Kansas City Replaces Interstate Rivalry With Collaboration to Help Entrepreneurs

Once they competed to lure businesses and jobs across state lines. Now Kansas City, Kansas, and Kansas City, Missouri, offer a new model for regional economic development.

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A hallmark of traditional economic development has been the zero-sum game of cities or states luring businesses from one another. The companies move from one place to another in return for tax incentives, but the region, the nation, and often the participating cities or states gain zero.

Nowhere was that more visible than in the interstate rivalry that for years highlighted economic development in Greater Kansas City, including both Kansas City, Kansas, and Kansas City, Missouri, two jurisdictions so intertwined that you often can't tell when you're leaving one and entering the other. 

As the Brookings Institution's interim president Amy Liu wrote in 2019, "For years, Kansas and Missouri taxpayers subsidized the shuffling of jobs across the state line that runs down the middle of the Kansas City metro area, with few new regional jobs to show for it. The firm poaching captured national headlines, branding these two states' practices as the poster child for how not to create jobs."

Not only were the two states and cities typically competing for well-established businesses that had likely produced whatever jobs they would generate, but those efforts also ignored the new and young businesses that create virtually all U.S. job growth. Since then, the two states have ended their poaching, and now the two cities have joined forces to replace that zero-sum rivalry with collaboration to help entrepreneurs. It's a remarkable new model that holds important lessons for the nation.

The collaboration has emerged through the evolution in both cities of one-stop shops--and, most recently, related online innovations--designed to facilitate the creation of new businesses and the growth of small ones. Those efforts focus especially on addressing the needs of underserved communities, and that in turn created a recognition that both cities are addressing the same innovation ecosystem. 

Entrepreneurs in Kansas City don't care whether the expertise they need resides on the Kansas side of the state line or on the Missouri side. The distinction is meaningless.

That's why the two cities, along with the Unified Government of Wyandotte County in Kansas, are collaborating as never before to serve that entrepreneurial ecosystem. The collaboration centers on related initiatives to start and grow new businesses and especially on providing online services and addressing shared needs of the ecosystem.

For example, KC BizCare, the office of small business for the city of Kansas City, Missouri, has worked for several years with Colorado-based software developer Qwally to create and then enhance its online platform serving the small-business ecosystem. Partly on the basis of KC BizCare's recommendation, the Unified Government engaged Qwally to build a new online platform serving Wyandotte County and Kansas City, Kansas, called DotteBiz, which launched in May. 

Now the two formerly rival jurisdictions have online platforms designed by the same software developer to serve their shared ecosystem. Both platforms offer step-by-step guidance for their entrepreneurial communities on starting or growing a business, user-friendly detailed checklists, and resource guides including information on related jurisdictions. 

The two one-stop shops also plan to connect their online content, so entrepreneurs can easily navigate the differences in requirements between the two cities and states. Together, the online platforms are addressing shared needs.

One of those shared needs is to understand better the ecosystem that they serve. One typically thinks of one-stop shops as operating primarily in one direction: helping businesses navigate government requirements more easily. That's clearly the fundamental purpose, along with streamlining that process. Yet there is also a need to know the demographics of the ecosystem, so that its needs can be better recognized and addressed. The two Qwally-designed online platforms can now work together to gather and share that data.

The benefits of this collaboration around one-stop shops and their online platforms does not flow solely to entrepreneurs. One of the fascinating things about entrepreneurship is that it benefits everyone. Every 1 percent increase in new business entrepreneurial activity in a city or in a county increases household wealth by more than $400 on average. A 1 percent increase in entrepreneurial activity in a state correlates to a 2 percent decrease in poverty for the state.

Those are significant benefits. The collaboration now unfolding in Greater Kansas City shows other cities, counties, and states how those benefits can be pursued across even formerly rival jurisdictions.