Reese and Fasenfest (1996) investigate the following questions:
1) Has the use of economic development incentives increased over time?
2) Are cities becoming more uniform in the techniques they use?
3) Have local government changed to more entrepreneurial techniques?
They compare the use of various economic development policies in Michigan and Ontario (Canada) cities in 1990 and 1994.
They discuss the difference between "Brand X" supply-side incentives (abatements and other financial incentives, land development, or loan guarantees) and "Brand Y" demand-side incentives (business incubators, export market development, entrepreneurship development, etc.).
They review literature examining why cities persist in supply-side techniques.
a) Political rationality may not correspond to economic rationality. In other words, the need by officials for visible and/or symbolic returns, uncertainty about what works, and competitive pressure form other cities may have more effect on policy choice than economic efficacy. (Wolman, 1988)
b) Decisions are often the result of decision rules or procedural routines, perceptions of competition and other environmental factors, and uncertainty about nature and goals of the job. (Rubin, 1988)
In their survey they found generally it was more of the same; that both supply-side and demand-side techniques were becoming more prevalent.
Within different categories there was a trend toward more demand-side than before. Such as:
Marketing - more promotions.
Land development - more reuse and redevelopment
Financial incentives - more incubators and training; less abatements.
Finally, they raise the question: If more cities are doing more of the same things, does that lessen the impact that any of those things has on economic development?
Over all, not a real useful article. You can't be sure how well this info applies to jurisdictions other than the two they surveyed.
Wolman, H. (1988). Local economic development policy: What explains the divergence between policy analysis and political behavior? Journal of Urban Affairs, 10, 19-28.
Rubin, H. (1988). Shoot anything that flies, claim anything that falls: Conversations with economic development practitioners. Economic Development Quarterly, 2, 236-251.
Posted by Chip on May 24, 2004 at 04:32 PM | TrackBack