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Developing Rhode Island’s Business Ecosystem

Monday, March 03, 2014

 

This week, GoLocalProv investigates the fourth of five major themes from Economic Intersections of Rhode Island , a private-sector generated report that outlines collaborative solutions to jumpstart the Rhode Island economy. Written based on the input, recommendations and work of more than 200 professionals from across all sectors of the Rhode Island economy, this report examines the most creative, bold and exciting new industries that will help to get the Ocean State back on its feet.

“Building Capacity and the Business Ecosystem”

In order to succeed, businesses depend on an entire ecosystem of resources in place that allows them to flourish. “ Building Capacity and the Business Ecosystem,” identifies what the report’s teams of participants pointed to as the pieces of the economic ecosystem that most need to be invigorated in Rhode Island to help businesses grow: capital, regulations, logistics, and technical assistance. With these areas in mind, “Building Capacity” lays out how best to go about bolstering and coordinating the things that all businesses in our state depend on.

Increase Logistics and Export Assistance

While 48% of U.S. GDP growth was driven by exports in 2012, Economic Intersection participants said that Rhode Island is among the least well-funded states in terms of supporting export capacity. Rhode Island is replete with shipping companies, as well as manufacturers. Increasing the capacity of both—and making sure that they are able to coordinate—will ensure that local businesses are able to take advantage of the lucrative market outside Rhode Island for goods produced within this state.

In order to expand on Rhode Island’s export capacity, Economic Intersections recommends specific proposals like creating a ShipRI App to make businesses aware of local port, rail and trucking companies, and the formation of an independent Shipping Alliance to combine shipping sizes for small and medium sized companies and sign contracts with ocean shipping lines directly on their behalves. Additionally, the report urges an increased coordination between city and state governments and logistics stakeholders to work on issues like congestion in Providence, weight restrictions on Massachusetts bridges, and hazardous material transportation.

Address Rhode Island’s Capital Gap

Equity and investments are critical to new companies struggling to get off the ground, and its been identified as an area in which Rhode Island suffers a lack of resources. To address this problem, Economic Intersections recommends that a group of private and public sector leaders convene to establish a “Fund for Rhode Island’s Future.” This fund would be modeled on private-public funding mechanisms that already exist in other states. This Fund would create independently managed pools of capital to invest in crucial businesses around the state within the sectors that most stimulate growth throughout the Rhode Island economy as a whole.

There are a number of options for how such a fund could best reach private businesses. The two most common options would be either to use state controlled funds to invest in a private equity fund contingent upon $3 to $1 match or the greater of private funds, or to provide matching funds to companies that secure private-sector investment. The Fund for RI’s Future would track the results of the investments through a transparent structure that measures economic resonance and benchmarks Rhode Island’s achievements against those of other states.

“Create New Mechanisms and Support Systems for Providing Capital to High-Opportunity Affinity Groups”

During the discussions that led to the creation of Economic Intersections, the report’s writers found that there were certain sectors of the economy which were not able to take full advantage of loan products already in the market place because of the underwriting requirements those products entail. The three segments of industry most effected were minority-owned businesses, the creative and cultural economy, and agriculture and aquaculture industries.

To address the needs of minority-owned businesses, Economic Intersections urges the creation of a community-based specialized financial institution that would work with emerging minority markets. With Rhode Island’s African-American and Asian-American populations growing by a respective 23 and 28 percent over the past decade, and Latino-owned businesses seeing an explosion in revenues to the tune of almost half a billion dollars, investment in minority-owned businesses will only pay bigger and bigger dividends as the state looks towards the future.

Economic Intersections also supports the creation of a Cultural Facilities Fund to strengthen the creative industries which generate over $324 million annually within Rhode Island. This funding mechanism, which already is built into the Governor’s proposed 2015 budget, would help cultural businesses to flourish all over Rhode Island that will create revenue, jobs, and can help to add value to mature businesses of all kinds as well.

The needs of the agri- and aquaculture industries are threefold. These businesses partner with regional banks and investors, provide low-interest loans for capital investments within these industries, and support succession planning. These sectors combine for a whopping $1.78 billion annually in revenue and an estimated jobs total of over 12,000.

“Enhance Technical Assistance and Industry Support Organization Capacity to Facilitate Job Growth for Small Businesses”

According to the U.S. Small Business Administration, small businesses represented 95.9 percent of all employers in Rhode Island in 2010, employing 55.4 percent of the private-sector labor force. Doing as much as possible to ensure these businesses’ success is critical to the state’s economy.

Small businesses need to work collaboratively in order to succeed. Economic Intersections notes the abundance of long-standing industry associations within the state, which, given better coordination and resources, could be a crucial ally for small businesses. In addition to industry associations, a program has begun to pair aspiring business owners with current owners without succession plans to help emerging and established small businesses to identify and realize new opportunities.

The report also contains recommendations for making the collaboration between small businesses and technical assistance organizations as economically beneficial as possible. To do so, technical service providers must increase their “cultural competency” when relating to small businesses. Ultimately, those technical service providers which can best demonstrate the ability to help their clients secure small business loans could be rewarded with promotion or greater amounts of funding.

"As a recognized leading lender to small businesses, BankRI is acutely aware of their importance to the success of the Rhode Island economy," stated BankRI's Director of Commercial Banking, Will Tsonos. "Coordinating and rewarding technical assistance organizations will laser focus their resources to ensure Small businesses and the organizations succeed."

Support Regulatory Reform Efforts

There is wide industry support for the Office of Regulatory Reform (ORR), the state office charged with reviewing agency regulations that adversely impact small businesses, from amongst the businesspeople who participated in Economic Intersections. Many of those professionals repeated frustration in their attempts to deal with state and local regulators.

There are several potential steps to take that would help businesses navigate these regulatory environs. These steps include replicating the ORR on a local level, reviewing local as well as state regulatory legislation. Businesses would also be well served by more consistent processes for municipal zoning and permitting, in addition to implementing e-government service. To help businesses that feel caught in a web of regulation, business specific ombudsmen should be put in place to liaison between industries and the agencies of local government that oversee them. These steps would better help businesses to understand their place within the regulation landscape, and to help them expand while never violating state or local mandates.

"Difficulties of local businesses navigating the vast array of municipal, state and federal regulations have been well documented," said Tsonos. "Any independent resource that helps local companies shift through regulatory hurdles will only help to improve Rhode Island's economy in the long-term."

 

This column is part of an ongoing sponsored content series with BankRI.

 

Related Slideshow: Rhode Island’s Most Unemployed Cities and Towns

Below are the unemployment rates for Rhode Island's 39 cities and towns from August 2013.  

The statewide average for the month was 9.1% -- the third highest rate in the country.  

Prev Next

#39 Narragansett

Latest Unemployment Rate: 6.0

Labor Force: 9,244

Employed: 8,688

Highest Rate in Last Two Years: 9.0 (January 2012)

Lowest Rate in Last Two Years: 5.6 (September 2012, June 2013)

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#37 (Tie) Jamestown

Latest Unemployment Rate: 6.5

Labor Force: 3,014

Employed: 2,818

Highest Rate in Last Two Years: 9.5 (February 2012)

Lowest Rate in Last Two Years: 5.7 (June 2013)

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#37 (Tie) New Shoreham

Latest Unemployment Rate: 6.5

Labor Force: 1,507

Employed: 1,409

Highest Rate in Last Two Years: 30.9 (February 2012)

Lowest Rate in Last Two Years: 5.0 (August 2011)

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#36 Barrington

Latest Unemployment Rate: 6.8

Labor Force: 8,211

Employed: 7,651

Highest Rate in Last Two Years: 8.8 (August 2011)

Lowest Rate in Last Two Years: 6.4 (April, May, July 2013)

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#35 Richmond

Latest Unemployment Rate: 6.9

Labor Force: 4,316

Employed: 4,018

Highest Rate in Last Two Years: 8.5 (February 2012)

Lowest Rate in Last Two Years: 5.2 (May 2013)

Prev Next

#34 Glocester

Latest Unemployment Rate: 7.2

Labor Force: 5,893

Employed: 5,470

Highest Rate in Last Two Years: 10.7 (February 2012)

Lowest Rate in Last Two Years: 6.4 (June 2013)

Prev Next

#33 North Kingstown

Latest Unemployment Rate: 7.3

Labor Force: 15,033

Employed: 13,939

Highest Rate in Last Two Years: 10.5 (January, February 2012)

Lowest Rate in Last Two Years: 6.6 (June 2013)

Prev Next

#32 Little Compton

Latest Unemployment Rate: 7.4

Labor Force: 1,904

Employed: 1,763

Highest Rate in Last Two Years: 12.4 (January 2012)

Lowest Rate in Last Two Years: 6.9 (April 2013)

Prev Next

#31 Middletown

Latest Unemployment Rate: 7.5

Labor Force: 7,917

Employed: 7,325

Highest Rate in Last Two Years: 13.5 (January 2012)

Lowest Rate in Last Two Years: 7.1 (June 2013)

Prev Next

#30 Portsmouth

Latest Unemployment Rate: 7.6

Labor Force: 9,362

Employed: 8,651

Highest Rate in Last Two Years: 11.5 (January 2012)

Lowest Rate in Last Two Years: 6.6 (June 2013)

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#28 (Tie) Bristol

Latest Unemployment Rate: 8.0

Labor Force: 12,455

Employed: 11,457

Highest Rate in Last Two Years: 10.6 (January 2012)

Lowest Rate in Last Two Years: 6.6 (June 2013)

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#28 (Tie) Westerly

Latest Unemployment Rate: 8.0

Labor Force: 11,917

Employed: 10,961

Highest Rate in Last Two Years: 11.2 (February 2012)

Lowest Rate in Last Two Years: 6.8 (September 2012)

Prev Next

#27 Smithfield

Latest Unemployment Rate: 8.3

Labor Force: 11,781

Employed: 10,799

Highest Rate in Last Two Years: 10.4 (August 2011, February 2012)

Lowest Rate in Last Two Years: 5.7 (June 2013)

Prev Next

#25 (Tie) Foster

Latest Unemployment Rate: 8.4

Labor Force: 2,701

Employed: 2,475

Highest Rate in Last Two Years: 13.4 (February 2012)

Lowest Rate in Last Two Years: 7.9 (June 2012)

Prev Next

#25 (Tie) N. Smithfield

Latest Unemployment Rate: 8.4

Labor Force: 3,014

Employed: 2,818

Highest Rate in Last Two Years: 9.8 (August 2012)

Lowest Rate in Last Two Years: 7.4 (December 2012)

Prev Next

#23 (Tie) Coventry

Latest Unemployment Rate: 8.6

Labor Force: 20,279

Employed: 18,537

Highest Rate in Last Two Years: 11.1 (August 2011, February 2012)

Lowest Rate in Last Two Years: 7.1 (June 2013)

Prev Next

#23 (Tie) Cumberland

Latest Unemployment Rate: 8.6

Labor Force: 19,055

Employed: 17,422

Highest Rate in Last Two Years: 10.4 (August 2011, July 2012)

Lowest Rate in Last Two Years: 7.4 (June 2013)

Prev Next

#20 (Tie) Newport

Latest Unemployment Rate: 8.7

Labor Force: 12,885

Employed: 11,763

Highest Rate in Last Two Years: 14.1 (January 2012)

Lowest Rate in Last Two Years: 7.2 (September 2012)

Prev Next

#20 (Tie) Warwick

Latest Unemployment Rate: 8.7

Labor Force: 46,308

Employed: 42,297

Highest Rate in Last Two Years: 9.5 (February 2012)

Lowest Rate in Last Two Years: 10.4 (August 2011)

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#20 (Tie) West Greenwich

Latest Unemployment Rate: 8.7

Labor Force: 3,678

Employed: 3,359

Highest Rate in Last Two Years: 11.7 (February 2012)

Lowest Rate in Last Two Years: 6.6 (June 2013)

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#19 East Greenwich

Latest Unemployment Rate: 8.9

Labor Force: 6,784

Employed: 6,178

Highest Rate in Last Two Years: 11.0 (February 2012)

Lowest Rate in Last Two Years: 7.5 (June 2013)

Prev Next

#15 (Tie) Charlestown

Latest Unemployment Rate: 9.0

Labor Force: 4,506

Employed: 4,099

Highest Rate in Last Two Years: 14.2 (January 2012)

Lowest Rate in Last Two Years: 7.1 (June 2013)

Prev Next

#15 (Tie) Lincoln

Latest Unemployment Rate: 9.0

Labor Force: 11,781

Employed: 10,717

Highest Rate in Last Two Years: 10.4 (February 2012)

Lowest Rate in Last Two Years: 7.9 (November 2012, June 2013)

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#15 (Tie) South Kingstown

Latest Unemployment Rate: 9.0

Labor Force: 16,455

Employed: 14,982

Highest Rate in Last Two Years: 10.6 (January 2012)

Lowest Rate in Last Two Years: 7.8 (September 2012)

Prev Next

#15 (Tie) Warren

Latest Unemployment Rate: 9.0

Labor Force: 5,908

Employed: 5,377

Highest Rate in Last Two Years: 12.0 (February 2012)

Lowest Rate in Last Two Years: 7.6 (June 2013)

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#14 Exeter

Latest Unemployment Rate: 9.2

Labor Force: 3,865

Employed: 3,509

Highest Rate in Last Two Years: 11.7 (March 2012)

Lowest Rate in Last Two Years: 7.6 (September 2011)

Prev Next

#13 Tiverton

Latest Unemployment Rate: 9.3

Labor Force: 8,882

Employed: 8,058

Highest Rate in Last Two Years: 12.0 (January, February 2012)

Lowest Rate in Last Two Years: 7.4 (June 2013)

Prev Next

#10 (Tie) Cranston

Latest Unemployment Rate: 9.5

Labor Force: 41,657

Employed: 37,682

Highest Rate in Last Two Years: 11.3 (July 2012)

Lowest Rate in Last Two Years: 8.8 (April 2013)

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#10 (Tie) East Providence

Latest Unemployment Rate: 9.5

Labor Force: 24,677

Employed: 22,339

Highest Rate in Last Two Years: 12.6 (January, February 2012)

Lowest Rate in Last Two Years: 8.7 (June 2013)

Prev Next

#10 (Tie) West Warwick

Latest Unemployment Rate: 9.5

Labor Force: 16,240

Employed: 14,693

Highest Rate in Last Two Years: 12.9 (February 2012)

Lowest Rate in Last Two Years: 8.4 (June 2013)

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#8 (Tie) Hopkinton

Latest Unemployment Rate: 9.8

Labor Force: 4,888

Employed: 4,411

Highest Rate in Last Two Years: 11.2 (February 2012)

Lowest Rate in Last Two Years: 6.6 (June 2012)

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#8 (Tie) North Providence

Latest Unemployment Rate: 9.8

Labor Force: 18,130

Employed: 16,347

Highest Rate in Last Two Years: 11.3 (August 2011)

Lowest Rate in Last Two Years: 8.5 (April 2013)

Prev Next

#7 Burrillville

Latest Unemployment Rate: 10.0

Labor Force: 9,526

Employed: 8,570

Highest Rate in Last Two Years: 11.6 (February 2012)

Lowest Rate in Last Two Years: 8.0 (June 2013)

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#6 Scituate

Latest Unemployment Rate: 10.4

Labor Force: 6,166

Employed: 5,527

Highest Rate in Last Two Years: 11.2 (July 2012)

Lowest Rate in Last Two Years: 8.4 (June 2013)

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#5 Johnston

Latest Unemployment Rate: 10.5

Labor Force: 15,645

Employed: 14,004

Highest Rate in Last Two Years: 12.9 (February 2012)

Lowest Rate in Last Two Years: 9.2 (June 2013)

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#4 Pawtucket

Latest Unemployment Rate: 11.1

Labor Force: 36,412

Employed: 32,378

Highest Rate in Last Two Years: 13.7 (July 2012)

Lowest Rate in Last Two Years: 10.2 (June 2013)

Prev Next

#3 Woonsocket

Latest Unemployment Rate: 11.2

Labor Force: 20,730

Employed: 18,409

Highest Rate in Last Two Years: 13.6 (January 2012)

Lowest Rate in Last Two Years: 10.7 (June 2013)

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#2 Providence

Latest Unemployment Rate: 11.5

Labor Force: 80,605

Employed: 71,362

Highest Rate in Last Two Years: 14.3 (August 2011)

Lowest Rate in Last Two Years: 10.4 (May 2013)

Prev Next

#1 Central Falls

Latest Unemployment Rate: 12.1

Labor Force: 8,348

Employed: 7,341

Highest Rate in Last Two Years: 15.3 (January, February 2012)

Lowest Rate in Last Two Years: 11.4 (April 2013)

 
 

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