Measuring success in economic development

I read an interesting article the other day in the New York Times about minor hockey in Minnesota and its new approach to reducing fighting and bad behaviour in the sport.  At one point the state was known for its bruising hockey – kids would drop the gloves for just about any reason – and the league decided to adopt a novel approach to reducing bad behaviour.

The concept of a penalty in hockey is meant curb bad behaviour – by definition.  You trip someone, elbow them, slash them with your stick, punch them in the face, you get to spend time in the penalty box.  This wasn’t working too well in Minnesota so they adopted a new model.  Teams receive a point each game if they recieve fewer penalties than a certain threshold.   Fighting and bad behaviour has plummeted. 

As I read this article my immediate thought was of Don Cherry and those that would say this is an abomination.  But upon reflection, why not?   If the point of the penalty box is to curb bad behaviour and it is not working, shouldn’t they adopt other measures?

The point is that the penalty box doesn’t just exist – it is there for a reason and if it is not fulfilling its raison d’etre – then you find a new model.

I have been thinking a lot lately about the measurement of success in economic development.  I have had clients at every level grappling with this and it seems that every RFP I receive these days (two this week) spend an inordinate amount of time on measurement – or measuring the value for dollars spent.

This is a vital point.  It’s starting to translate into city councils, boards – even the general public – where is the value from economic development efforts?   People want proof their investment in economic development is working. 

We’ve discussed this in the past – there is somewhere between $80 and $100 million spent directly on economic development in this province each year – not including any grants or loans to business.  At some point there needs to be measures to determine if that expenditures adds value. 

If government spends $100 million on roads, they get x miles of paved highways.  If it spends $100 million on health care, it covers 40,000 people with health care services.  If if spends $100 million on education – it gets UNB.

What does it get for the $100 million in economic development?

Think of the penalty box story.  If we were measuring results in economic development, and it was clear it wasn’t working, we could come up with a new way of promoting good behaviour (success). 

I think we need to hold economic development – system wide – to a clear incremental tax base measurement.  If we are not generating $3 or more dollars in new tax revenue for every dollar invested, I don’t really see the point of economic development.  If we aren’t getting out more than we put in why put any in at all?

Now I have had this conversation with folks and they say things like “it would have been worse” without us but this argument for me doesn’t hold much water.  Imagine any organization in just about any sector of the economy having as their mandate “keeping things from getting even worse”. 

Economic development, ultimately, has got to be about development.

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One Response to Measuring success in economic development

  1. mikel says:

    One quick caveat-I don’t agree that ‘not making it worse’ is not a valid policy aim. But it needs more definition. Are we talking about a persons salary in ED? In that case HOW exactly did they keep it from ‘not getting worse’? Did they convince a local company to stay put rather than move labour to mexico? Great, I’d say that person should get more of a bonus than those people at NBIMC. If X dollars were necessary to keep some company afloat, then that may be a worthwhile investment, but there needs to be some exit strategy and some indication that it was viable.

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