Understanding Your Regional Economy

Understanding Your Regional Economy

Robert GuellProfessor of EconomicsIndiana State University

My Tasks Today

• An overview of the region’s significant economic drivers

• Understanding the importance of a communities’ priorities in economic development

• Understanding the impact of local ownership, including start-up businesses, as compared with outside ownership.

• Understanding the impact of public amenities, such as outstanding schools

Economic Drivers of West Central Indiana/East Central Illinois

• Higher Education• Health Care • New Car Parts

Higher Education

• Indiana State• Eastern Illinois University• Vincennes• Ivy Tech-WV• Eastern Illinois Comm. Colleges• RHIT• SMWC

Regional Health Centers

• In each West Central Indiana County the hospitals & physicians groups rank in the top five employers– Terre Haute: UAP*, Regional– Vincennes: Good Samaritan– Brazil: St. Vincent Clay– Clinton: Union*only Indiana top 50 employer in region

New Car Sales

– Terre Haute• ThyssenKrupp Presta (Steering)• ADVICS-Aisin (Brakes)

– Marshall• TRW (air bags and brakes)

– Paris• N.A. Lighting (Headlights)

– Vincennes• Futaba (Welded components)

Employers of Regional Importance: Terre Haute

• Regional Retail Center• Federal Prison• Plastics– Bemis– AET

• Sony DADC• Great Dane

Employers of Regional Importance: Brazil

• Great Dane• IVC Industrial Coatings • Morris Manufacturing• PDF

Employers of Regional Importance: Sullivan/Knox Vincennes

• Futaba• Schott (Glass-Ceramics)• Coal – Peabody operates the largest surface mine in the

eastern U.S.

Community Priorities and Economic Development

• What is the Coin of the Realm?– Jobs– Income– Tax Revenues

• How do you measure your EDC’s productivity?– Is a Pfizer for Alorica a good trade? Is it a trade?

• Do you have patience for, and confidence in a long term approach?

What is Cause and What is Effect?

• Variables– Jobs– Income– Education– Governmental Competence– Non-Government Amenities– Taxes– Educated Workforce

• What is the direction of the causality?

It’s Complicated What Can You Do?

• Income =f(jobs, education, taxes, ed WF)• Jobs=f(education, govt competence, non-govt

amenities, taxes, ed WF)• Govt comp=f(ed WF, taxes)• Non-govt Amenities=f(income, education, ed

WF)• Ed WF=f(income, jobs, non-govt amenities,

education)

Treatment of Employers

• What is the role of TIFs and Abatements?• Our treatment of the Big Guy• Our treatment of the little guy (who may, if

treated well, become the next Big Guy)• Incubating the next BIG THING is taking care of

the next Big Guy– Stay in touch with your Promising Children

(especially those who have left to explore higher opportunities.)

Doing Our Best with What We Can Control

• Schools– Is being “better than average” good enough?– Are socio-economic statistics merely as excuse?– Could the causality be the other direction?• Is it harder to educate a poorer student

– Or• Does the lack of education make you poor

SAT & K-12 Poverty in Indiana

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HS Grad Rate and K-12 Poverty

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SAT & K-12 Poverty

0% 5% 10% 15% 20% 25% 30% 35% 40%800

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Where are Wabash Valley Schools?

SAT & K-12 Poverty

0% 5% 10% 15% 20% 25% 30% 35% 40%800

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HS Grad Rate and K-12 Poverty

0% 5% 10% 15% 20% 25% 30% 35% 40%40

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Doing Our Best with What We Can Control

• Schools– Is being “better than average” good enough?– Are socio-economic statistics merely as excuse?– Could the causality be the other direction?

• Is it harder to educate a poorer student – Or

• Does the lack of education make you poor

• Governmental Competence– What you know becomes more important that who you

know• The Menser-Renn vs the Larry Bird approach

Takeaways

• Local economic development is a complicated simultaneous equation system where the levers do not pop out.

• The variables you can control have nearly no immediate impact because – they take time to move– reputation takes even longer to change