The Impact of Technology on Economic Development Policy

Posted: Updated:

In a world where technology is enabling almost everything, economic development policy makers are faced with several challenges when planning and implementing strategies for economic growth. Communities, regions and states must be able to adapt programs and initiatives to address the economic disruption caused by technology. In particular, investments in technology and talent are vital to ensuring economic growth and wealth creation for residents and businesses throughout the world.

History is always instructive when looking at public policy impacting economic development issues. The United States and world have experienced evolution in the economy for centuries. The introduction of steam power and electricity were game changers for the economy. Transcontinental railroads and interstate highway systems allowed businesses to reach more markets with its goods. The oil and gas sector created wealth and allowed businesses and consumers to enjoy affordable and diverse energy sources. 

Today, we sit squarely in the information technology economy and this is transforming the globe in dynamic ways. From the Internet of Things to automation, consumers and businesses alike are seeing more rapid disruption than any other time in our history. This requires public policy makers to be nimble in order to react and maximize economic opportunities and results. Thought leaders must focus on the best ways to prepare talent, position its tax climate, change regulations and align incentives to be best positioned for economic development opportunities.

In a technology enabled world, talent is the most important commodity. In fact, talent will not only be the most important location decision factor for a technology business, but it also represents the area where those businesses will invest the most money in order to ensure success. In our site selection practice for approximately 90 percent of our projects, talent is the highest weighted location decision driver by our clients. Due to this fact, governmental and economic development leaders have to adjust public policy to support the development of talent.

Today, towns, cities and counties need to examine the best ways to support the retention and attraction of talent. Investments in quality of place assets, job training (industry recognized credentials and certifications), telecommunications infrastructure and entrepreneurial development programs are critical.  These types of investments position areas to attract a highly educated and sustainable workforce that meets the needs of its key business sectors.

When it comes to economic development incentive programs, technology disruption has had a significant impact on long standing tools used by local and state government. As an example, most local communities tie their incentive programs to capital investment as compared to headcount and earnings, because this is what has historically generated the most tax dollars for them. In addition, this is the way local leaders have approached economic development for decades.

As a result, it is important to pivot incentives to focus on human capital versus fixed assets (building and equipment) in order to competitive. This will require communities and states to examine their approach to taxation to ensure it meets the needs of a changing economic base. This way, incentives, forms of investment and generation of taxes are fully aligned.

In closing, communities, regions and states can no longer approach economic development in the same manner as it has for decades. By recognizing the importance of talent, technology and automation and most importantly, aligning initiatives and programs to support businesses, a location can position itself to provide more opportunities for jobs and wealth creation for its residents and businesses. The challenge is in front of us and the locations that seize the opportunity will be the economic winners.

Larry Gigerich is executive managing director of Ginovus.

  • Perspectives

    • Ahh…Yes! Turning a Hot Mess into a Cool Breeze

      "Problems cannot be solved by the level of thinking that created them," is attributed to Einstein over 75 years ago. This still holds true, particularly in challenging communications. Many people address conflict at the level it was created by rehashing and building more evidence for their ‘side’ of an argument. Repeating a position tends to intensify the separation of people.

    More

Subscribe

Name:
Company Name:
Email:
Confirm Email:
HTML
INside Edge
Morning Briefing
BigWigs & New Gigs
Life Sciences Indiana
Indiana Connections
INPower
Subscribe
Unsubscribe

Events



  • Most Popular Stories

    • Bob Stutz

      New Role For Salesforce Exec

      After three years on the job, Salesforce Marketing Cloud Chief Executive Officer Bob Stutz is moving into a new role. Stutz, who will remain in Indianapolis, is now executive vice president of strategic partners at Salesforce (NYSE: CRM).  Since arriving in Indianapolis, Stutz has overseen the establishment of the company’s regional headquarters in downtown Indianapolis, which included the Salesforce name being placed atop the state’s tallest building.

    • Red Star announced plans to expand and add 18 jobs.

      Larwill Medical Device Maker to Expand, Add Jobs

      A Whitley County-based medical device maker has announced plans to expand its facility in Larwill which should mean new jobs. Red Star Contract Manufacturing Inc. says it will invest $1.6 million in real estate improvements and additional equipment and will create 18 new jobs by 2022. 

    • Purdue Global Now Offers Analytics Degree

      The U.S. Bureau of Labor Statistics reports that jobs in the field of data analysis are projected to grow 26 percent over the next ten years. Acting upon that data, Indianapolis-based Purdue University Global has launched a new Bachelor of Science degree program in analytics. 

    • Regal Beloit is closing in Valparaiso. (photo courtesy; The Times of Northwest Indiana)

      Valpo Bearings Plant to Close, Eliminating 160+ Jobs

      Wisconsin-based Regal Beloit Corp. and the union representing workers have reached an agreement about the closing of a helicopter bearing factory in Valparaiso. According to our partners at The Times of Northwest Indiana, the decision will cost between 160 to 170 workers their jobs. 

    • (image courtesy of The Times of Northwest Indiana)

      U.S. Steel Updates Layoff Notice to State

      Pittsburgh-based U.S. Steel Corp. (NYSE: X) has updated the State of Indiana regarding its previously announced layoffs at the East Chicago Tin Mill. The company says 314, rather than 307, workers will be displaced when the mill is idled this fall.