Recommended
Recommended
More Related Content
What's hot
What's hot (20)
Similar to Market-Based Community Economic Development
Similar to Market-Based Community Economic Development (20)
More from RWVentures
More from RWVentures (20)
Recently uploaded
Recently uploaded (20)
Market-Based Community Economic Development
- 1. Market-Based Community Economic Development Presented toPresented to J. McDonald Williams InstituteJ. McDonald Williams Institute ByBy Robert Weissbourd and Riccardo BodiniRobert Weissbourd and Riccardo Bodini RW Ventures, LLCRW Ventures, LLC October 23October 23rdrd , 2006, 2006
- 2. CONTENTS Applying the Framework: Retail Development Market-Based Community Economic Development Applying the Framework: Urban Financial Markets Discussion
- 3. Origins: From “Equity” to … “Equity” Putting thePutting the EconomicsEconomics in Economic Developmentin Economic Development Civil RightsCivil Rights EmpowermentEmpowerment Economic Development:Economic Development: AssetsAssets Economic Development:Economic Development: MarketsMarkets
- 4. Why Markets? • To address poverty, create wealth • Wealth is created by investing in assets • The economic mechanism for investing in assets is the market • To create wealth in low income communities, expand market activities to the assets of those communities
- 5. Market Failure in Lower Income Communities PovertyPoverty ProductivityProductivity ConnectednessConnectedness IsolationIsolation
- 6. Market Failure in Lower Income Communities • Employment networks • Entrepreneurial opportunities • Business, real estate investment • Expanded products and services • Competitive, healthy communities • Distressed neighborhoods have undervalued assets, reflecting lack of specialized marketDistressed neighborhoods have undervalued assets, reflecting lack of specialized market intelligence and poor economic networksintelligence and poor economic networks • Investment is function of profitability, risk and transaction costsInvestment is function of profitability, risk and transaction costs • ““Seeing,” measuring, accessSeeing,” measuring, access ValuingValuing Market Activity and OpportunityMarket Activity and Opportunity • Undervalued,Undervalued, underutilized assetsunderutilized assets PovertyPoverty ProductivityProductivity ConnectednessConnectedness IsolationIsolation
- 7. Overall Framework: Enhancing Markets to Include LICs Set Success Metrics; Evaluate Progress Set Success Metrics; Evaluate Progress Community Economic Development Goals Community Economic Development Goals Is There A Market Solution? Is There A Market Solution? Key Levers for Affecting Market Behavior Key Levers for Affecting Market Behavior Choose and Implement CED Strategy Choose and Implement CED Strategy
- 8. Overall Framework: Enhancing Markets to Include LICs Goal:Goal: Align Market and CEDAlign Market and CED InterestsInterests Strategy:Strategy: • Analyze MarketAnalyze Market • Target Market ComponentTarget Market Component • Identify Change LeversIdentify Change Levers Products and Activities:Products and Activities: Choose operating activitiesChoose operating activities to move leversto move levers Set Success Metrics; Evaluate Progress Set Success Metrics; Evaluate Progress Community Economic Development Goals Community Economic Development Goals Is There A Market Solution? Is There A Market Solution? Key Levers for Affecting Market Behavior Key Levers for Affecting Market Behavior Choose and Implement CED Strategy Choose and Implement CED Strategy
- 9. Goals: Aligning Markets and Development Low AlignmentLow Alignment High AlignmentHigh Alignment MarketMarket InterventionIntervention Market solutionMarket solution possible ifpossible if marketmarket operations andoperations and environmentenvironment changedchanged through publicthrough public policy andpolicy and advocacyadvocacy MarketMarket RedefiningRedefining Market solutionMarket solution possible ifpossible if marketmarket operations andoperations and marketmarket environmentenvironment changedchanged through privatethrough private activitiesactivities Market RefiningMarket Refining Market solutionMarket solution possible withpossible with new information,new information, products orproducts or networksnetworks Pure MarketPure Market Market solutionMarket solution possible; marketpossible; market alreadyalready generates CEDgenerates CED outcomesoutcomes Non-MarketNon-Market No marketNo market solution; marketsolution; market is not theis not the appropriateappropriate channelchannel Market InterestsMarket Interests CED GoalsCED Goals Adapted from Kahane,Adapted from Kahane, Weissbourd and WeiserWeissbourd and Weiser
- 10. Goals: Aligning Markets and Development Low AlignmentLow Alignment High AlignmentHigh Alignment MarketMarket InterventionIntervention Market solutionMarket solution possible ifpossible if marketmarket operations andoperations and environmentenvironment changedchanged through publicthrough public policy andpolicy and advocacyadvocacy MarketMarket RedefiningRedefining Market solutionMarket solution possible ifpossible if marketmarket operations andoperations and marketmarket environmentenvironment changedchanged through privatethrough private activitiesactivities Market RefiningMarket Refining Market solutionMarket solution possible withpossible with new information,new information, products orproducts or networksnetworks Pure MarketPure Market Market solutionMarket solution possible; marketpossible; market alreadyalready generates CEDgenerates CED outcomesoutcomes Non-MarketNon-Market No marketNo market solution; marketsolution; market is not theis not the appropriateappropriate channelchannel Market InterestsMarket Interests CED GoalsCED Goals Adapted from Kahane,Adapted from Kahane, Weissbourd and WeiserWeissbourd and Weiser This step helps determine whether a market based developmentThis step helps determine whether a market based development strategy makes sense, and begins analysis of what level of marketstrategy makes sense, and begins analysis of what level of market activity to focus on…activity to focus on… Make MarketMake Market WorkWork (Addressing(Addressing InternalInternal Imperfections)Imperfections)Change MarketChange Market ParametersParameters (Using Market(Using Market Mechanisms)Mechanisms) Change MarketChange Market ParametersParameters (Using Non-(Using Non- marketmarket Mechanisms)Mechanisms) Vital Work –Vital Work – but not CII!but not CII! Market Works:Market Works: CompanyCompany profits whileprofits while providing CEDproviding CED impact.impact.
- 11. Other ExogenousOther Exogenous Influences:Influences: InfrastructureInfrastructure Factors/ResourcesFactors/Resources TechnologyTechnology TastesTastes Institutional Context:Institutional Context: Enabling LawsEnabling Laws Prescriptive RegulationPrescriptive Regulation Entry BarriersEntry Barriers Strategies: Identifying Key Levels and Levers of Market Activity ExchangeExchange ProductionProduction ConsumptionConsumption Level: Market EnvironmentLevel: Market Environment
- 12. ProductionProduction FunctionsFunctions Levers:Levers: ProductivityProductivity CostsCosts ExchangeExchange Levers:Levers: Transaction Costs:Transaction Costs: Finding costsFinding costs Measurement costsMeasurement costs ExchangeExchange FunctionsFunctions Levers:Levers: TasteTaste IncomeIncome ConsumptionConsumption FunctionsFunctions Strategies: Identifying Key Levels and Levers of Market Activity Level: Market OperationsLevel: Market Operations
- 13. Information Resources are the Modern Currency of Wealth Creation • Who gets seen and servedWho gets seen and served --specialized market knowledge &--specialized market knowledge & customer accesscustomer access • Who gets employedWho gets employed -- employment-- employment networksnetworks • What goods and services areWhat goods and services are producedproduced – product and process– product and process knowledge and controls, flexibleknowledge and controls, flexible customization, financial risk andcustomization, financial risk and transaction costtransaction cost • Value CreationValue Creation -- Fed Ex (tracking-- Fed Ex (tracking system); Sabre (reservationssystem); Sabre (reservations system)system) Information Determines: 0% 100% 200% 300% 400% 500% 600% $s lbs %Change Gross Domestic Product % Growth over last 50 years Greenspan: Fundamental change in the economy towards intangible assets
- 14. • Finance • Retail • Employment SpecializedSpecialized products,products, policypolicy SpecializedSpecialized products,products, policypolicy More Efficient,More Efficient, Productive,Productive, InclusiveInclusive SystemsSystems More Efficient,More Efficient, Productive,Productive, InclusiveInclusive SystemsSystems Target specificTarget specific market levelsmarket levels and leversand levers Target specificTarget specific market levelsmarket levels and leversand levers Identify CEDIdentify CED goals andgoals and relevantrelevant marketsmarkets Identify CEDIdentify CED goals andgoals and relevantrelevant marketsmarkets MainstreamMainstream MarketsMarkets MainstreamMainstream MarketsMarkets • Prod./Exchange Costs • Market Intelligence • Training, Transaction Costs • Payroll Cards • Specialized IC Models • Skills Certification, Coordinated Networks A Framework for Enhancing Markets NeighborhoodNeighborhood AssetsAssets NeighborhoodNeighborhood AssetsAssets GoalsGoals StrategiesStrategies ActivitiesActivities Adapted from Living Cities/BrookingsAdapted from Living Cities/Brookings
- 15. Example: Retail • Goal: Commercial Development • Market Operation: Exchange function • Strategy: Reduce retailers’ finding costs • Activity: Develop better data and models to reveal demand and improve market access in IC neighborhoods • Example: MetroEdge
- 16. Bexar County, Median Income Darker blue shades represent areas with higher median income.
- 17. Bexar County, Concentrated Buying Power Darker blue shades represent areas with higher concentrated spending power ($ per sq. mile).
- 18. Spending as a Percent of Income 1995 Consumer Expenditure Survey 252% 140% 109% 87% 83% 66% 0% 100% 200% 300% <$10K $10-20K $20-30K $40-50K $50-70K $70K+ Income Bracket Income is NOT a Good Indicator of Spending Power Source: MetroEdgeSource: MetroEdge
- 19. 1990 census data 0.00% 4.00% 8.00% 12.00% 16.00% 20.00% < $5000 $10,000 to $12,499 $15,000 to $17,499 $20,000 to $22,499 $25,000 to $27,499 $30,000 to $32,499 $35,000 to $37,499 $40,000 to $42,499 $45,000 to $47,499 $50,000 to $54,999 $60,000 to $74,999 $100,000 to $124,999 > $150,000 Household Income Category %HouseholdsinCategory CHICAGO SOUTH SHORE South Shore median income = $25,100 South Shore has a lower proportion of the very wealthy and a higher proportion of the very poor, but its solid middle class looks much like anywhere else in the city. Central Cities are Diverse as well as Dense Source: MetroEdgeSource: MetroEdge
- 20. Retail Float for Bexar County
- 21. New indicators were more significant than traditional ones in this location model created to predict sales for a grocery chain. Validating a New Approach 0.00 0.05 0.10 0.15 0.20 0.25 0.30 0.35 Percent African American Percent Home Ownership Median household Income Private Co Data Per Capita Exp on Dry Cleaning Population Density Concentrated Buying Power Percent Using Credit Products Median Housing Value Avg Credit Balance NOT STATISTICALLY SIGNIFICANT NOT STATISTICALLY SIGNIFICANT NOT STATISTICALLY SIGNIFICANT Standardized Coefficients (Beta from LTS Multiple Regression on Sales Per Sq. Ft.) New Data Predicts Sales Performance For Grocery Store Model Source: MetroEdgeSource: MetroEdge
- 22. Example: Financial Services • Goals – Enable IC residents to build ownership assets (by expanding financial and insurance services) • Market Operation – Production and Exchange functions • Strategy – Reduce producer’s underwriting costs; improve risk assesment • Activity – Reduce incompleteness and bias (esp. of credit scores) by including additional information & improving models • Example – UIPI, CFSI
- 23. Market Snapshot • As many as 39 million people, including 11 million unregistered immigrants, are unbanked. • Approximately 44.7 million people are underbanked -19.4% of all households. • The combined un- and underbanked populations may be 40 million households and $1.1 trillion in income. • The average underserved household receives $27,500 in income. • Assuming the average household spends 1% of income on basic financial services, the overall market is $11 billion. Source: BearingPoint and Visa study (not including last bullet)
- 24. • 35-50 million Americans have thin or no credit files. • Many of these consumers are demonstrating responsible financial behavior but aren’t getting credit for it. – Rent – Utility bills • Credit bureaus and lenders are beginning to experiment with alternative data and scoring methods. – Experian – PRBC – CircleLending Process Improvements: Alternative Credit Reporting/Scoring – Remittances – Payday loans
- 25. When viewed with a “lifetime value” lens, the needs of financial institutions and underbanked customers can be aligned The Credit Path Alternatives Federal Credit Union Financial institution viewCustomer view •Investment products •High margin lending •Fee income •Cheap deposits •Consumer credit •Savings Closing the Gap: Creating Alignment
- 26. Market-Based Community Economic Development Presented toPresented to J. McDonald Williams InstituteJ. McDonald Williams Institute ByBy Robert Weissbourd and Riccardo BodiniRobert Weissbourd and Riccardo Bodini RW Ventures, LLCRW Ventures, LLC October 23October 23rdrd , 2006, 2006