During the economic recession of the late 1980s and the early 1990s, American communities contributed significantly to the dramatic increase in the intense bidding wars for corporate relocations, business expansions and the new jobs and tax base that these projects generated. Cities, regions and states across the US were pitted against each other vying for these “economic prizes,” upping the stakes to astronomical incentive levels in many cases. Because of the severity of the recession, no political jurisdiction was immune to this behavior. 

One of dozens of examples is found in the Greater Phoenix Economic Council (GPEC), one of the nation’s first regional or citistate economic development partnerships. True to the prevailing practice of that era, the battle cry was sounded each time a prospective new employer was shopping US markets for a new site. Raiding Los Angeles of its companies was a major initiative for Phoenix, as was going head-to-head with Dallas, Portland, Tampa, Atlanta, Seattle, Austin and numerous other citistates to win coveted new employment generating projects. As evidenced by its present robust economy, this strategy yielded positive results for the Greater Phoenix region. 

Today, even with the unprecedented, sustained growth in the national economy, economic development bidding wars continue, with the award of substantial public incentives to induce new investments and jobs from private enterprises. This practice has raised legitimate and significant public policy questions for citistates, many of which are debated incessantly as corporate welfare giveaways continue to make headlines. 

Based on broad economic development experience over 25 years, I am encouraged with what I see will eventually be an episodic change in economic development practices. During this new century, Americans will finally witness the long overdue demise of combative, “lose-win” competition for coveted jobs, investment and tax base among states and communities. Instead, “alliances” will forcibly emerge as the dominant form of interaction among cities, regions, and states. A new era for growing economies now is beginning to emerge, one in which factions of historic rivals are, in fact, engaging in “win-win” collaboration between and among themselves to preserve their social and economic livelihoods. The United States will become a nation of allied “citistates” that will adhere as groups on the basis of shared values, interests and perceived and real external economic threats. These as yet unorthodox alliances ultimately will typify how U.S. communities conduct economic development in the future. 

Quantum advances in information technology and our global economy are the principal drivers of this change. Success will come to those who forge new ‘boundary-less’ and cooperative agreements. Consider disparate regions working together as one to gain competitive and comparative advantage over other regions and nations. 

Already, we are witnessing many examples of this new level of citistate alliances. A long-standing international trade and economic development alliance between the states of New Mexico and Chihuahua, Mexico has yielded impressive economic “win-wins” for both. Technology, business and university resources are shared by the three metropolises of the Diamond Alpine Region – Lyon, France; Turin, Italy; and Geneva, Switzerland. Maryland, Virginia and the District of Columbia joined forces three years ago to mount an international tourism campaign and program, using the Nation’s Capital as the centerpiece of attraction. The Cincinnati/Kentucky region has benefitted from a strong alliance in economic and workforce development, and most recently, is using this platform to bid for the Summer 2012 Olympic games. These are just a very few of many examples of the new strategic alliances that are being forged between and among previously competitive and combative citistates. 

As we move into this new century, picture the mayors from Seattle to San Diego joining forces to create one West Coast, USA citistate to compete for ever-emerging technology start-ups. Imagine the governors from Maine to Maryland creating a single foreign free-trade zone, complete with a uniform taxation policy, to stave off the exodus of their dwindling manufacturing jobs to points south, west, and offshore. Believe that the Rocky Mountain States will adopt a singular permitting process to induce even more business growth in their region. 

In this newly emerging alliance-based citistate economy, public officials will work to enhance the quality of life — and therefore their comparative advantages — throughout entire multi-jurisdictional regions, and not just within their own political boundaries. Private sector leaders, who today confront commerce and competition on a world scale as a matter of course, will force even stronger alliances with expansive market areas to ensure that their business locations stay healthy, vibrant and good places in which people can live and raise families. 

These trends bode well for the future of citistates. No longer can we rely upon singular jurisdictions, or even regional market economies, to sustain economic and community health. Cities, counties and regions are expanding their horizons and “virtual” territories in each direction to expand their reach for enduring and vibrant economic futures. 

The author is founding president and CEO of two citistate economic development initiatives: Greater Phoenix Economic Council (1989-1997) and Greater Baltimore Alliance (1997 to present).

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Last updated October 29, 2000