the inner city--12/2/24

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Today's selection -- from The Inner City edited by Thomas D. Boston and Catherine Ross. For all the concerns about the economies of inner cities, professor and business strategist Michael Porter sees four advantages:

“Porter has identified four areas of potential competitive advantage for the inner city:

“Strategic location. Porter's theory on the competitive advantage of the inner city reflects the thinking of many practitioners in the field of economic development, which sees locational (space and time) factors as the most important, and amenable to control, of all the factors related to economic development. Inner cities are located near major business, transportation and communications nodes and would be ideally situated if such effects were economically important. But increased geographic mobility and improved communications and distributions systems have lessened the advantage of central locations over the suburbs and exurbs, where most economic activity now occurs. The importance of locational centrality has waned for almost all economic activities. What is left—governments, medical institutions, and educational facilities—are constrained either politically or by enormous investments in buildings and land.

“Local market demand conditions. Opportunities exist to serve the inner-city markets but what special, new competitive advantage results? Porter is least impressive when he goes on at great length about the ‘special’ market of the inner city with its consumer preferences for beauty care products and certain food products. There are elements of truth here. Ethnic marketing is an accepted business practice, but this is really nothing new in economic development theory or practice.

“Integration with regional clusters. By definition, clustered firms should exhibit a complex pattern of complementary and competitive behaviors. How these linkages are discerned and formulated into a detailed implementation plan that specifies linkages to new firms, Porter leaves substantially unaddressed. These details are the nuts-and-bolts of a credible plan to make clustering work in any environment, especially the inner city. Even in The Competitive Advantage of Nations, Porter's methodology relies primarily on the ad hoc adjustment of location quotients based on international trade patterns. Porter's few examples of inner-city export clusters in Boston and Los Angeles, mostly food distribution, laundry and toy importing, do not clearly suggest a specific methodology of identifying clusters. Access to which clusters by which inner city firms is an important question that must be answered clearly and accurately if Porter's ideas are to be implemented.

“Human resources. The inner-city labor force has almost no real competitive advantages in a globalized economy. The black middle-class continues to abandon the inner city as a place of residence (and commerce). Porter rejects exploiting unskilled labor—the only real, short-term product of the ghetto—because of its wide availability in the global market. However, not all unskilled labor is replaceable in global markets; much unskilled labor, such as personal and home repair services, can only be delivered locally. Maximizing these types of locally delivered unskilled jobs is not mentioned in Porter's scheme, in part because it would not be consistent with his preference for export over income substitution and other internal development strategies. Instead, he implies that poor inner-city residents should find jobs in the new information and other industries identified as part of export-based clusters.

“Porter correctly warns against a rising tide theory, avoiding pinning inner-city revitalization hopes on general improvements in the regional economy. Full regional employment should create strong forces to employ unskilled inner-city residents. But first, as Porter notes, ‘there would still be a large surplus of better qualified unemployed or underemployed people that would need to be absorbed before the benefits to inner-city residents would be realized. If the demand for labor rose enough to approach local supply, migration and immigration of unskilled labor into the region would limit the benefits for inner-city residents.’ Porter's speculation about the deleterious effects of unskilled in-migration as a factor that effectively denies the unemployed jobs has been demonstrated for the Atlanta region, as noted previously. But what are the objectives of inner-city revitalization if employment of current residents is not the central focus? Inner-city industry employing suburbanites or new migrants to the metropolitan region benefits most inner-city residents very little. And without work for its residents, the physical, social, and economic conditions of the inner city will not be renewed.”

author:	Thomas D. Boston and Catherine Ross
title:	The Inner City: Urban Poverty and Economic Development in the Next Century
publisher:	Routledge
pages:	87-88