The Private Sector Can Drive Innovation — but Requires Public Governance

Editor’s Note: This blog is part of an ongoing series of contributions from participants in The German Marshall Fund’s flagship leadership development program, The Marshall Memorial Fellowship (MMF).

In the United States, we tend to assume that innovation and growth are best incubated in the private sector. While this perspective has merit, my recent Marshall Memorial Fellowship travel in Europe reinforced the continued importance of public sector stewardship to ensure stability and growth that spans lifetimes.

In my field, rural regional economic development, we use an approach to growth that recognizes the interconnectivity of a number of factors linked to prosperity, including infrastructure, workforce, regulatory environment, financial capital, social amenities, entrepreneurial environment, and innovation capacity. Throughout my travels as a 2017 Marshall Memorial Fellow, I had the opportunity to discuss economic development approaches across multiple communities in Europe. Two elements stood out as enhancements to the approach we currently employ in the United States.

1. Focus on Public Governance. One topic that repeatedly arose was the need to invest in good public governance as a core asset of economic development. As one of our presenters noted during the fellowship, “the Abbey lasts longer than the Abbot.” The durability of institutions was reinforced throughout this fellowship. This emphasis on the durability of institutions in Europe pointed to a gap in our approach in the United States in relation to innovation,  which in our rural region frequently focuses disproportionately on the private sector. But it is equally important, especially in a time of rapid change, to analyze innovation within public institutions and their ability to adapt in order to create flexible responses to a myriad of complex challenges.

2. Increased Collaboration Between Private Industry, University Partners, and Elected Officials to Advocate for Bold Investments. MMF highlighted the premise that leaders do not just express public will, but can lead the public to new ground. The ability to do so requires courage and some calculated risk, but the opportunity to significantly move a transformative project forward can be further facilitated by collaborating directly with industry. One such example was highlighted for us during a visit to Bilbao, Spain. Bilbao faced a similar post-industrial trajectory to the Columbia Gorge region of Oregon and Washington, in that it faced an economic shock with the sudden loss of a primary industry, moved through a period of recovery bolstered by strategic industry sector investments, and is now starting to deal with complex challenges and redefining solution sets. Bilbao has adopted a shared, cross-sector  vision for redevelopment of a former industrial space. The Zorrotzaure master plan for this site is a major urban renewal project that aims to spur economic development. Their approach is unique in the level of collaboration between leaders in the public and private sectors. Their shared vision for redevelopment is advocated not just by city leadership but is also reflected in conversations with business leaders as they have positioned the project to be responsive to industry needs.

Industry may provide a more significant lever to drive the changes a community hopes to achieve than public policy can, but adaptable and innovative public institutions are necessary to provide stability and opportunity for economic prosperity. Both should be recognized and reflected in our regional economic development framework.

Amanda Hoey, executive director for the Mid-Columbia Economic Development District in Oregon and Washington States, is a Spring 2017 American Marshall Memorial Fellow.