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CHAPTER ONE INVESTING IN EQUITY: TARGETED ECONOMIC DEVELOPMENT FOR NEIGHBORHOODS AND CITIES Robert P. Giloth INTRODUCTION Promoting social equity requires explicit investments—in jobs and wealth creation—that are customized to connect low-income families to economic opportunity. Making explicit investments means that local officials make commitments—and hence are accountable not only for the rhetoric but also for the budget and staff allocations, implementation, and results. In an era of tight labor markets, municipal strategies should focus on enhancing and directing growth, equipping residents with skills and supports, and ensuring a share of prosperity for those most disconnected. No one investment is sufficient to improve social equity, although our focus is primarily on work and wealth. Cities require portfolios of investments that address different populations and tap different economic development assets. These portfolios require active and creative management to identify promising opportunities, customize investments, support ongoing learning and continuous improvements, and make new investments. One example of developing and managing such a portfolio was the Research and Development Division of the Department of Economic Development during the mayoral administration of Harold Washington (Giloth, 1991). 23 24 ECONOMIC DEVELOPMENT IN AMERICAN CITIES Making explicit investments to connect low-income populations to economic opportunities is important for two reasons. First, a great deal of what has come under the banner of poverty alleviation has focused on perceived individual or community deficits rather than changing the economic opportunity structure experienced in neighborhoods and cities. Second, and despite much progress, significant racial and ethnic barriers remain that get in the way of individuals and communities taking advantage of the opportunities that do exist. For both reasons, targeted investments that make these connections are necessary as a complement to more universal efforts to grow the economy, enhance access and education, and ensure fair play. The purpose of this chapter is to identify alternative economic ideas, practices, and examples that municipal leaders might find useful for reducing lags in economic progress experienced by low-income residents and neighborhoods . This chapter defines the practice of targeted economic development (a somewhat larger frame than job-centered economic development), considers the conceptual and policy dilemmas that constrain the effectiveness of economic opportunity strategies, offers a typology and illustrative examples of current targeted economic development strategies and practices, and considers specific design and implementation challenges. Targeted economic development , to be successful, must occur in the context of economic growth and universal social welfare policies. “Targeted” here refers to investment strategies and policies that do not assume that economic benefits automatically flow to and are taken advantage of by the most excluded populations. The chapter concludes by considering the opportunities, barriers, and limits for targeted economic development, and how municipal leaders and their civic partners might develop and manage portfolios of such investments. DEFINING TARGETED ECONOMIC DEVELOPMENT Improving economic opportunity requires making sense of the people and place as well as the micro- and macrodimensions of economic development in cities. While in-depth consideration of these dimensions is beyond the scope of this chapter, a brief review of their conceptual and policy challenges , as well as their theoretical underpinnings, is a useful way of framing our discussion of targeted economic development. Both sets of distinctions contrast the implications and interaction of individual-level decision making and different levels of economic and spatial structures, whether neighborhoods or regional and national economies. The “people versus place” policy dilemma asks whether public and private investments should focus on enhancing the individual skills, assets, and mobility of low-income people, or whether, instead, the emphasis should be on revitalizing the places or neighborhoods where low-income people reside. Alleviating people and place poverty requires access to economic opportunity. In the past, these economic opportunity options were simplified 25 INVESTING IN EQUITY as “opening up the suburbs” or “gilding the ghetto.” Human development is a valued outcome of public policy, but it is costly, unpredictable, and may result in people moving out of neighborhoods that are in need of development as their opportunities and livelihoods improve, as has been the history for many immigrant groups in the United States. Social mobility equals spatial mobility. Focusing on place or neighborhood, although perennially attractive as a way of achieving scale and sustainability, has not proved to be a very effective economic opportunity strategy for two reasons. First, local economies are regional, not neighborhood based. Neighborhoods simply do not represent the economic complexity and interdependence that are evident at the regional level. Second, neighborhoods are fraught with local...


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