Introduction to Inner City Economic Development

Introduction to Special Issue: Inner-City Economic Development
by Haifeng Qian and Kimberly Zeuli

Journals: Economic Development Quarterly 2016, Vol. 30(2) 103–104.

In 1997, Economic Development Quarterly published a forum issue featuring three articles on inner-city development. In the lead article, Michael Porter (1997) presented an economic development strategy for inner cities that is based on the premise that inner cities offer competitive advantages for businesses and are not, as conventional wisdom at the time held, places of total despair with no economic opportunity. Porter’s strategy was groundbreaking at the time, in part because he also argued that, to revitalize American inner cities, an economic strategy is necessary; without one, social programs such as subsidies in housing, education, and health care could never transform the lives of inner-city residents. The strategy he proposed was based on “private, for-profit initiatives and investments based on economic self-interest and genuine competitive advantage [of inner cities] instead of artificial inducements, government mandates, or charity” (p. 12). He identified four competitive advantages of inner cities that support businesses: strategic location, regional clusters, unmet local demand, and abundant human resources. Under this private-led economic strategy, he further noted that the role for government should be in “creating a favorable environment for businesses” instead of traditional business attraction using heavy incentives (p. 19). Community-based organizations should also recognize the leading role of private businesses in inner-city development.

Two additional articles provided a response to Porter’s article. Harrison and Glasmeier (1997) argued that the competitive advantages noted by Porter had been recognized by community development practitioners for decades. And, some local governments and community-based organizations had been practicing the roles supported by Porter. They reported that the major contribution of Porter’s strategy was the “clusters” approach to business development, although they further questioned the effect of cluster-based strategy on long-term innovation and economic development. In the second response, Bates (1997) was more critical, arguing that Porter’s solutions to the problems in American inner cities was “wishful thinking.” Similar to Harrison and Glasmeier’s critique, he pointed out that some economic strategies by government have been in place since the 1960s. Noting that minority business owners are more likely to hire minorities, he also criticized the lack of attention on minority business ownership in Porter’s strategy. Bates (1997) argued that the negative attitudes and prejudices toward minorities are “the greatest single barrier to solving America’s urban racial crisis” (p. 43). It has been almost two decades since that debate was published by Economic Development Quarterly. Given the Great Recession, increased tensions in inner cities, historic levels of national income inequality, and a new trend in urban living, we think it is timely to revisit inner-city economic development. How have inner cities changed during the past two decades? What have we learned about effective strategies for their development? Are there new theories to bring to bear on this issue?

This special issue begins with a notable commentary by Michael Porter that revisits the comprehensive economic development strategy he published in 1997 in the context of 20 years of research and practice on inner-city economic development. He makes the case for why inner cities should remain at the forefront of critical national economic policy debates and summarizes their performance over the last two decades, using data that were not available in 1997. Porter recognizes that the strategy he presented in 1997 was “based on solid research, but the research wasn’t exhaustive and there was a lot we didn’t know about inner cities.” His commentary incorporates the relevant research and practice that has been done since then, especially the work by the nonprofit organization he created to implement his vision, the Initiative for a Competitive Inner City.

Porter’s commentary provides a compelling context for the remaining four articles. Mercedes Delgado and Kimberly Zeuli empirically evaluate Porter’s theory (1997) that integrating inner-city businesses into regional clusters will drive inner-city economic development. They build on prior research, which shows that the presence of clusters creates externalities that improve regional performance, and develop a framework to examine the role of clusters of related industries on job creation in the inner city. They utilize unique data sets from the Initiative for a Competitive Inner City and from the U.S. Cluster Mapping Project to analyze the relationship between the strength of a regional cluster and the employment growth of inner-city industries during 2003 to 2011. They find that when a cluster is “connected” across the inner city, the surrounding city, and the metropolitan statistical area, it leads to the greatest employment growth within the inner city, suggesting that regional cluster policies have an important role to play in inner-city economic growth.

T. William Lester, Daniel Hartley, and Nikhil Kaza’s article provides a nice complement to Porter’s commentary and the Delgado and Zeuli research. Utilizing a slightly different definition of inner cities than in Delgado and Zeuli, they also analyze employment trends in the inner city over the last decade (2002-2011). They find significant employment growth in inner cities, comparable to suburban areas. They further explore the competitiveness of inner cities and find that many inner cities are able to attract a significant share of metropolitan jobs, providing additional support for Porter’s theory. Their research reports some of the same drivers of inner-city competitiveness: proximity to downtown business areas, higher population growth, and access to transit. They also articulate that competitiveness (and job growth) are constrained by concentrated poverty and argue that government intervention should be targeted to these areas.
In light of his original contribution to the 1997 issue, we are pleased that Timothy Bates contributed new research to this issue with Alicia Robb. Their study follows up on Bates’ 1997 critique that minority ownership is missing in Porter’s inner-city development strategy. Using recent Kauffman Firm Survey data, they find that Black and Latino business owners are more likely to be discouraged borrowers, suggesting racial discrimination as a major barrier to economic development in the inner city. There is a disproportionately higher concentration of minority business owners in inner cities who are more likely to hire minority and local residents. Addressing the racial problem, therefore, is critical to inner-city business development. Bates and Robb address that the Equal Opportunity Credit Act prohibiting racial profiling in banking should be enforced.

Finally, Robin G. Newberger and Maude Toussaint- Comeau from the Federal Reserve Bank of Chicago and Darline Augustine from the University of Stellenbosch Business School in South Africa provide a concluding commentary that summarizes the research and practice discussions at the 2015 Inner City Economic Summit, a special conference organized to present the work in this special issue to a diverse group of economic development professionals and policy makers. The national convening was held in Detroit from September 15-16, 2015. Built on observations from the summit and papers from this special issue, they also focus their commentary on cluster-centered inner-city development strategy, and they propose three sets of policy recommendations for inner-city economic development: investing in clusters, training workers, and supporting small and minority business owners.

Needless to say, American inner cities still face many economic development challenges today. This collection of work offers some insights into inner-city development based on new theories, evidence, and practice. It is our hope that this special issue spurs a new debate on strategies for revitalizing American inner cities and invites more research and practice to solve inner-city problems.

References Bates, T. (1997). Response: Michael Porter’s conservative urban agenda will not revitalize America’s inner cities: What will? Economic Development Quarterly, 11, 39-44. Harrison, B., & Glasmeier, A. (1997). Why business alone won’t redevelop the inner city: A friendly critique of Michael Porter’s approach to urban revitalization. Economic Development Quarterly, 11, 28-38. Porter, M. E. (1997). New strategies for inner-city economic development. Economic Development Quarterly, 11, 11-27.


Author Biographies Haifeng Qian is an assistant professor at the School of Urban and Regional Planning, the University of Iowa. His areas of expertise include regional and local economic development, entrepreneurship and innovation, and public policy analysis. His research has been published in peer-reviewed journals such as Annals of Regional Science, Economic Development Quarterly, Environment and Planning, Growth and Change, Journal of Economic Geography, Journal of Technology Transfer, Small Business Economics, and Urban Studies. He is also an associate editor of Economic Development Quarterly.
Kimberly Zeuli is the senior vice president and director of research at the Initiative for a Competitive Inner City. Her areas of expertise include urban and rural economic development, organizational theory, urban innovation, food resilience, and cooperatives. Her work has been published in various peer-reviewed academic and professional outlets. She holds a Ph.D. in applied economics from the University of Minnesota.


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Haifeng Qian: The University of Iowa, Iowa City, IA, USA
Kimberly Zeuli: Initiative for a Competitive Inner City, Roxbury, MA, USA
Corresponding Author: Haifeng Qian, School of Urban and Regional Planning, The University of Iowa, 338 Jessup Hall, Iowa City, IA 52242, USA. Email: Haifeng-qian@uiowa.edu
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Economic Development Quarterly 2016, Vol. 30(2) 103–104
© The Author(s) 2016
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DOI: 10.1177/0891242416642321
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