|
before the
Subcommittee on Transportation and Infrastructure
Committee on Environment and Public Works
United States Senate
Hearing on
The Reauthorization of the
Economic Development Administration
July 14, 1998
Mr. Chairman and Members of the Subcommittee:
I am R. Scott Fosler, President of the National
Academy of Public Administration. I am here to provide testimony
on behalf of the Academy's panel on economic development.
Former Governor Dick Thornburgh, the chair of this panel and
an Academy Fellow, wished to be here, but he is on a trip
to South Korea.
NATIONAL ACADEMY
OF PUBLIC ADMINISTRATION
The Academy is an independent, nonpartisan, nonprofit organization
chartered by Congress to identify emerging issues of governance
and provide practical assistance to federal, state, and local
government on how to improve their performance.
To carry out this mission, the Academy draws
on the expertise of more than 400 Fellows, who include current
and former members of Congress, cabinet secretaries, senior
federal executives, state and local officials, business executives,
scholars, and journalists. Our congressional charter is one
of two granted to research organizations. The other is held
by the National Academy of Sciences which specializes in scientific
research. The Academy's emphasis is on the design and management
of government operations and programs.
THE ACADEMY REPORT
Two years ago, the Economic Development Administration of
the Department of Commerce asked the Academy to address the
question, "What is the appropriate future role of the
federal government in economic development activities?"
The Annie E. Casey Foundation also provided support for the
project.
The Academy convened a diverse panel of
experts from the local, state and federal levels and also
from the private sector. Some members of this panel have had
distinguished careers specifically in economic development,
and others have had experience in economic policy or related
areas.
We reviewed the economic development policies
and programs of all federal agencies, not just the programs
of the Economic Development Administration. Our staff conducted
field work in eight communities, including rural and urban
areas. We interviewed economic development experts and studied
the extensive literature on economic development including
evaluations of federal and state programs. The panel then
prepared its report, and convened a national meeting of economic
development professionals from all parts of the country to
discuss it.
I have brought copies of the report today,
and ask for it to be entered into the record.
The panel did not address the specific issue
before this Committee - reauthorization of the Economic Development
Administration. Nonetheless, its findings and recommendations
may provide useful information for the Committee as it considers
such legislation.
Briefly, the report recommends a rethinking
of the basic premises for federal economic development activities
at the state, local , and regional levels.
Historically, federal development efforts
have tried to increase overall national productivity and to
help economically distressed and poor communities gain a share
of the country's general prosperity. Toward these ends, the
federal government has built and sustained a variety of organizations
involved in economic development at every level of society.
They include development agencies at the state and local levels,
multi-county development districts, and community-based development
corporations, not to mention various nonprofit organizations
and working relationships with banks, industrial associations,
and other private sector partners.
Among the panel's findings are the following:
- The fundamental economic influences of
the private sector and market forces must be incorporated
into successful economic development plans.
- Federal investments in development efforts
are critical to many states and localities, but not all.
- No single federal program is appropriate
in all communities; however, the present multiplicity of
programs imposes unnecessarily high transaction costs on
states and localities and exacerbates inherent weaknesses
in their approaches.
- The meager federal investment in information
sharing and technology severely constrains our nation's
economic development efforts.
The panel proposed a new approach to meet
economic development needs. It urges the federal government
to help states and localities learn through better information,
leverage all available resources, and link multiple federal
initiatives to assist local communities.
In order to promote learning, the federal
government should:
- Help states and communities learn about
state-of-art economic development practices.
- Act to reduce the economic losses resulting
from unrestrained bidding wars by states and localities
to recruit or retain businesses.
- Improve the quality of economic development
decision-making and the assessment of policies and programs
at all levels by gathering and disseminating state, regional,
and local economic statistics and by reducing the fragmentation
of the nation's statistical system.
In order to leverage state and local efforts, the federal
government should:
- Give states and communities incentives
to design and implement effective regional or inter-jurisdictional
development strategies.
- Encourage investment in development strategies
that offer opportunities to generate jobs and income over
the longer term, rather than in high-visibility projects.
- Give special assistance to states and
communities seeking to create economic opportunities in
distressed communities.
In order to make it easier for states and
localities to link federal resources, the federal government
should:
- Substantially reduce the fragmentation
of the federal economic development efforts.
- Establish a permanent mechanism to provide
overall policy-level guidance to other federal activities
such as workforce training, environmental protection, technology
and research, and other endeavors that contribute to economic
development outcomes.
- Reorient federal programs, especially
business finance programs, towards strategies that address
the underlying obstacles to obtaining credit.
- Encourage states and localities to stimulate
links among businesses to enhance overall economic performance.
The nation's economic development programs
will be a critical factor in two of the most significant domestic
policy challenges of the coming decades: America's adjustment
and response to an increasingly competitive global economy
and the recent transformation of social policy from one based
on dependency to one that stresses opportunity and personal
responsibility. A reformed federal approach to economic development
will help states and communities make real and far greater
contributions to addressing these issues.
EDA does not have the authority to implement
all of the panel's recommendations. For example, it would
take action by the Congress and leadership by the President
to substantially reduce the fragmentation of the federal economic
development effort.
However, EDA has taken the panel's recommendations
to heart. On an informal basis, we have been watching EDA's
actions to implement the recommendations under its statutory
authority and have been pleased at many of the steps they
have taken. Phillip Singerman, Assistant Secretary for Economic
Development, recently provided to us a detailed list of these
steps, and I ask that a copy of his letter be entered into
the record. While we have not formally studied or assessed
EDA's actions, it is clear that the agency has taken the panel's
recommendations seriously and has taken some useful steps
-- especially in the area of technical assistance and training,
or as the panel put it, learning.
For example, Mr. Singerman's letter informs
us that EDA is working to develop a methodology to assess
the costs and benefits of state incentive programs. EDA has
engaged a contractor to assess how federal statistical agencies
can better serve the needs of economic development practitioners.
EDA is seeking to strengthen the planning processes of the
states and regions that it works with. And EDA has commissioned
independent evaluations of its own programs, hopefully as
a step towards encouraging the states and regions with which
it works to evaluate their own efforts. Thoughtful, sound
evaluations can be tremendously useful to economic development
efforts in sifting the wheat from the chaff, sharing good
ideas, and finding better ways that EDA and other federal
agencies can support their work.
For many years, EDA has been at risk of
being terminated. When we were doing the research for our
study, we were told repeatedly about the chilling effect this
had on the morale and the capabilities of the agency. EDA
is now working hard to revitalize itself. We are pleased that
the Academy report has been of some use to the agency in this
process and hope that the Committee will also find the report
useful in its work.
CONCLUSION
Mr. Chairman, this concludes my prepared statement. I would
be pleased to answer any questions. Thank you
|
