Brookings Report Suggests Great Lakes Region Has Potential to Lead the Nation in Next Economy

A report recently published by the Brookings Institute suggests that the region hardest hit by the Great Recession has the fundamentals to lead the rest of the country forward into what Brookings calls the next economy.

Public and private sector stakeholders contend that simply reconstructing the old economy, one based on highly leveraged domestic consumption, would be a big mistake. Instead they believe the nation must focus on building an economy that is geared towards greater exporting, powered by a low-carbon energy strategy and driven by innovation.

Brookings suggests that The Great Lakes region, comprising 12 states including Ohio, Illinois, Indiana, Michigan, Wisconsin; eastern Iowa, Minnesota, Missouri, western New York, Pennsylvania, West Virginia and northern Kentucky, has the fundamental resources necessary to create a better, more sustainable economic model.

Cited among these fundamentals are top-ranked universities, companies with deep experience in global trade and emerging centers of clean energy research.

The report contends that the region has the capacity and manufacturing prowess needed to build a clean energy, low-carbon economy with a strong leadership potential in the areas of wind and solar component manufacturing. Michigan, Ohio, and Illinois are among the top states in the nation for green tech patenting, focused on new technologies in battery power, hybrid systems, and fuel cells.

But while the region shows great promise, it still faces a number of challenges that will need to be addressed. For example, the Great Lakes region produces almost one-third of the new US patents each year – and yet less than 14 percent of the nation’s venture capital is invested in the region. To fulfill its potential, the region must find ways of funding innovation and keeping the resulting promising companies from moving to the coasts.

To achieve economic transformation, the region will have to address a number of other challenges including the deficient transportation infrastructure for trade, the concentration of energy-intensive industries, the lack of seed capital and the low educational attainment levels. To resolve these challenges, the report provides three key Next Economy drivers that will help federal, state and metropolitan leaders to maximize the region's promise:

• Invest in the assets that matter: innovation, human capital, and infrastructure: Even though budget cuts have become a regular occurrence, the researchers argue, Long-range economic health is not just a matter of spending less, but spending and investing to spur growth. The region should concentrate its efforts on developing regional innovation clusters, instituting workforce development at community colleges and smart spending on infrastructure to facilitate trade.

• Devise new public-private institutions that are market-oriented and performance-driven: Government leaders should be prepared to go to voters to support bond issues or dedicated tax sources for these institutions. They also can consider reorganizing money from programs and systems that are underperforming. These institutions include new infrastructure banks, advanced manufacturing labs, regional energy research and innovation centers and a venture capital fund of funds.

• Reimagine metro form and governance structures to set the right conditions for economic growth: To achieve growth and innovation, cities and states must overhaul their physical redevelopment strategies and local governance structures in the Great Lakes region due to their significant population and economic declines. They must focus on right-sizing communities, green development and infrastructure and governance reform.

For more details, see the full report.