Commerce Secretary Evans
Addresses Rural Issues

Editor’s note: Recently, the Digest interviewed Department of Commerce (DOC) Secretary Donald Evans about the administration’s plans regarding the DOC’s and the Economic Development Administration’s (EDA) role in assisting regional development organizations and the rural communities they represent.

Digest: What is the role of the Department of Commerce, and specifically EDA in federal economic development?

Evans: The Bush administration is committed to ensuring that every American community and citizen is given the opportunity to live the American dream. The Department of Commerce (DOC), with its great and diversified resources, is working to promote job creation, economic growth, sustainable development, and improve living standards for all Americans. For nearly four decades, the Economic Development Administration (EDA) has served American communities as the only federal agency specifically responsible for guiding the nation’s disadvantaged communities to success in attracting private capital investment and higher-paying job opportunities. The agencies of the DOC are working together to leave no geographic sector or demographic group behind when it comes to promoting economic prosperity for all Americans.

Digest: What is your vision for the EDA?

Evans: Assistant Secretary for Economic Development David Sampson and I want nothing less than for EDA to become the premier standard bearer for domestic economic development. To reach this goal, EDA is moving from a culture of compliance to a culture of performance. It is reestablishing its strategic context and focus and developing meaningful performance-based program outcome measures. We are also moving to ensure that EDA investments are awarded to applicants who have the entrepreneurial spirit, and to communities who want to ensure that American taxpayers are getting their money’s worth out of investments made by their government.

Digest: There is great potential for bio-terrorist attacks in rural areas: water supply areas, nuclear power plants and nuclear storage facilities, trains carrying hazardous materials. What is the Department doing to specifically address homeland security in rural areas?

Evans: The President has made combating terrorism a top priority of his administration. The DOC makes an important contribution to our government’s ongoing efforts to combat terrorism and protect our critical infrastructures. What we bring to the table is expertise and experience in working with private industry on matters relating to national and economic security. However, securing the nation’s critical infrastructures cannot be achieved by government action alone. It requires an unprecedented partnership with private industry. Working with the private sector and promoting such partnerships across industry sectors is a core competency of the Commerce Department.

Digest: What do you see the role of the Department, and EDA, to be in terms of promoting entrepreneurship, especially in rural areas where support networks and attracting venture capital is critical?

Evans: The Department plays a pivotal role in fostering a business environment that lets innovators innovate and helps entrepreneurs create companies that lead to job creation and prosperity. The Department is working to promote entrepreneurship all across America. EDA provides investments that help communities in rural America build technology-based business incubator facilities that foster the growth of small and medium-sized businesses. EDA investments help communities build the infrastructure needed to support tech-based business development and help train the local workforce that supports entrepreneurial endeavors and other high-growth industries. EDA’s revolving loan funds provide small and minority-based businesses with the financing they need to reach their business goals. The Department’s Minority Business Development Agency (MBDA) is dedicated to becoming an entrepreneurially focused and innovative organization, committed to empowering minority business enterprises for the purpose of wealth creation in minority communities.

Digest: How will the DOC promote and/or support EDA and the regions or development districts that deliver services?

Evans: President Bush believes partnerships tie all levels of government together with economic development districts, non-profit organizations and Native American tribes. EDA has a long history of working with economic development districts (EDD’s) to forward the development goals of eligible regions. These partnerships are important because different tools and strategies are needed to fit local needs. Some may opt for skill-training programs or business incubators. Others may concentrate on developing modern infrastructure and community capacity. Some partnerships are dedicated to helping rural communities contend with out-migration, while others are formed to help communities make a “comeback” from natural disasters and the havoc they wreak on local economies. Through years of experimentation and investment, through trial and error, more effective ways to develop micro enterprises, retain businesses, transfer technology and develop exports can be explored. We support the partnership approach to economic development as the best way for communities to come together and create wealth for their citizens.

Digest: What role do you see the DOC - particularly EDA - playing in helping communities impacted by the scheduled round of base closures slated for 2005?

Evans: EDA expects to play essentially the same role for communities affected by base closures in 2005 as it did for the more than 100 communities affected by the earlier Base Closure and Realignment Act (BRAC) closure rounds (‘88, ‘91, ‘93, and ‘95). EDA plays an important role in helping communities diversify in the wake of these closures. EDA assistance helped convert the former Fitzsimons military facility located in the Aurora-Denver area into a $4.2 billion, 25,000-worker science and technology campus. The project is the nation’s largest medical-related redevelopment project.

Digest: How will the Department of Commerce promote expansion of telecommunication technology and services to rural areas?

Evans: The Department is working to provide greater access to telecommunications technology to all Americans. As such, the Department’s National Telecommunications and Information Agency (NTIA) is working to ensure that all Americans and American companies have affordable phone and cable service. The agency is also helping to bring the benefits of advanced telecommunications technologies to millions of Americans in rural and underserved urban areas through its information infrastructure grants. EDA provides communities with the hand up they need to place the infrastructure and build high tech business centers that help diversify local economies and create jobs for local citizens.

Digest: How is the DOC working to increase exports from America’s rural and small metropolitan areas?

Evans: Exporting is essential to the health of the U.S. economy. Exports support more than 11 million jobs in the United States, which pay 15 percent more than the U.S. average, and international sales have contributed to nearly 30 percent of domestic economic growth in recent years. But this success is not limited to large corporations. The number of American businesses sending their goods and services overseas has tripled since 1990, two thirds of that boom coming from companies with fewer than 20 employees. It’s become a necessity for any business to export, and those that don’t are nine percent more likely to fail in any given year than comparable firms. The Department of Commerce partners with rural communities to advocate local products and businesses overseas. EDA works with non-profit organizations to provide local business communities with the technology they need to reach the global marketplace. EDA has also been instrumental in helping communities along the border region with Mexico build international trade centers and other facilities that help rural businesses and workers participate in export-related business development.

“We support the partnership approach to economic development as the best way for communities to come together and create wealth for their citizens.” -Department of Commerce Secretary, Donald Evans

Digest: EDA revolving loan funds (RLFs) have been instrumental in creating and retaining hundreds of thousands of jobs over the past 25 years. What are DOC’s plans for increasing funding for RLFs to continue providing business development capital in distressed parts of the country?

Evans: The RLF is one of several types of grants under the EDA’s Economic Adjustment program that may be used to assist communities undergoing economic transition. Although EDA cannot make direct grant investments in businesses, an RLF grant provides a locally operated program that can make loans to area businesses. RLFs fill the critical financing gap faced by businesses located in areas struggling with economic recovery and can help implement the business assistance portion of an area’s comprehensive economic recovery strategy. EDA is also looking at ways to better use the more than $671 million that the agency has already invested in approximately 600 RLFs across the country. These investments, some more than 25 years old, represent a tremendous opportunity for increased performance, increased operational efficiency, and collective participation in a developing secondary market for economic development loans.

EDA Promotes Climate of Job Creation

The Economic Development Administration (EDA) and the Department of Commerce promote the infusion of private capital investment to achieve higher-skill and better paying jobs to regions. Toward this end, over the coming year, EDA will give priority to proposals that:

Help communities plan and implement economic adjustment strategies in response to sudden and severe economic dislocations.

Support technology-led economic development and reflect the important role of linking universities and industry and technology transfers.

Advance community and faith-based social entrepreneurship in redevelopment strategies for areas of chronic economic distress.

Studies have found that 327 jobs were created or retained for every $1 million in EDA investment - a job cost of $3,058. For every $1 million the organization invested under its Public Works program, an additional $10.08 million in private sector investment was leveraged. Incubators in which EDA invested created 13 percent more jobs than incubators that did not receive investments.

The Bush administration's FY 2003 budget includes $349.89 million for EDA, down from almost $367 this year. The proposed budget reduces public works programs by $18 million, planning by $1.7 million, and technical assistance by $670,000. The trade adjustment assistance program received an increase of $2.5 million.

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