Archive for December, 2014

Economic development promotes democracy, but there’s a catch | WashingtonPost.com

From The Washington Post’s Monkey Cage:

“I provide evidence for another. Paradoxically, high economic growth and the high national income it—ultimately—causes have counterposed effects: the first entrenches the dictator, while the second undermines the dictatorship. Vigorous growth—which boosts household incomes and government revenues—enhances the incumbent’s survival odds. Thus, dictators have a personal interest in growth. But over time that same growth changes society and the ruling elite in ways that make it more likely the regime will collapse after the dictator is gone. What’s good for the dictator is not so good for his dynasty.”

Read the post, “Economic development promotes democracy, but there’s a catch.”

The Innovation Economy Must Include Everyone | ID8 Nation

MAPA Group Partner Bill Generett wrote about economic inclusiveness for ID8 Nation:

Today, a disturbing commonality unites our nation’s high-growth regional economies. African Americans, Latinos and many women are not benefitting from the prosperity created in these economies. This economic disconnect and the resulting economic imbalance has created two separate and different societies around race, class and gender.

One society (Society No. 1) is made up of the direct beneficiaries of the economic prosperity created within the regions. It comprises a select class of highly educated white males and a small subset of equally elite minorities. This group owns the vast majority of the high-growth companies and fills the good jobs they create. The successful, high-growth companies in these regions are creating new economic development (expensive housing, high-end retail, good public schools and fine dining) that benefit the members of this society.

The other, much larger society (Society No. 2) is mostly comprised of women, Latinos, African Americans and disconnected white people. Their connection to the good jobs and high-growth entrepreneurial opportunities in Society No. 1 is insignificant. The largest job growth for Society No. 2 members is in low-wage service sector industries. Very little economic development has occurred in most of these communities. In a few instances, economic development in Society No. 1 does spread to Society No. 2, but when it does, it is often inequitable and provides few tangible benefits for the members of the latter.

Our nation’s inability to connect and expand the impact of Society No. 1 to its disconnected counterpart must be addressed. Regional economies can’t be strong or sustainable if large segments of their populations are not fully integrated into these economies. Stakeholders in high-growth regions must create clusters of high- growth entrepreneurial companies that create an economic impact that is broad, inclusive and transformational.

The year 2045, when the United States will be majority Latino and African American, is fast approaching and high-growth regions are not prepared. The regions that are successfully transforming their economies have every right to pause and celebrate wins. However, celebrations should be proportional to the size of the victory and the self-congratulation in many high-growth regions seems unnecessarily large. Confetti can obscure a region’s ability to see opportunities and threats. The demographic challenges that all regions face dictate that we move forward with a clear mind.

Read the entire article, The Innovation Economy Must Include Everyone.

Public-Private Partnerships | Center for American Progress

Understanding the Difference Between Procurement and Finance

A public-private partnership, or P3, is an alternative approach to infrastructure procurement for large-scale, complex projects that allows a private entity to exercise greater control and decision-making authority than it would be able to under a traditional procurement arrangement. A P3 approach allows the public sector to transfer some or all of the project development, design, construction, operational, and revenue risk to a private entity. When structured properly, a P3 agreement can leverage contractual penalties and rewards to increase the likelihood that the private entity will complete the project on time and on budget. Additionally, a long-term P3 deal may result in higher maintenance standards, since the contract obligates the state and concessionaire to uphold their responsibilities to the facility even when adverse economic or political conditions would otherwise lead to deferred maintenance and neglect.

Public-private partnerships exist on a spectrum with more or less private control depending on how the government structures the agreement. On the low end, a P3 approach may simply combine project design and construction into one contract. On the high end, the government may choose to grant additional responsibilities beyond design and construction to the private firm, such as operations, maintenance, and rehabilitation over 30 years or more.

A public-private partnership may or may not involve private financing. The most common forms of private financing are proceeds from a private-activity bond issuance and equity capital. Typically, private-activity bond proceeds cover a significant share of total project costs, while equity capital—the most expensive source of financing available—covers much less of the total cost.

Find more, including a link to the Public-Private Partnerships report, from the Center for American Progress.

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