In Search of the Magic Elixir

October 17, 2011

Leaders from Alexander the Great (323 B.C.) to Juan Ponce de Leon (1513) have searched for the fountain of youth. This search for a magic water that would save them from old age is timeless, and yet reoccurring. It seems our quest for the secret answer of economics is also never ending. Three recent articles/studies provide a confusing picture of sources of job creation and the ravages of our slow growth. Each study is from a credible source and has merit. I believe all three are worth discussion and action.

The Kauffman Foundation’s 2010 Report entitled The Importance of Startups in Job Creation and Job Destruction offers the data driven premise that net job growth occurs in the U.S. economy only through startup firms. One would conclude that we should re-double our economic development efforts to aid the creation, nurturing and scaling of such companies to achieve our job creation goals. The Columbus Region is doing this through its efforts at The Ohio State University Technology Commercialization office, TechColumbus, Small Business Development Centers, and small business finance shops like Economic and Community Development Institute, among a host of other activities.

Then I pick up Bloomberg’s BusinessWeek, which just published an article entitled Rethinking the Boosterism about Small Business. While it does not refute Kauffman’s claims about high-growth start-ups – it dispells many of the common myths about small business – stating “the notion that small business is the force behind prosperity is not true. The longer the U.S. and other countries cling to this myth, the harder it will be to carry out the kinds of economic policies that might actually stimulate job growth.” They even suggest that the U.S. should loosen some of its takeover policies to promote more growth of major foreign conglomerates within the U.S. Again – the Columbus Region is taking action, targeting mid-sized and large companies for expansion opportunities within our area, including foreign-owned firms wishing to grow their U.S. market presence.

Finally, we wrote last week about the silent strength of the middle market. Companies that perhaps we have never heard of, but nevertheless produce an enormous amount of the everyday goods and services we consume – and that many of us work for! GE’s commitment to study this space with The Ohio State Fisher College of Business is notable and important. The Columbus Region’s efforts in this regard are two-fold. First, we need to take good care of the mid-sized companies that are within our region and second, we need to continue to pursue additional companies in this space that are expanding to serve markets from the Columbus Region.

The fact is that we need to pursue strategies that help small, large, and mid-sized companies to be successful and meet the scale of the problem we face. What say you? Please let me know by sending me a comment at

Columbus2020! Update
The existing business team is proactively meeting with local businesses and economic development partners to identify appropriate resources to support company stability and growth. Intense two-day training with the JobsOhio team to continue to transition economic development responsibilities to Columbus2020! takes place later this week.

Kenny McDonald
Chief Economic Officer