Institutionalizing inclusive growth: Rewiring systems to rebuild local economies

Leaders in America’s cities and regions are grappling with the fallout of a severe pandemic, historic economic crisis, and social and racial reckoning. In this post-crisis moment, a wide range of local government, business, civic, and community organizations—which in the past tended to operate in isolation, if not at cross purposes—are navigating their disparate narratives and goals, rethinking their missions to drive economic and racial inclusion, and forming new systemic alliances that will enable them to improve and scale their efforts. Drawing inspiration from case studies profiling efforts to “rewire systems” in five older industrial cities (Akron, Ohio; Birmingham, Ala.; Cincinnati, Ohio; St. Paul, Minn., and Syracuse, N.Y.), this report provides a framework and practical examples that can guide local action and state, federal, corporate, and philanthropic investment in cities across the nation. 

1. The challenge: Local communities have struggled to marshal the capacity to advance inclusive growth, but are increasingly adopting approaches that work across system pillars 

COVID-19 compounded well-known pre-existing economic, social, and institutional challenges: too few family-sustaining jobs in too few regions; racial inequality that undermines economic potential and social justice; and insufficient capacity in local public, private, and civic institutions for addressing an array of economic and social challenges.  

Every city has many organizations working to create better jobs, educate workers, improve neighborhoods, and make overall economic growth more inclusive for their residents, businesses, and communities. Yet, these efforts—by business and economic development organizations, regional and community nonprofits, higher education institutions, workforce groups, philanthropies, and other government and civic entities—often operate in isolation, with insufficient resources. As a result, they struggle to address significant challenges to inclusive growth in their communities, with tremendous downstream consequences for economic and health inequities. 

2. The opportunity: Local leaders can invest in institutional capacity to ‘rewire’ economic systems and generate inclusive growth 

Local leaders are increasingly aware of the inclusive growth imperative. Their problem is not one of knowledge or motivation, but rather in marshaling the capacity—fiscal, political, and institutional—to act at a scale commensurate with the problems that they face. 

Just as Progressive Era reforms, New Deal stimulus, and Great Society programs helped prior generations of local leaders enact institutional and systemic change, recent federal investments present local communities with an unparalleled chance to not only recover from these crises, but invest in the local governing capacity to yield longer-term inclusive growth.  

This report is a playbook to inform economic practice in this moment. Through in-depth case studies documenting over 20 inclusive growth interventions in five older industrial cities (Akron, Ohio; Birmingham, Ala.; Cincinnati, Ohio; St. Paul, Minn., and Syracuse, N.Y.), it profiles the wide variety of local public, private, and civic institutions stewarding their communities through economic challenges by investing in and coordinating across four pillars that drive inclusive growth: economic development, talent development, spatial development, and asset development.    

3. The path: A ‘systems rewiring’ framework can guide local leaders to better understand, intervene in, and measure regional economic systems 

We call this process “systems rewiring” because it creates new connections (i.e., wires) between organizations—and between organizations and the communities they support—in service of inclusive growth. By changing whom regional economic systems work for, systems rewiring acts in service of targeted goals and strategies that benefit excluded populations. By changing how economic systems work, systems rewiring builds capacity within and across inclusive growth pillars to enable greater scale and impact.  

Drawing inspiration from the case studies, we provide a framework that can guide local action and state, federal, corporate, and philanthropic investment in cities across the nation. Rewiring regional economic systems entails:  

• Understanding systems to spotlight inclusive growth challenges, establish goals, and identify institutional networks required to meet those goals. 

• Intervening in systems by evolving, aligning, and inventing institutions that govern economic systems, both within system pillars and across them. 

• Measuring systems through new indicator frameworks that holistically track inclusive growth inputs, outputs, and outcomes. 

Every sector can contribute to systems rewiring. The case studies showcase how elected politicians, government administrators, community leaders, business executives, grant-makers, and education officials all bear responsibility for regional economic systems and the outcomes they produce. They have the power to set regional agendas, push their individual institutions toward greater alignment and scale, invent new institutions when the need arises, and finance and measure collective action toward inclusive growth. Now, armed with a once-in-a-generation infusion of federal dollars, local leaders can use this playbook to build the institutional and systemic capacity to ensure their economies are working for all.