Prosperity Report

ECON 309/Spring 2003 (Prof. Hackett)

Seth Dallmann

Eric Bywater

BreeLyn DuPertuis

In reviewing the Humboldt County Prosperity plan, our group finds numerous strengths and weaknesses in the strategy. As with any strategy, the Prosperity plan encompasses many opportunities and faces several threats in its effectiveness. An interview with Dan Ihara, current director of Center for Environmental Economic Development and an active participant in the development of the plan, gives us a chance to include a credible perspective on the Prosperity plan. Comparing Prosperity to a recent strategic plan put forth by the Arizona Department of Economic Security (DES) and a Regional Economic Action Plan for the Olympic Coast in Washington brings to light some unique factors of the Prosperity plan.

The use of Industry Clusters is a strength of the plan by helping bring forth an economy that represents the community. Focusing on the development of the Industry Cluster groups supports local entrepreneurs, rather than businesses ordained by external objectives. The Olympic Coast region in Washington is working on implementing industry clusters. They mention in their strategy “identification of specific niches within target clusters enable individuals communities to efficiently focus local resources on complementary development efforts that serve those niches”. As opposed to using a general method of indexing that measures the community as a whole, the Industry Cluster strategy allows for the evaluation of the economy by each individual industry, giving a clearer picture of growth, success, and needs in the community. As the Olympic Coastal region also recognizes, industry clusters also allow for different types of strategies to be applied to different industries to better fit that particular industry. As discussed in class, running an economic system, as a central planner can be difficult because of the billions of bits of information of market exchanges that must be known. Networking facets of the local economy also strengthens communication within the community and competitive edge. Competitive edge often leads to better quality and low cost consumer goods strengthening support from community.

The evaluation process by local industry representatives is a strength to the plan by keeping up communication between the clusters and individual businesses. Having an evaluation technique in place is an important aspect of any strategy to determine progress and success. The current evaluation plan outlined in Prosperity looks like it could be very effective if set against a timeline and goals. Both Dan Ihara and our group agreed that the evaluation process could be considered a weakness to the Prosperity plan when conclusions are vague.

Humboldt County’s economy of a relatively common culture aids in the implementation and communication of the Prosperity plan. Cultural conflicts are minimal in this area in comparison to other areas. These cultural similarities provide for similar goals and views toward the future. When people have common goals, it makes a strategy easier to accomplish. Cultural conflicts are of note and often exacerbating to work out. In the past, Humboldt County has exposed common goals by the battles it chooses to fight and endeavors it chooses to support. For example, the members of the community financially assisted the recent Eureka Waterfront development. The county as a whole is more focused toward sustainability and local economic growth.

A strength and weakness of the Prosperity plan is the aspect that Humboldt County is a comparatively small and isolated region. Moderately safe from the influences and demands of urban sprawl, Humboldt County has the capacity to implement a rather unique economic strategy. This small and isolated region allows for easier implementation and monitoring of a strategy such as Prosperity. Being a small and isolated community can serve as a weakness when concerning distribution and access of goods. Limited distribution and limited constituents in the community constricts the power to support small businesses. Small businesses that lack local customers or that have a limited customer base due do difficulties exporting will have problems generating enough revenues to continue operations. Weaknesses in the Prosperity plan are not limited to location.

The Prosperity plans lack of reference is also a weakness. The use of Industry Clusters is not overly common and seems to have very little examples to refer to. Though the plan states that the Industry Cluster strategy is a proven method, there is no reference to any examples. In reviewing Prosperity, Industry Clusters, as a concept, remains vague. A reference to the “proven” instance of Industry Clusters would help clarify the concept.

The Prosperity strategy’s main weakness lies in the vagueness that exists on many levels of the plan. On one level, there is a huge gap between the values developed by the focus meetings and the actual strategies. Coherent links need to be made to the public between what Prosperity is talking about and what it is actually implementing. Another level of vagueness is that lack of clarity about projected goals and timelines. When implementing and monitoring strategies it is important to set goals and have clear standards. Prosperity does not always set out clear goals, nor does it consistently provide a timeframe within which to accomplish goals.

The Prosperity plans minimal upkeep and funding weakens the effectiveness of the strategy. Dan Ihara mentioned that under the Department of Planning for Humboldt County, only one person is responsible for the upkeep of the Prosperity plan. In order to be clarified, the Prosperity plan needs to be the primary focus of more than one person.

The lack of mention of consumer involvement is a weakness to the Prosperity plan. In order for this or any economic strategy to be effective, it requires community involvement. The DES states how vital customer service is in its guiding principles. DES further expresses this by including three strategies to meet this goal. They intend to “coordinate and streamline service delivery systems, increase and improve stakeholder/customer/community involvement, and increase customer satisfaction. The need for local community members supporting the plan can make all the difference. Actively advertising the plan could cause it to be better accepted and acknowledged by local consumers, through purchases and donations.

Humboldt County has historically expressed an interest in having a say in the economy. The forward thinking people of Humboldt County create an opportunity for implementing sustainable economic concepts and practices. In Humboldt County, there is already an economic climate with an emphasis on import substitution with small-scale local entrepreneurs. This reduces leakage and supports a pro-democratic process. This progressive community will present an accepting environment for Prosperity. The Prosperity plan compliments this interest and allows room for the communities’ involvement in the economy to advance.

Especially in Humboldt County, environmental concern is growing, giving rise to the opportunities for economic practices with environmental integrity. Using resources more efficiently has a positive long-term effect on the economy. Though not currently in effect, the environmental consciousness of our community gives the opportunity to address environmental issues through future business policies and applications.

Humboldt County also recognizes the need to create advantageous local vocational opportunities in order to keep local youth from fleeing to larger cities. By using the Industry Cluster strategy, there are smaller barriers for entrepreneurs to enter the market. Keeping youth in the community and encouraging growth will further strengthen the economy. In class, we discussed the importance of enhancing our local human capital using the bathtub example as a conceptual measure. When the economy grows stronger, youth and professionals will not have to move to urban centers to support themselves. Industry Clusters are driven by the desire to enhance the community as opposed to larger external industries that are strictly focused on profit.

External corporate firms are still a threat and could undermine the Prosperity plan. The business strategies of large corporations are very profit driven and are alluring to an economy as a quick monetary gain. The family owned lumber industry in the area, Pacific Lumber Company, strived for a sustainable harvests plan based on a low discount rate. A more profit driven external firm, Maxxam, had a higher discount rate. Seeing Palco operating in a way that was more sustainable rather than profit driven, Maxim decided to buy out current owners and increase logging for profit now as opposed to later. Maxxam proceeded to lower harvest rates to approximately 20 years between harvests.

Another threat to Prosperity is the environmental degradation is generally associated with economic growth. If the development of this economy succeeds, industries will be threatened by pollution and environmental damage. In order for Prosperity and the community to succeed, the local industries will need to be more productive but use fewer resources and reduce pollution.

The effects of fast changes in an economy often threaten to cause an upheaval of ethical debates. When an opportunity for change arises, the community must agree upon the decision for something new. Fast changes in the economy present threats to economic development plans. This threat is due to the fact that fast changes are hard to predict. If the plan is too short-term then it will be hard to account for future changes. A long-term strategy will have difficulty accounting for fast changes in the short-run. For a successful development plan, these fast economic changes must be monitored with attempts to dampen them or the effects of them. Contrasting ethics and preferences often take effort to make plans work. People have a natural resistance to change, which is always a threat when trying to implement a strategy. This is especially true if a strategy is new and is still in the process of figuring out the specifics of the best courses of action, people often become disheartened by even minor set backs and failures which affects the credibility of the plan.

In assessing the potential effectiveness of the Prosperity plan, we find that the use of the Industry Cluster strategy is realistic for this area. The location of the region coupled with the individuals that make up the community support the plan. All plans have strengths, weaknesses, opportunities, and threats. The Prosperity plan would benefit from more upkeep and funding. The plan would also benefit with more clearly defined goals, time frames, and consumer communication. The fundamentals of the plan are obviously well thought out, serving as a solid base for economic development in this region.