Getting the State Role Right on Regions

by Mark Muro | June 16, 2011

States don’t often get the state-metro relationship right on economic development, as Kenan Fikri and I observed recently in a paper on the potential of state industry cluster strategies.

Sometimes states ignore or stiff their regions, thanks to the dynamics of rurally oriented legislatures.  Other times--when they do recognize the centrality of their regions’ critical clusters--they get too pushy, and try to dictate outcomes with top-down or over-determined industrial policy.  Either way, the magic touch remains elusive.

Yet here’s something auspicious: Michigan is getting the state-region link just right with a creative “match” initiative it’s offering this month to strengthen its regions’ applications for the Obama administration’s pending Jobs and Innovation Accelerator Challenge program.

The deal works like this:  With the Jobs Accelerator program holding out $33 million to support 20 awards to regional consortiums that propose the smartest cluster initiatives, the Michigan Economic Development Corporation’s “Michigan Match” maneuver is committing to award an additional 25 percent of the amount received by a winning region to further support the initiative, and enlarge it. In short, the state will throw in up to an additional $500,000, meaning that a Michigan region’s victorious proposal could swell into a fairly sizable $2.7 million cluster play--not bad in the cluster world.

But what is especially refreshing beyond the welcome added cash here is the tact and restraint of the state engagement.  Most importantly, by offering its match, the state--far from micro-managing its regions--has at once enhanced the chances of its regions securing grants while leaving them in the lead as far as determining a clusters’ needs, proposing an initiative, and managing its future implementation.  All of which gets economic development just right. Michigan--rather that dictating economic development policy “top down”--is putting the state in service of its regions, which can and should lead on the essential strategic clusters they contain.

 

Source URL: http://www.newrepublic.com//blog/the-avenue/90081/getting-the-state-role-right-regions