Ed MorrisonPurdue Center for Regional DevelopmentWest Lafayette, INDecember 3, 2009
MEASURING THE IMPACTS OF COMMUNITYRENEWAL INTERNATIONAL
This note explores how to measure the economic impacts of CommunityRenewal International's model of neighborhood renewal.
Background
Community Renewal International (CRI) has developed a new model forbuilding prosperity within poor inner-city neighborhoods. This model focuseson the development of supportive networks of "intentional relationships". The model guides the development of these relationships along the criticaldimensions of a healthy community. The CRI model of neighborhood transformation is closely allied to a similarapproach that we have been developing at the Purdue Center for RegionalDevelopment for regional economic transformation. Our model relies on thedevelopment of open networks.We focus on five dimensions of regional transformation: 1) buildingbrainpower with 21st-century skills; 2) translating brain power into wealththrough innovation and entrepreneurship networks; 3) developing quality,connected physical spaces; 4) creating powerful regional narratives througheffective storytelling; and 5) developing democratic, collaborative leadershipskills. We call this approach Open Source Economic Development. To guidethe development of complex projects within these open networks, we'vedeveloped a new approach to strategy, called Strategic Doing. Unlikestrategic planning, which assumes you can you operate through ahierarchical organization to develop and implement strategy, Strategic Doingguides development of complex projects in open networks. These two models of economic transformation -- one developed byCommunity Renewal International, the other developed at the Purdue Centerfor Regional Development -- are closely aligned. They both represent a newgeneration of policy strategy based on understanding our economy as aseries of networks embedded in other networks. This new perspective carriesprofound impacts for the study of economics, as well as public policy for
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community development, education transformation, economic development,and workforce development.
In the past, policy strategies for community development, economicdevelopment and workforce development have focused on solving problems.Federal and state level policies have been isolated. This approach makessense if you view the economy as a mechanical system that can be "fixed".So, not surprisingly, public policy for community and regional development ishighly compartmentalized and fragmented. In the case of economicdevelopment, there are over 180 programs scattered across nine federaldepartments and five independent federal agencies. This complex maze of programs evolved over five decades, as the federal government attemptedto solve isolated problems.
Network-based approaches take a different view. These models seeeconomies at the community and regional level as open networks that canbe intentionally strengthened and focused. They call for a new generation of state and federal policy that is more flexible and adaptive, but no lessaccountable.
Measuring the impacts of Community Renewal International: AFramework
CRI's approach to transforming neighborhood economies creates twobroad categories of impacts: reducing social costs and increasingneighborhood wealth.Reducing social costsNeighborhood poverty creates social costs that are not borne by theresidents of the neighborhood. These costs are shifted to the broadereconomy and we pay for them in higher taxes. In a sense, these costsrepresent the "social overhead" of a poor neighborhood. These costs fall intobroad categories: crime and health care. Reducing the social costs of crimeis easy to grasp. Reducing health care costs is less obvious. However, if CRIimproves the wellness of residents in a neighborhood -- lower rates of obesity or diabetes, for example -- the effect is lower health care costs.
1
Beinhocker, E. D., 2006. The Origin of Wealth: Evolution, Complexity, andthe Radical Remaking of Economics . Boston, Mass.: Harvard Business SchoolPress
2
Mark Drabenstott, 2009.
Why is Targeted Regional Economic Development Important in Today's Policy Setting
. [online] Available from:http://nercrd.psu.edu/TRED/DrabenstottChapter.pdf [accessed December 3,2009]
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Increasing community wealth Two factors drive the increase in neighborhood wealth: higher levels of educational attainment and new business development. The connectionbetween higher levels of educational attainment and higher incomes is well-established. As we move toward a more knowledge-based economy, incomelevels of high school dropouts and high school graduates have beendeclining, while the income levels of people with postsecondary educationhave been increasing.New business activity also increases the wealth of a neighborhood. Threefactors drive this process. New and expanding businesses trading withcustomers outside the neighborhood generate income for the neighborhood.Wealth also increases within a neighborhood when neighborhoodresidents buy goods and services from each other. Economists call this factorthe "multiplier" which measures the impact of a new dollar coming into theeconomy. Vibrant economies have higher multipliers. Finally, wealth isincreased within the neighborhood when businesses "plug the leaks". So, forexample, a larger company, by choosing a local supplier, reduces the flow of money outside the neighborhood.
Measuring the impacts of Community Renewal International:Some Specifics
We can use a variety of metrics to measure CRI'simpacts. Here are several:
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Reducing teenagepregnancy
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Reducing lowbirthweight babies
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Increasing earlychildhood education
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Improving 3d gradeliteracy
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Reducing high school dropouts
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Increasing educational attainment
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Ed Morrison Purdue Center for Regional Development West Lafayette, In
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