Policyleaders should be critically concerned with using these new tools to reviveareas devastated by deindustrialization and chronic poverty. Around the world,"emerging markets" are hotspots for investment, so many states aretreating their low-income domestic areas as "domestic emergingmarkets" that just need a bit of patient capital in order to be revived.

Backin 2000, California State Treasurer Phil Angelides laid out thephilosophy that is the basis for the new wave of tough-minded investment in"The DoubleBottom-Line: Investing in California's Emerging Markets."  Whether the investments are in hightechnology or in urban revitalization, these state investments deliver economicreturns that are measurable on the financial bottom-line. One studyfound that eight large public pension funds had more than $3 billion investedin urban development projects, and have helped leverage private equity partnersthat have validated their economic returns.

Stategovernment and public pension investments are part of the broader trend ofexpanding investments in a range of community-based investment vehicles, fromCommunity Development Banks to Community Venture Capital Funds, all designed toincrease capital access in communities often starved for the financial capitalneeded to revive local businesses. The SocialInvestment Forum highlights the quiet revolution as the assets of communityinvestment institutions have grown from $4 billion in 1995 to $19.6 billion in2005, a growth of 388 percent in a decade.

Ina multi-trillion dollar economy, even these amounts have not been enough to reviveall of the communities undermined by deindustrialization and poverty, but theirinitial success and growth set an encouraging precedent for positive strides inpublic policy.

Phil Angelides - "The DoubleBottom-Line: Investing in California's Emerging Markets (CaliforniaTreasurers Office).
PublicSector Pension Funds and Urban Revitalization: An overview of policy andprograms
Social Investment Forum - 2005Report on Socially Responsible Investing Trends in the United States