The myth of scientific economic development

I can’t remember the city but there was a place in the US back in the 1990s that just decided one day to attract chocolate and candy manufacturers from Europe.  The jurisdiction sent over delegations to Switzerland, Belgium, Denmark, etc. and ended up attracting a number of manufacturers.

There are some – probably not any in the economic development business directly – who think that economic development decisions done on some pure, scientific basis.  Warehouses are set up in cities at the centre of population areas.  Manufacturers make plant investments based on highly calibrated models that weigh cost, labour, political and geographic factors.  IT firms only cluster in certain locations with lots of Starbucks and VC.

The facts, of course, are far different.  One U.S. study found that CEOs of multinationals tend to be more friendly to the jurisdiction where they were born.   Concentrations of manufacturing, services, high tech – start up in the strangest places based on distinctly non-scientific factors such as luck (why was Bill Gates in Redmond anyway?) or – wait for it – politics.

I tell my clients that nothing is inevitable.    While it is not scientific, economic development is based partially on vague factors such as those above but also on real comparative advantage and jurisdictions need to relentlessly seek to foster comparative advantage.

It’s the magical intersection between a passionate leadership class – we will transform our community – entrepreneurs and the ability to catch the eye of multinationals that make things work.

I had a conversation this week where I suggested that a place like Moncton – in the medium to longer term – might attract more food manufacturers as the cost of transportation rises and people become more environmentally conscious.  The 100 mile diet is a currently a myth in the Maritimes but if Moncton was a hub for food production for Atlantic Canada, we could possibly foster the 150 mile diet for the whole region.

 

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