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PA's Economic Efforts Should Focus on Building Businesses Not Poaching Them, Report Finds

April 09, 2015

Pennsylvania’s economic development strategy should focus on building businesses rather than poaching, according to a new report from the Keystone Research Center (KRC) – All Pennsylvanians Prospering Together (APP): A Pennsylvania Economic Development Strategy for the Long Term. KRC’s Executive Director Stephen Herzenberg contends, “Pennsylvania needs to renew its historic bipartisan commitment to economic development,” and “create a national model of an economic development strategy in which all the people contribute to a joint effort to expand the economic pie and benefit from the growth of that pie.” In the report, KRC identifies four core principles to guide the state’s efforts:

  • Investing in public goods  that deliver public benefits;
  • Practicing market-based, not market-distorting, economic development;
  • Investing in innovation and growing Pennsylvania’s own companies; and,
  • Pursuing a Pennsylvania good jobs strategy.

To achieve the KRC goal of Pennsylvania as a national model for an inclusive, equitable strategy focused on building not poaching, the authors identify several recommendations that include, but are not limited to:

  • Implementing a Manufacturing Innovation 2.0 R&D network – a network that brings together university, industry, and economic development practitioners;
  • Restoring the Keystone Communities Fund with a $74 million commitment in funding;
  • Creating a Pennsylvania industrial performance center to deepen knowledge about good job strategies;
  • Setting aside 5 percent of technical assistance funds to assist companies in low-wage industries improve jobs;
  • Increasing innovation capital through the use of innovation bonds and other tax-financed capital programs;
  • Establishing a tax credit to a create multi-firm investment fund to support investments in public goods;
  • Launching the Solving Industry Manufacturing Problems and LEarning Solutions (SIMPLE Solutions) program through which university students help solve real problems of Pennsylvania manufacturers;
  • Forming a “Pennsylvania Startup Capital Advisory Council”; and,
  • Stopping the student loan repayment clock, with the potential for partial loan forgiveness for high-tech, high-skill workers who stay in Pennsylvania to work for a startup.

The authors call for the plan to be developed at both the state and regional level by engaging key stakeholders to improve the plans and build ownership of those plans.

The report also includes a brief history of Pennsylvania and other states’ economic development strategies employed by states from 1950 with the establishment of the Pennsylvania Industrial Development Authority (PIDA) low-interest loan program used to recruit manufacturers to Pennsylvania. KRC is a nonpartisan research and policy development organization focused business, education, and labor related issues in Pennsylvania. Read the report….

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