Past economic development efforts should inform decision making (Capitol Update)

Frustrated by Oklahoma’s recent high-profile failures to land large manufacturing facilities, Senate President Pro Tempore Greg Treat, R-Oklahoma City, last March created the Senate Economic Development Select Committee. At the time Pro Tem Treat said, “Oklahoma has abundant resources, qualified employees and a legislature and executive branch that is friendly to the business community. There is no reason for us to continuously lose out to another state in this country on major business developments.”

The select committee met last week to hear from State Chamber President and CEO Chad Warmington, and chamber Research Director Ben Lepak. According to Lepak, states typically use one of two models to lead their economic development efforts: A traditional model that relies on a state agency, such as Oklahoma’s Department of Commerce, and a hybrid model that uses a public-private entity for those efforts. 

Lepak said the hallmarks of the hybrid model are private sector leadership, a nimble operating model more in line with the private sector, appropriate resources, sometimes including dedicated revenue, buy-in from elected officials, regional and sector-based strategies, and durability. Warmington said states that do economic development well use the public-private model. Examples are Florida, Indiana, Virginia, and Ohio.

There is nothing new under the sun. In 1987 Oklahoma’s commodities-based economy was bottoming out from a crash in oil and gas prices and low agriculture prices that produced numerous bankruptcies, farm foreclosures and 122 bank failures from 1980 through 1994. To energize the long slog back, the legislature passed House Bill 1444, the Economic Development Act of 1987. The Act created “Oklahoma Futures,” a public-private partnership “to bring together the Oklahoma business community, agricultural community, financial community, universities, labor, and the state executive and legislative branches to coordinate short-term and long-term strategic economic analysis, planning, action and to conduct performance audits.”

The objectives of Oklahoma Futures were:

1. To expand existing Oklahoma firms which capitalize on Oklahoma’s comparative economic advantages by producing value-added, export-oriented goods, processes and services
2. To encourage the establishment and growth of new firms which create new value-added products, processes and services and can benefit from Oklahoma’s comparative economic advantages
3. To restructure established Oklahoma enterprises so that they can compete effectively in global, national, and regional markets and
4. To identify firms in worldwide economic growth sectors which would prosper from relocating to Oklahoma where they could benefit from the state’s special economic strengths.

Oklahoma Futures consisted of 23 members from the public and private sector, including business, labor, agriculture, universities, and other private citizens as well as leaders of the executive and legislative branches and was charged with being the central economic-development policy planning and oversight board for all economic development activities in Oklahoma. HB 1444 also created the present Oklahoma Department of Commerce which took over the economic development activities previously performed by the governor’s office and the Department of Economic and Community Affairs. The Department of Commerce was to create five-year plans for the approval of, and to be supervised by, Oklahoma Futures.

In addition to Oklahoma Futures and the Department of Commerce, HB 1444 created the Oklahoma Center for the Advancement of Science and Technology. Oklahoma Futures was repealed in 2002. Whatever public-private, or hybrid economic development model is created in the future, it would be wise to look back at Oklahoma Futures and learn why it failed to live up to expectations and was repealed.