Mega mentality | The time is ripe for a regional approach to New England's economic development
For the past six years, I’ve focused on driving venture capital into secondary cities in northern New England; for the next 10, as part of my fund-in-formation, Clear Venture Partners, I’ll try to do the same in all six New England states. My regional plans have therefore made me very interested in how a multi-state effort might drive its collective economies as if they were a single economic block. At this unique moment in our country’s economic history, there’s much to be said for this wider perspective, and it turns out there are others looking at this type of “mega-regional” approach to economic development. Viewing our state as part of a New England block could well benefit all states when it comes to national and global competition.
First some background. States compete and collaborate with one another, depending on the issue. Business attraction and retention, for example, typically cause competition, but states tend to collaborate on projects that reflect a common need. New England states collaborate on cross-border initiatives such as transportation, the electricity grid and agricultural policy issues. In the last couple of years, for example, the Northern Borders Regional Commission gained support in Congress and is looking to tap significant federal funds for its Maine, New Hampshire, Vermont and New York initiative to drive economic development resources to the northern counties of these states. Each state in this instance has prioritized a collective approach to economic development rather than pursue an every-state-for-itself approach. It helps that these states share a historic economic profile stemming from the decline of their manufacturing base in paper and textiles and the challenge of maintaining an agricultural economy. These states are collaborating to access federal capital to promote green jobs, creative services, enhanced transportation like high-speed rail and broadband infrastructure to enable the region to play in the knowledge economy.
As we live through what appears to be the most challenging economic environment since the Great Depression, we would be well served to look more closely at how Maine as a state might collaborate more with its five New England sister states and New York. Just as economic need drove the NBRC to form, we could create a more nationally and globally competitive region by aligning ourselves with other states toward a common end without necessarily taking away each state’s rightful and appropriate in-state marketing focus.
Making us mega
How do we collaborate? First, we’d recognize that each state can and should activate in-state and cross-border initiatives. A mega-regional view is not a replacement for in-state marketing any more than the United States’ competitive desire to lead in the global marketplace precludes economic partnerships with European and Asian countries in areas where collaboration makes sense. Second, a mega-regional view would leverage and exploit common activities and resources in each state. In New England, every state has agencies, universities and investors developing some sort of clean tech initiative for their own state’s benefit; a multi-state approach would connect these players with a higher purpose — that of creating a Northeast powerhouse in clean tech that could be nationally and globally competitive. Finally, at a time when the federal, state, private and third sectors are all financially pinched, what better approach than to leverage federal, state and private resources across multiple states to gain economies of scale?
I’ve written in the past about the power of industry clusters as an economic development tool for the state, something Maine’s leaders and institutions understand well, especially after the Brookings Institution report. (See “The Cluster Effect,” April 16, 2007.) Industry clusters, however, are not limited conceptually to an in-state focus. Indeed, University of Southern Maine economist Charlie Colgan, in the 2003 book “Regionalism in a Global Economy,” paraphrased one of the greatest and most public advocates for industry clusters, Michael Porter of Harvard Business School, when he wrote, “leading industries in common could provide a basis for regional cooperation. Prospective regional efforts might include industry and public-policy efforts to foster mutually beneficial supply chain relations in the region … Both R&D capabilities and human capital move relatively easily across state borders and the benefits from efforts in any one state could be shared with other states through supplier-customer relations and movement (e.g., commuting) of labor.”
In this country, most industry clusters are concentrated within the borders of a state and encourage interstate competition. But states need to remember our global competitors tend to compete with the United States as if it were a single economic block. Maybe the time has come for mega-regional thinking here at home.
Michael Gurau, managing general partner of Clear Venture Partners in Portland, can be reached at mg@clearvcs.com.
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