What’s Holding Back Economic Growth?
Walt Rostow many years ago when he visited Ottawa. I enjoyed listening to the great man
hold forth on his ideas about how to establish the preconditions for economic
takeoff in DCs, developing countries. From Walt Rostow’s work of the 1950s and
1960s and recent work by Hernando De Soto and others (I have dared to add in a
few of my own suggestions), I have constructed a list of that what is needed
for economic takeoff in nation-states today—
3. supply of and private ownership of
housing (safe, affordable, privately owned)
4. clear title to housing based on
accurate addressing and surveying
5. tolerance of and legalization of
6. tolerance of mixed use
neighborhoods where people can work, live, shop, trade, play, make, learn,
entertain all in the same location or neighborhood
7. low level of NIMBY (not in my
backyard) activism or ability for political leaders to face down opposition and
fear of any change
8. adequate land inventory for growth
9. environmental protection
adequate and safe municipal services
legal system, respect for the rule of law and contracts
levels of taxation and avoidance of confiscatory levels of taxation
of black and gray markets (deeding of lands and title in squatter settlements )
active capital markets (borrowing circles and
financial recycling of savings and investment, home mortgage and business loan
of and support for entrepreneurship
access to access to capital and public markets—competitively priced financial instruments,
financial system open to all
widespread high speed internet access and
effective communications systems including wi-fi and mobile internet
and technological innovation, a culture of innovation
sound public infrastructure
encouragement of arts and culture
tolerance of diversity
adequate density and intensity in
strong branding and marketing of the
excellent recreation facilities
mass people movers
extensive private ownership of economy
respect for human rights and tolerance of
diversity, fight against ageism
protection of private property rights
good, honest and transparent government, absence of cronyism
peace and harmony
courage, hope and faith.
the need for a culture of and support for entrepreneurship and innovation as
well as some neo-urbanist planning principles. I have become convinced that
these are important ingredients to unlocking development potential not only in
DCs but first world nations as well.
all economic growth since the discovery of agricultural cultivation has derived
from synergy and trading behavior (based on comparative advantage) that derives
from the proximity inherent in the development of dense urbanized villages,
towns and cities, says Jane Jacobs. In her view, City-State economies are
driving the national and global economy.
addition, tolerance for and encouragement of entrepreneurship plays a major
role in raising standards of life and mustn’t be forgotten.
Respect for the law including contract law is an important
pre-condition. Former President Bill Clinton, when asked to comment on why it
was taking so long for the ‘new’ Russia to be fully accepted into
the community of trading nations, responded that this would have to wait until
contract law was widely accepted as binding by the people and institutions of
that country. People doing business in Russia in the 1990s needed to carry
around briefcases full of US currency—they couldn’t rely on Russian banks to
‘give’ back any money they deposited there.
It’s hard for an economy to takeoff without trust. I have learned as
an entrepreneur that you can have rooms full of legal paper but if the other
side has no respect for a contract, the legalese is generally pretty useless.
Having to go to court to force someone to live up to their agreement is not
only expensive and time consuming, it is soul destroying too and often futile.
I estimated the annual cost of NIMBYism to the economies of the United States and Canada.
First, I asked myself the question: what are some of the factors
holding back these economies?
Here are some of those factors:
1 low birth rate
2 low productivity
3 lower workforce
4 lack of lifetime
6 misfit of skills
retirement/force out of over 50s
8 lack of startups
9 poor urban
design, urban planning, NIMBYism
To estimate the cost of NIMBYism, I looked at just one variable—adding
more density to existing residential areas by permitting coach houses (tiny
“granny” flats in your backyard). This is permitted in Ottawa ON
since November 2016.
Here are my sample calculations:
If 20% of the housing stock in the US and Canada added a coach house, I
estimate that the annual increase in GDP is more than $1.8 trillion.
That’s a big number.
I think the unwillingness to experiment with
better urban design is holding back both innovation and growth as well as
making our cities, towns and villages less interesting and less vibrant than
they otherwise could be.
Bruce M Firestone, PhD, real estate investment coach, ROYAL LePAGE Performance Realty broker, Ottawa Senators founder 6137628884 firstname.lastname@example.org
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