Is Amazon HQ2 a Game Changer?

Amazon HQ2

So, 238 proposals later, we’re no closer to knowing who will win the race to win Amazon’s (infamous) second US headquarters. While some communities decided to pass on the opportunity to put in a bid (see an interesting example of this from Little Rock, AR), Amazon posed a challenge to attract 50,000 jobs. For some, this has become a bidding war in terms of incentives, but should also be a competition on long term location factors, like skills, infrastructure, and university programs.

When Amazon eventually make their choice (and let’s assume that their shortlist isn’t pre-ordained), then 237 locations will be disappointed. One argument I have read is that it’s ok not to win, as the attention that the community from “being in the game” is worthwhile. However, this seems like a difficult argument to make – is a losing bid by a community, some of whom may not have fully met the criteria in the first place, really justify the substantial time and resource? Could that resource have instead gone into securing other successful investments? Is their media attention generated far beyond their own local community?

We can question whether this very public process Amazon has initiated is in good taste, but perhaps it could also change the business of investment attraction in the U.S. for the better. If, given the long odds, communities become less inclined to chase a glamorous, but unlikely opportunity like this, perhaps we will see a change that includes:

  • A move away from the incentives-driven approach that is prevalent across the country, so that communities position themselves more explicitly and primarily on what actually differentiates them, whether specific sectoral skills or anything else

  • A proactive targeting approach to attraction and retention, which includes both domestic and international elements. While this is already increasingly happening in many parts of the country, there are still exceptions where Economic Development Organizations (EDOs) rely mainly on companies and site selectors coming to them.

  • A commitment to developing a well thought through strategy for attraction and retention. This needs to be separate from a broader economic development strategy, so that it focuses specifically on target sectors, defines the location’s offer, the marketing actions that will generate investor opportunities, and an organizational make-up that gives the location the best chance of being successful.

But for this change of mind set in economic development to occur, EDOs need to recognize that responding to an occasional long shot Amazon RFP is not a panacea. Instead, a continuous effort to court relationships with companies both large and small, provides the best chance of economic success in the long term. Across the world, the most successful cities in attracting big name companies achieve this through a well-defined strategy. So, even after 237 unsuccessful bids later, we can hope that Amazon really will have indirectly helped support sustainable economic development - across every one of these communities.

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