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An economic strategy for America’s inner cities: Addressing the controversy


Inner cities must compete, and can compete. Developing a new strategy will require an understanding of what is unique about each inner city, how to build on its advantages, and a plan to eliminate or reduce the many disadvantages to conducting business. This process will require the commitment and involvement of business, government, and the nonprofit sector.

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  1. 1.

    Harvard Business Review (May–June, 1995): 55–71.

  2. 2.

    From “The Competitive Advantages of Inner City Baltimore,” by Mercer Management Consulting and the Initiative for a Competitive Inner City, unpublished, 1995. Sources of data: 1990 Census, Dun & Bradstreet data, Mercer analysis.

  3. 3.

    New York Times, 9/4/95.

  4. 4.

    New York Times, 10/2/94. p. 5.

  5. 5.

    “One Good Apple,”Time (January 15, 1996); “How to Run a Police Department,” George Kelling,City Journal (Autumn 1995).

  6. 7.

    Richard D. Bingham and Robert Mier (Eds.),Theories of Local Economic Development: Perspectives from Across the Disciplines, (SAGE Publications, 1993), p. i.

  7. 7.

    John P. Blair,Local Economic Development, (SAGE Publications, 1995), p.22.

  8. 8.

    See analysis of literature of inner-city economic development in “Benchmarking Theory and Best Practices of Inner City Economic Development,” by Dwight Hutchins and Kate Moriarty. Harvard Business School and Kennedy School of Government, unpublished, May, 1996.

  9. 9.

    See Jeffrey D. Sachs and Andrew M. Warner, “Economic Reform and the Process of Global Integration.”Brookings Papers on Economic Activity, 1995:1,1–118.

  10. 10.

    For example, a study by the New York City Department of Consumer Affairs showed one supermarket for every 5,700-7,000 residents of the Upper East Side, Brooklyn Heights, and Upper West Side, but only one supermarket for every 63,818 residents of parts of Williamsburg and Bedford-Stuy vesant. Cited inNew York Times, 6/6/92.

  11. 11.

    New York Times, 6/27/93, p. 5.

  12. 12.

    Wall Street Journal, 6/8/92, p. 1.

  13. 13.


  14. 14.

    New York Times op. cit.

  15. 15.

    For further information on inner-city retailing, see “Inner City Retailing” by Jon Patricof and Willy Walker. Harvard College and Harvard Business School, unpublished, May 1995. For information on franchising, see “Inner City Franchising Opportunities” by Paul Singh, unpublished, 1996.

  16. 16.

    New York magazine, 11/21/94.

  17. 17.

    Wall Street Journal, 7/25/96, p. B1.

  18. 18.

    New York Times, 1/8/96.

  19. 19.

    Boston Globe, 12/3/95.

  20. 20.

    "Banking on the New America: The Business Case for Investing in the Inner City.”Speech by Richard M. Rosenberg, Chairman and CEO of BankAmerica Corporation to 17th Annual Real Estate and Economics Symposium, UC Berkeley Center for Real Estate and Urban Economics, San Francisco, December 14, 1994.

  21. 21.

    New York Times, 8/18/ 95.

  22. 22.

    69 students * $42.50/hour * 120 hours/student = $351,900. Hourly wages based on $1,700 weekly salaries paid by Boston area consulting firms to summer MBA student interns.

  23. 23.

    New York Times, 4/28/95.

  24. 24.

    See Harvard Business School case study,Bidwell Training Center, 9-693-087, 1993.

    Google Scholar 

  25. 25.

    SeeNew York Times, 4/21/96.

  26. 26.

    See study of the Red Hook area of Brooklyn by Philip Kasinitz and Jan Rosenberg, “Why Enterprise Zones Will Not Work: Lessons from a Brooklyn Neighborhood.”City Journal (Autumn 1993): 63-9. Also, see their latest unpublished work, cited inThe Washington Post National Weekly Edition, March 25–31, 1996, p. 34. Also, see study by Shorebank Corporation that shows that of the nearly 46,000 light manufacturing jobs in the Austin neighborhood of Chicago, fewer than 10% go to local inner city residents (interviews with Shorebank senior management, 2/12/ 96). Finally, see various enterprise zone studies cited in a footnote below.

  27. 27.

    See unpublished study by Philip Kasinitz cited inThe Washington Post National Weekly Edition, March 25–31, 1996, p. 34.

  28. 28.

    John A. Shields, CEO, First National Supermarkets,New York Times, 6/27/ 93, p. 5.

  29. 29.

    Comments made by the CEO of Dreyers Ice Cream at the Holy Names College Business Symposium in October, 1995.

  30. 30.

    Wall Street Journal, 3/3/94, p. 1.

  31. 31.

    See survey led by Margaret Simms conducted by the Joint Center for Political and Economic Studies (in conjunction withBlack Enterprise magazine and the National Minority Supplier Development Council) published inBlack Enterprise June 1996. Also, see various studies by Prof. Timothy Bates, Wayne State University.

  32. 32.

    Business Week, 7/31/95.

  33. 33.

    For example, “the citizens of Detroit must contend with a total tax burden that is aboutseven times higher than the average Michigan municipality.”Stephen Moore, Director of Fiscal Policy Studies, Cato Institute, cited inThe Detroit News, 12/19/93.

  34. 34.

    “Academic studies have found that as little as 15% of the workers in some enterprise zones actually live there.”New York Times, 1/26/96; in a Louisville, KY enterprise zone, only 14% of the jobs created by companies that received tax breaks were filled by people who were unemployed or on welfare,New York Times, 10/31/ 90, p. A18; in Indiana, only 6.35% of manufacturing jobs and 30% of retail jobs went to enterprise zone residents; “a survey of 155 zones in 28 states by the National Center for Enterprise Zone Research found that only 5.3% of zone businesses were minority-owned,”Financial World, 9/1/92, p. 23.

  35. 35.

    For example, in New York City, the federal government is threatening to withdraw its $100 million contribution unless a political impasse between the city and state governments is resolved. SeeNew York Times, 5/18/96, p. Bl.

  36. 36.

    Quotations from interviews in Spring 1995.

  37. 37.

    “Finding Work in the Inner City: How Hard is it Now? How Hard will it be for AFDC Recipients?,” Katherine Newman & Chauncy LeMon, Working Paper, October 1995.

  38. 38.

    Quotations from inner-city Baltimore manufacturer, interviewed April 1996; inner-city manufacturing and distribution businesses in New Jersey and Louisiana, interviewed June 1995; and manufacturer in Harrison, NJ, letter dated March, 1995.

  39. 39.

    For further background and analysis, see “A Survey and Analysis of the Inner City Job Training System” by Chelli Devadutt and Julie Fletcher. Harvard University Kennedy School of Government, unpublished, May, 1995.

  40. 40.

    New York Times, 11/7/93.

  41. 41.

    1992 annual report.

  42. 42.

    1991 Inner City annual report.

  43. 43.

    Interview with America Works, 2/21/95; company materials.

  44. 44.

    Inc. magazine, May 1994, p. 85.

  45. 45.

    Ibid, p. 86.

  46. 46.

    Ibid, p. 86.

  47. 47.

    “An Economic Analysis of Taxicab Regulation,” Federal Trade Commission, 1984. Department of Transportation study, 1992.

  48. 48.

    Quoted inNew York Times, 12/4/95.

  49. 49.

    New York Times, 5/19/96

  50. 50.

    The Death of Common Sense, Philip K. Howard, 1994, p. 106.

  51. 51.

    City Journal (Spring 1994): 54.

  52. 52.

    Business Week, 5/27/96, p. 80.

  53. 53.

    Quoted inNew York Times, 12/4/95.

  54. 54.

    Business Week, 5/27/96, p. 80.

  55. 55.

    “It’s Not a Wage Gap But an Age Gap,”New York Times, 4/21/96.

  56. 56.

    Richard B. Freeman, “Help Wanted: Disadvantaged Youths in a Labor Shortage Economy,” unpublished manuscript, 1989. Cited in Myron Magnet,The Dream and the Nightmare, 1993, p. 47.

  57. 57.

    Magnet, pp. 143–44.

  58. 58.

    Interview with McDonald’s corporate communications department, 7/25/96.

  59. 59.

    “Action Plan for Community Retail and Economic Development in Washington D.C.”Public Voice for Food and Health Policy, 1995, cited inWashington Post, 3/7/96.

  60. 60.

    13-25% more than suburbanites and 27% more than New York’s Lower East Side, New York’s Community Food Resource Center, cited inNew York Times, 6/ 27/93, p. 5 andWall Street Journal, 7/25/96, p. Bl; 8.8% more than suburbanites in a 1991 study by the New York City Department of Consumer Affairs, cited in “The Ghetto’s Hidden Wealth,”Fortune, 7/29/91.

  61. 61.

    New York Times, 6/27/93, p. 5.

  62. 62.

    Department of Labor study, cited inThe Economist 10/10/92.

  63. 63.

    Wall Street Journal, 6/8/92, p. A5.

  64. 64.

    See LISC and Pathmark’s efforts to gain approval for a new supermarket in Harlem.

  65. 65.

    Study by Katheryn J. Edin, Rutgers University, and Laura Lein, University of Texas at Austin, to be published by the Russell Sage Foundation, cited inBusiness Week, 5/20/96, p. 26.

  66. 66.

    New York Times, 6/24/96.

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Porter, M.E. An economic strategy for America’s inner cities: Addressing the controversy. The Review of Black Political Economy 24, 303–336 (1996).

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  • Private Sector
  • York Time
  • Economic Strategy
  • Enterprise Zone
  • Empowerment Zone