Music City and the Circle City: Lessons for regional economic development strategy.

• Author: Powell, Philip T.

Indianapolis seeks a regional strategy for economic development, one that leads not lags.

There are multiple strategies and proposals out now seeking traction:

1. Central Indiana Comprehensive Economic Development Strategy from the Indianapolis Metropolitan Planning Organization (1)

2. White River Regional Opportunity Initiative proposal submitted to the Indiana Economic Development READI program (2)

3. Accelerate Indy from the Indy Chamber (3)

Each of these offer plans for the advancement of the greater Indianapolis metropolitan economy. While such plans offer well-placed insights on traditional issues of talent, commerce, place and housing, the perceived absence of a single, succinct and compelling vision that uniquely differentiates Indianapolis disturbs business leaders.

IBJ media CEO Nate Feltman summarized it well in a high-profile December 2021 Indianapolis Business Journal commentary: "Time is not our friend. Other cities have plans in motion. A vision and a plan are needed now. Let's pick some priorities and move quickly." (4)

Many discussions of a reinvigorated Indianapolis economic strategy generate comparisons with Nashville, Tennessee. In the span of 25 years, a smaller metropolitan area just five hours south that socially and economically lagged Indianapolis has quickly closed the gaps and become a formidable competitor.

In 2018, Amazon bypassed Indianapolis and rewarded Nashville with a supply chain and logistics hub that promised 5,000 new jobs as part of its HQ2 selection process. (5) In November 2022, Nashville announced plans to construct an enclosed professional football stadium and make it part of a strategy to steal Indianapolis convention and sporting event business. (6) The Indy Chamber semiannually benchmarks Indianapolis against Nashville, including in the current iteration of Accelerate Indy and in a recent Brookings Institution study on inclusive economic development. (7) As recently as last summer, the Indy Chamber's Leadership Exchange took Indianapolis leaders to Nashville to understand the root of Music City's success. (8)

Economic success for a metropolitan area requires strategy, leadership and investments that leverage comparative geographic, economic and demographic advantages. In the 1970s, Indianapolis executed a deliberate vision to become a global sports hub. (9) The recruitment of six professional sports franchises, headquarters for four high-profile amateur sports associations and a continuous stream of national championship sporting events (such as the Super Bowl and NCAA Final Four) demonstrate the success of that strategy. (10)

Forty years on, the region's sports economy remains dynamic, but it is also mature. Nashville's impressive momentum inspires resurrection of the strategic energy of the 1970s to place Indianapolis on an economic path that leads, rather than lags, other great cities. This study dissects the data to explain Nashville's ascension and suggest elements of a forward-thinking economic vision for the Indianapolis region.

Nashville surpasses Indianapolis

In order to compare apples to apples, we are looking at the per capita real gross domestic product (PC-RGDP), the per-resident value of all final goods and services produced in a geographic area and measured in constant year 2012 dollars. Dividing the metropolitan area RGDP (U.S. Bureau of Economic Analysis) by the population estimate (U.S. Census Bureau) generates a well-established measure of prosperity that can be used to compare annual economic performance between Indianapolis and Nashville (see Figure 1). (11)

Before the Recession

In 2001, Nashville's per capita GDP was 82% that of Indianapolis, and it increased only slightly to 84% by 2007. But out of the Great Recession bounded a new Nashville, with a per capita GDP that surpassed Indianapolis in 2015 and exceeded it by 8% in 2021.

During the recession, real economic activity in Nashville fell by 6.6% between 2008 and 2010, as opposed to a 9% drop in Indianapolis. Nashville's economic activity then grew between 2010 and 2012 while it shrank in Indianapolis. Because of a larger dependence on hospitality and tourism, the pandemic lockdown hit Nashville harder than Indianapolis (a decrease of 5.5% in Nashville as opposed to a decrease of 3.6% in Indianapolis in PC-RGDP between 2019 and 2020), but Nashville enjoyed an impressively larger bounce after the lockdown (an increase of 11.1% versus an increase of 4.4% in PC-RGDP between 2020 and 2021) that solidified its long-term lead over Indianapolis.

A Transformation

Nashville's transformation between 2007 and 2021 can be traced to bold leadership by two successive mayors in the 1990s and early 2000s. Elected in 1991, Mayor Phil Bredesen engaged the business community to ignite a new vision for downtown and commit the city to bold investments. (12) These included $155 million in 1996 for a new arena that eventually housed a National Hockey League expansion team, $206 million in 1998 for new schools, $264 million in 1999 for a new stadium to bring the National Football League team in Houston to Nashville and $83 million in 2001 for a new library. (13,14,15,16)

Mayor Bill Purcell, Bredesen's successor, increased annual education funding by $200 million, commenced work with the Chamber of Commerce that launched the Nashville Entrepreneur Center in 2010 and initiated planning for a $455 million replacement of Nashville's convention center that opened in 2013. (17,18,19) Momentum established by Bredesen and Purcell attracted large investments by new multinational companies with no previous presence in Nashville. These included high-profile announcements by Dell Computer in 1999, Nissan in 2005, UBS in 2013, Amazon in 2018 and Oracle in 2021. (20,21,22,23,24)

Intentional marketing and branding of Nashville complemented public investment in placemaking and education. In 1998, Nashville's biggest tourist attraction, Opryland, closed and sparked a period of decline in visitors to the city. (25) At that time, the tourism market considered Nashville a destination for families and seniors. Perceptions limited the city's entertainment brand to country music, especially older forms of the...