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Market-Based Solutions to Vital Economic Issues


Kenan Institute 2024 Grand Challenge: Business Resilience
Market-Based Solutions to Vital Economic Issues
Mar 2, 2023

Building Infrastructure Transforms Economies

The country’s roads are perhaps the most evident example of publicly funded infrastructure. They connect people to one another and to economic opportunity, reduce friction within the economy and open entirely new economic opportunities such as tourism. 2021’s massive bipartisan infrastructure bill earmarks well over $100 billion for roads and other transportation projects, offering an opportunity to focus on how these new investments can increase wealth in communities with the greatest needs and minimize harm to the environment – all while supporting the broader economy.

If we take federal legislators at their word, creating economic opportunity and long-term economic development are their top motivations for infrastructure development. However, in keeping with those two underlying economic motivations – opportunity and development – building infrastructure could be conducted to disproportionately benefit the least of those among us and achieve specific socioeconomic goals. The interstate highway system, for example, has had a positive impact on urban employment and GDP, but the effect has been geographically and sectorally uneven.

Thus, the potential impacts of infrastructure are as disparate as the positive and negative outcomes from past development. Now is the time to be wary of how infrastructure can be unintentionally harmful or even weaponized. And now is the time to explore how clear, long-term development goals can be brought to the forefront.

Infrastructure for the People: The Example of the Outer Banks in Eastern North Carolina

The Outer Banks, a thin, hurricane- and climate-susceptible chain of barrier islands off the Atlantic coast of North Carolina, have become a tourist destination for more than 2.5 million annual visitors, supporting more than 2,800 jobs and creating $225 million in economic impact. Coincidentally, the rise of this tourism powerhouse coincides with the economic demise of the tobacco-dependent towns of eastern North Carolina that these tourists travel past on their way to the islands.

The nature of this tourism also creates a perverse incentive to continually rebuild roads and other infrastructure that belies the environmental costs. One such road is also one of the most expensive highways in the United States: NC-12. The 148-mile-long state highway connects the islands of the Outer Banks, often running only a few feet from the ocean waves and frequently needing repair after storms. The estimated cost of maintaining NC-12 has been more than $200 million over the past 20 years.

To be clear, the highways are not the primary reason for the economic decline of eastern North Carolina. However, the investment made to support Outer Banks tourism does not integrate the small and medium-size towns of the region. Infrastructure could have been developed to benefit those rural communities – communities that are now more disconnected from the broader economy than they were a generation ago.

This Time, Do No Harm

Roads have a long history of being used to intentionally destabilize economically vibrant places. Tulsa, Oklahoma’s Greenwood neighborhood has rightfully entered the national consciousness because of the 100th anniversary of the state-sanctioned destruction of that Black community and the murder of hundreds of its residents. However, less well known is that the so-called Black Wall Street was rebuilt by the Black community despite property owners’ receiving no compensation for the travesty. It was the subsequent construction of Interstate 244 (known with bitter irony as “Martin Luther King Jr. Memorial Expressway”) that eventually destroyed Greenwood as a Black-owned business district.

Similar tales can be told in the urban renewal projects in Tupelo, Mississippi; Durham, North Carolina’s Hayti neighborhood; New Orleans’ Treme; and Los Angeles’ Chavez Ravine (the last an example of the removal of a Mexican-American community). These are examples of weaponizing infrastructure to target communities of color whose social and business success challenged the political and economic hegemony of the ruling caste. While these are clearly illustrations of what to avoid, they do illustrate the raw power of targeted infrastructure development. Fortunately, the American Jobs Plan fact sheet does include a plan to “reconnect neighborhoods cut off by historic investments.”

Leverage Talent and Insights from Across the Spectrum

In September 2016, I helped introduce a collaboration between the leadership of Princeville, North Carolina – the first U.S. town chartered by formerly enslaved Africans — and Skanska, the multinational Swedish construction company. The town had plans for a new community center and other assets to support heritage tourism, which could benefit from Skanska’s technical advice. A month after our first meeting, Hurricane Matthew devastated Princeville, leaving the town underwater for days. Fortunately, while the initial federal recovery effort failed to respond to employment and housing needs, the tenacity of local Princeville leaders has led to significant gains, including new climate-resilient public infrastructure and civil engineering enhancements to dikes and floodgates. Skanska stayed engaged, led major fundraising efforts, and helped the town tell its story to a national audience.

Many other partners contributed to planning efforts, including during a weeklong community planning workshop led by Professor Kofi Boone at North Carolina State University. The people of Princeville – from Mayor Bobbie Jones and Mayor Pro Tem Linda Joyner to residents of all ages – led all these partnerships, showing how Princeville’s cultural assets had the power to build multisectoral relationships. This is but one example demonstrating how local communities, and perspectives must be included in the policy conversation to identify and implement sustainable solutions.

Focus on Long-Term Benefits

Democratically elected governments and free-market-based economies are tuned to short-term priorities, measurably beneficial actions that align with election cycles; the quarterly report; and the day-by-day of financial markets and political discourse. But infrastructure is about making near-term investments to support long-term future economic development and affect an area or population for decades or even centuries.

Given this longer time scale, affected communities should share control of infrastructure planning and production. This means going beyond elected officials and traditional power brokers to identifying and working with people who can genuinely represent the fullest diversity of peoples in a place, beginning, I would argue, with the least politically and financially powerful.

Ten years from now, there will be people, communities and businesses that will benefit from the investments in infrastructure that are made today. Infrastructure investments have the possibility for transformative, sustainable development of people and communities, but only if humility and thoughtfulness are central to the decisions about what is built, where it’s built, and how it’s built.

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