New ED Metric Model Unveiled

A study of the Northeast Ohio economy provides a different way of analyzing and tracking the impact of economic development initiatives by mathematically analyzing economic data and determining there are eight key factors of regional economic growth. Dashboard Indicators for the Northeast Ohio Economy, released by the Fund for Our Economic Future, establishes statistical correlations between economic growth in jobs, output, worker productivity and per capita income, and the eight key factors (skilled workforce, urban assimilation, racial inclusion, legacy of place, income equality, locational amenities, business dynamics, and urbanization/metro structure).

The study demonstrates that when regional economies chart strong growth, they tend to score well in most or many of the eight categories, and when regional economies chart weak growth, they tend to score poorly in the eight categories.

The study provides a different perspective than most indicator reports for measuring the impact of economic development activities. The press release accompanying the Dashboard Indicators release puts it this way:

"While other regions in the country have developed sets of factors to measure economic performance, frequently they are based on what seems interesting or useful. By contrast, The Dashboard Indicators for the Northeast Ohio Economy is based on statistical analysis, not on anyone’s agenda or preconceived ideas. The study allows public policy makers, business people, civic organizations and the general public for the first time to see beneath the surface of an economy and to understand the full range of factors figuring in a region’s economic performance. The study will be used to guide policy makers when developing targeted programs for addressing specific factors of the economy and to track the effect of such programming. For organizations working together toward economic development across the region, the Dashboard provides a common point of reference."

The study concludes there is no silver bullet for economic growth but that, nevertheless, some factors correlate more strongly with economic growth measures than others. For example:

• Skilled Workforce correlates strongly to output growth, per capita income growth and productivity growth;
• Business Dynamics correlates strongly to employment growth;
• Racial Inclusion and Income Equality correlate positively to economic growth;
• Regions with Legacy of Place costs face greater challenges when repositioning their economies for growth;
• The Locational Amenities indicator is positively correlated to per capita income growth but not as strongly as other factors.

“Perhaps the most interesting finding is that racial inclusion, income equality and ethnic diversity – measures of equity and fairness – correlate positively to economic growth. These factors are not normally called out in regional economic measurement tools, but in this study they are shown to be important to the economic picture. Arguably, as we improve opportunity for all people, there is inherent economic benefit to the region as a whole,” said Robert Jaquay, associate director of the George Gund Foundation and a member of the Fund for Our Economic Future’s volunteer staff.

While many technology-based economic development professionals around the country are increasingly looking at "wealth generation" as a measure of success, Dashboard would seem to indicate that if that wealth is increasingly concentrated in a smaller percentage of an area's population or business community, the overall health of the regional economy is likely to suffer.

The Fund for Our Economic Future is a multi-year collaboration of organized philanthropy in Northeast Ohio formed to encourage and advance a common and highly focused regional economic development agenda that can lead to long-term economic transformation. In 2004, more than a dozen philanthropic organizations committed $22 million to support a coordinated regional economic development strategy for Northeast Ohio (see Feb. 27, 2004 issue of the Digest). Since then, membership in the resulting organization, Fund for Our Economic Future, has swelled to 78 foundations and charities. The fund's budget has grown to $28 million, only $2 million short of its $30 million goal before 2007.

The fund worked with W.E. Upjohn Institute for Employment Research, Kleinhenz and Associates, the Universities Collaborative and the Federal Reserve Bank of Cleveland to develop Dashboard Indicators for the Northeast Ohio Economy.

Dashboard Indicators for Northeast Ohio is available at: http://www.futurefundneo.org/page10474.cfm