Michael MacDowell: How to Grow the Regional Economy


It’s not easy to reinvent or to grow a regional economy. The old proverb, “It takes a whole village to raise a child,’’ can be applied equally to building a sustainable and vibrant economy because it requires the whole community to be successful in sometimes complicated and intertwined facets.

Michael MacDowell, President, Misericordia University

There are several key ingredients to most successful regional economies: A strong community of entrepreneurs with investment capital is essential, but so is the availability of state-of-the-art technology. Innovative companies must be willing to work hand-in-glove with institutions of higher education to further develop technology and to create other high-tech products and services. And perhaps, most important of all is the local workforce and the region’s quality of life.

So seven years ago, business and education leaders in the nine-county area that comprises Northeastern and Eastern Pennsylvania set out to rebuild the foundation of our own economy from manufacturing to technology with the assistance of a $13 million grant from the U.S. Department of Labor and the Workforce Innovation in Regional Economic Development (WIRED) project.

The genesis of the 2004 grant was the belief that the region could be a backup site for the financial district of New York City and even Philadelphia if another 9/11-type disaster occurred. Some people, though, have suggested that the results of the WIRED grant, later dubbed “Wall Street West,’’ were at best, mixed.

Few people knew that shortly after the grant was received that the financial markets would experience an historic meltdown. The resulting contraction in financial-related business, coupled with the inability of the commonwealth to provide the high-speed connection from New York City that was promised as a match to the grant, inhibited the growth of Wall Street West, per se. Our local economy, though, is better today because of the grant. A lot was accomplished thanks to significant input and direction from the Northeastern Pennsylvania Technology Institute (NPTI) and the Great Valley Technology Alliance (GVTA).

The formation of the NPTI and GVTA was based upon the recommendations of a study conducted by the Battelle Memorial Institute that was commissioned in 1999 by the Greater Scranton Chamber of Commerce, Greater Hazleton CAN-DO, and the Greater Wilkes-Barre Chamber of Business and Industry. They visualized a “Great Valley Technology Corridor,” running along Interstate 81 and eventually branching out to Stroudsburg and the eastern part of the state. The concept was based upon a proven system for 21st century economic development where innovative new companies paired with area colleges and universities to create high-tech products and services.

Of course, building a community with strong entrepreneurial attributes based upon state-of-the-art technology does not happen overnight. It takes many interested parties, spanning several areas of expertise and working closely together to create a new technology-based focus. The NPTI and GVTA — which have subsequently merged — helped facilitate the WIRED project. They were conduits for the distribution of competitively-awarded funding for internships that were supported by the WIRED grant and the Keystone Innovation Zone (KIZ) in NEPA. KIZ allowed small, start-up businesses the opportunity to sell tax credits to larger companies and by so doing, raise the capital they needed to grow their new business. The NPTI and GVTA also developed an Angel Network, where local investors can review and, after discernment, invest in local firms that offer exciting opportunities for growth and development.

The Department of Labor estimates that 90 percent of start-up businesses are under-capitalized both in terms of financial resources and personnel. The WIRED grant and KIZ are a perfect match to offset this inevitable phenomenon.

With WIRED support, and with the help of the KIZ program, hundreds of young college students fanned out to serve new firms such as Pepperjam, Baby Age, Solid Cactus, and TMG Health, to name a few. These firms have gone on to hire many local college graduates. Some of these companies have been sold to larger firms, and the wealth created by those sales has multiplied locally. For instance, Kris Jones, the founder of Pepperjam, is now using the capital created by the sale of that company for a new innovative, knowledge-driven marketing firm called ReferLocal.com.

TMG, which will soon be opening a brand new office in Jessup, was among those companies that benefitted from the efforts of the NPTI and GVTA.

Two ingredients for this new knowledge-based economy are critical to a region’s ability to compete: The first is the quality of the workforce and the second is the quality of life. Talented and technologically-sophisticated companies will flock to areas where local college graduates have the ability to help them create new wealth through hard work and innovation. Similarly, firms will grow in an area where social, cultural, and recreational facilities are prevalent and where schools are good and neighborhoods are safe. These attributes are abundant in the region.

Economic growth also requires well-managed technology or biotechnology-based firms which can hire young college graduates and provide them with the opportunities for career growth in NEPA. For years, this region was known for its “brain drain” as hundreds of viable young people left the area to seek their fortune in larger cities. This tradition can be, and in part has been, reversed by the growth of firms that owe their success at least partially to the NPTI and GVTA.

Regional leaders had to adjust their focus for Wall Street West when elements outside of their control changed the scope of the initial project. The region continues to benefit today due to the work of these innovative and hard working people.

Michael A. MacDowell is president of Misericordia University in Dallas, Pa., where he occasionally teaches economics.