OAPA Oregon 2050 Session: Economic Health: What Can Be Done?
Bob Wise, Cogan Owens Cogan, LLC
May 14, 2014
The purpose of this discussion is to understand what is meant by “economic health”, what current trends indicate
and what realistically can be done at the local and regional levels to increase economic health.
What do we mean when we think of economic health? Some common measures include increasing employment,
reducing unemployment, increasing incomes, increasing commercial and industrial land development, increasing
educational attainment, growing-retaining-attracting companies, supporting R&D and technology transfer,
increasing the rate of new business formation, improving community livability, investing in infrastructure and
others. The Oregon 2050 Action Planning has a visionary action planning definition: to build, grow and buy
locally and to sell globally.
This is a fairly provocative idea. Much current economic development thinking is focused on what is called the
“traded sector” or those industries and companies that export our locally produced products and services to bring
money into our communities. Think Intel or Eastern Oregon wheat farmers. The second strategy to “build, grow and
buy locally”, might be called “import substitution” that is aimed at reducing the flow of capital from and circulating
capital in our communities by focusing on local and regional suppliers and purchases. Think New Seasons Market,
renewable energy facilities and the secondary markets in used automobiles as examples. These purchases contrast
with those made through Amazon, for example.
Communities are left fundamentally with a strategic choice. Do they focus on gaining and keeping capital through
strategies to support the traded sector or do they focus on local companies that encourage import substitution or can
they do both?
Traded sector strategies are well known with trade shows, recruitment trips, branch plant attraction, and land
development to attract traded sector firms and other strategies. Import substitution strategies are less well
understood. The current focus on Oregon’s food and energy supplies have identified areas of potential economic
opportunity that have not been well documented until now. For example, recent studies indicate that in the Portland
region alone 90-95 percent of the food consumed comes from outside the region. In Oregon, 85 percent of the
energy we purchase (primarily in the form of motor fuels, natural gas and coal based electricity) is from out of state.
These two areas alone represent a capital outflow of approximately $12 billion per year lost to our economies. Add
to that automobile and consumer goods purchases and pension fund and other investment we are talking real money.
This is interesting because Oregon is one of the best places in the world to grow food and we have a super
abundance of renewable energy supplies. A strategic focus on healthy food supply and renewable energy can help
bridge urban and rural Oregon. We also know how to build houses with our local lumber.
To date no community has done a comprehensive analysis of where our money comes from and where it goes. Some
communities including Clackamas and Multnomah Counties, Lane County, and the City of Portland, among others,
have developed plans for economic health that recognized that Oregon has strong food production and renewable
energy assets we can support to keep more money circulating locally.
As we consider economic health we should think clearly about whether we are going to focus on the traded sector,
import substitution or both to capture the money flows necessary to support our long term economic goals. This
strategic decision can guild whether we focus on our main streets or industrial parks or whether we purchase locally
or globally. We might see economic health defined, at least in part, as how much capital our communities attract and
how much they keep circulating through local and regional purchases and investment.
So our main challenges appear to be to determine:
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What we mean by economic health and how do we measure it?
What are our communities and related regions’ traded sector and import substitution opportunities?
What are the feasible actions we can take?
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Which infrastructure investments makes sense for the economic health strategy
How can we improve our performance over time?