americans. Probably three African Americans maybe one Asian and maybe one or two Hispanics that were at the C-suite level in major markets around the country.
And now here 20 years later, we probably have doubled that. Maybe a little more than doubled that, but it's still not outstanding performance. And to the point I made earlier, economic development needs to look like the communities that it's in. It's terms of the diversity of field. And so I think we've a long way to go in the practice of economic development, in terms of diversifying practitioners and having practitioners that come from communities. Because it's vitally important to being able to bridge that gap and making sure that programs and approaches are thoughtful and effective.
So the work I'm doing at the Kennedy School, I'm really excited about it. It's with the Taubman Center. It's really focused on bringing together economic developers from around the country to really dig deep into what some of the things are that have worked in terms of economic inclusion practices and some of the things that haven't worked.
I'm also focused on, you're know, really supporting students. Students are when I was at the Kennedy School as a student 20 plus years ago there was very little domestic economic development coursework, if any, at all. And there were really no paths for students to move into the field. So a big piece of my work is not only just bringing this community practice together, but finding ways to connect the students at Harvard to opportunities in the field. So I'm really excited and enjoying it a great deal.
Rohan: Lastly, Rod. According to the Detroit Free Press, when then Mayor Coleman Young created the Detroit Economic Growth Corporation in the 1970s, the idea in part was to speed up development by removing layers of inertia and bureaucracy that came with doing things in inside city government. Now, a lot of reforms around the country on economic development have happened at the regional level, sometimes driven by a mayor like Coleman Young but very often by the private sector or local philanthropy. In a moment when there's more Federal attention in this area, reflected in Build Back Better funding as well as the American Rescue Plan, what is top of your policy wish list? What should agencies like the Economic Development Administration, for instance, keep in mind as they try to think about reforms in economic development more generally?
Rod: Oh, that's a great question. I'll answer to a question you didn't ask and then answer that one as well. For local communities. I think the big opportunity of the future is really around things such as environmental technologies and infrastructure. I think climate change is probably the biggest issue that will be impacting our lives over the next few generations.
And so at the local level, I think it's vitally important to think about infrastructure and think about climate change, and even the environment as a sector, environmental technologies, as you build our direct home development strategies.
At the federal level, and I mention that particularly because at the federal level, Build Back Better, ARPA, the Inflation Reduction Acts, et cetera, et cetera. They've done a very good job at putting in a lot of money around things related to economic inclusion and a lot of money related to efforts related to infrastructure. What they've not done, which I actually think is in this case a good thing, is they've not been overly prescriptive. I believe it's probably because for two reasons. One is they don't know what the answer is, and two is that, that the best answers are going to come from the bottom up. So I want to give the Feds a shout out and say that I think that they were very smart and the structure of a lot of this legislation in terms of giving the space for local practitioners and communities.
What the ED and others I think can do better? I think one is information. Most economic development organizations at the local level really struggle with basic information. They need to make decisions because they don't have teams that can crunch data and they don't have good analytics. And I would say at the federal level, they have a lot more resources and they could be very powerful if they could provide support in analytics and in data for local markets. Secondarily, I think while we did a rework of the WIOA, the Workforce Investment Opportunity Act, while the WIA was what it was before was it was refashioned as a Workforce Investment Opportunity Act. This still falls of aligning workforce development and economic development. And I think there's still some tweaking that needs to be done in that.
The third thing I would talk about would be the Community Reinvestment Act that pushes banks to reinvest in communities based on where they've made money, in particularly poor communities.
I think that I think it's probably time for rework of the Community Reinvestment Act as well to make sure that the uses align with the realities of kind of a modern day economy that hasn't been looked at quite some time. So those are kind my high level thoughts for the Feds and for the locals in terms of what to be thinking about next.
Rohan: Rod, I'm sure this is the beginning of many more conversations. Really appreciate the work you're doing both at HKS and beyond.
Thank you so much for your time
Rod: Thanks for having me.
Rohan: Thank you.