Base economic development on broad vision

BYLINE: Justin Maxson

This year presents a critical opportunity to craft a new economic development strategy that will move Kentucky forward now and over the next 20 years.

With the hiring of a new leader for the economic development cabinet, as candidates vie for the governor's office and as Congress considers raising the minimum wage, Kentuckians need to press the dialogue about the state's economic future looking forward through the windshield, not backward through the rear-view mirror.

In an April 23 commentary, the president of the state manufacturers association described the industries he represents as the backbone of the state's economy, and set out the hope that by 2012, Kentucky would be one of the most desired locations for manufacturing in the world.

But a new effort called the High Road Initiative is founded on the conviction that Kentucky's economy should be grounded in a broad vision that rests on a high-quality of life for the state's residents. The current investment of state funds is questionable and needs to change.

First, while manufacturing is critical to the state's economy, success in manufacturing alone is not a firm foundation on which to build the economy of the future. Manufacturing represents only 14 percent of the jobs in Kentucky, and manufacturing jobs declined 12.2 percent between 1996 and 2006.

That's a national trend. In 1950, 35 percent of America's jobs were in manufacturing compared with only 13 percent in 2004. This trend also reflects well-documented global shifts in manufacturing outsourcing. For the last 25 years, Kentucky has plowed at least $1.8 billion into trying to lure factories into the state. Yet Kentucky's per capita income ranking remains 44th in the nation, the same place it was 25 years ago.

And because of exemptions to state open-records laws and the way preferences in the tax code receive no evaluation, the public has no way of understanding the return on these public investments.

Second, state incentives have enjoyed little success in the rural areas that are most desperate. Kentucky cannot thrive as long as there is such a disparity between the middle-class in its urban centers and the desperately poor in the rural parts of the state. A recent study by the Kentucky Science and Technology Corp. indicates the state's growth in per capita income is so meager that at the current rate it will not equal the U.S. average until 2160.

These figures are evidence of our state's unanswered questions: How do we invest more in education as the foundation of a strong economy? How can we best expand and meet the needs of existing Kentucky businesses? How do we foster innovation, creativity and entrepreneurship at all levels? Shouldn't we focus on regional economic development efforts that connect urban and rural areas? Shouldn't we have more-accountable economic-development structures and practices that result in a reasonable return on public investment?

Good answers to these questions will point to a new way forward. Education matters. Kentucky's businesses deserve real support. Innovation and entrepreneurship are keys to the future. Regional strategies work. Kentuckians deserve transparent economic development.

Voters registered their anxiety with the national economy in the midterm elections. In Kentucky, more than ever before, our public leaders need to answer these questions and move Kentucky to the high road.

Justin Maxson of Berea is president of the Mountain Association for Community Economic Development, which co-founded the High Road Initiative to improve state economic development efforts.