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Published: Saturday, 1/29/2011

Metropolitan areas are key to moving forward

Ohio Gov. John Kasich has moved from campaigning to governing, taking the helm of a state with an unemployment rate of 9.6 percent and a projected budget gap of as much as $8 billion.

The state's largest metropolitan areas, including Toledo, have been hit by the double blow of the recent recession and the pole-axing of traditional manufacturing. To create jobs and build its next economy, Ohio must recognize the power of its economic engines: the metropolitan areas that house most of its people and generate an even greater portion of its gross domestic product.

The state's seven large metro areas are home to 71 percent of Ohioans. They generate close to 80 percent of Ohio's economic output, even after they've been wracked by the recession.

More than half of rural Ohioans live in a metropolitan area. Fulton County may look and feel rural, but it is part of metro Toledo.

These metros are where Ohio's next economy will flourish. They are export powerhouses: The Toledo region has the eighth-most export-intensive economy of all large U.S. metropolitan areas. Cleveland, Cincinnati, Dayton, and Youngstown are all in the top 25.

Metros in the rest of the world, particularly in Asia and Latin America, have bounced back from the recession more robustly than the United States. So exports will be critical to job growth in the next several years, now that consumers abroad are buying again.

Toledo must constantly innovate to maintain its place in global markets. As this region and others in Ohio have painfully learned, routine manufacturing is routinely outsourced.

So the state needs to preserve or strengthen programs such as the Ohio Department of Development's Hubs of Innovation. They help metros continue to innovate and produce more of the products and processes, such as advanced solar technology, that will be in increasingly high demand across the globe.

Ohio can pay for its export efforts, innovation hubs, and other programs that support metropolitan industry clusters by cutting back on wasteful tax breaks and other giveaways for business recruitment.

The hard fact: No more than 3 percent of annual state job gains can be attributed to business relocations nationally. Nearly 42 percent come from the expansion of existing businesses, and 56 percent from the birth of new establishments.

State leaders can also help metros act like metros by encouraging the alignment of economic development strategies by local governments, as well as the sharing of public services, and, if they choose, tax bases.

The Ohio Revised Code is full of measures that throw up barriers to the collaborative provision of services among municipalities, townships, and counties. The state constitution also makes collaboration challenging.

A recent report by the Ohio Commission on Local Government Reform and Collaboration is a useful starting point. It urges state government to change laws that keep local governments from voluntarily working together to save money and discover their common interests by working across borders.

Even more boldly, the state can offer its metro areas a deal: If they create unified economic development strategies, analogous to private-sector business plans, the state will make it easier to use various money flows for job training, education, economic development, and innovation in a unified way.

Northeast Ohio is working on such a plan. Northwest Ohio needs to catch up.

State innovation is part of the genius of our federalist system. During the 1980s, governors from both parties experimented with welfare and health-care reforms that paved the way for federal advances in the next decade.

And states learn from each other. Ohio's Third Frontier program is widely acknowledged as a national model for technology-based economic development.

Governor Kasich, like his peers in other states, has no choice but to be bold and creative. All the easy budget fixes and nip-and-tuck cuts have already been applied.

Other new governors, from Republican Rick Snyder in Michigan to Democrat Andrew Cuomo in New York, have said that across-the-board, indiscriminate cuts are not the way to move forward. Now is the time for more fundamental restructuring of how states do business.

If the new governor and General Assembly can put state investments in the service of metropolitan efforts to create jobs and save money, Ohio can show the nation how to govern for growth.

Jennifer Bradley is a fellow at the Brookings Institution Metropolitan Policy Program in Washington, D.C. She is co-author, with Lavea Brachman of the Greater Ohio Policy Center, of “Restoring Prosperity: Transforming Ohio's Communities for the Next Economy.”

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