I. Groundwork
1. An introduction to state and local economic development policy
The purpose of this book is to ... characterize and analyze the policy domain of subnational economic development as a whole by exploring its modern origins, its justifications and practical elements, and the basis of its dynamics. (p. 4)
He gives three reasons to do this:
1. Economic development is an increasingly important government activity.
2. To document an unusual development in the way in which government in America relates to the economy.
US government market involvement is normally of the "weak state" model. Economic development has domonant features that are more toward the "strong state" end of the spectrum.
3. To suggest the importance of attending to subnational (rather than national) policy developments.
The economic development policy domain
Policy domain: an arena in which actors seek to craft and implement solutions and responses to one or a set of given public problems.
The problem of interest in the economic development domain is to
oversee the creation of sufficient, stable, well-paid employment to ensure and enhance collective well-being. (p. 6)
Relevant actors are a fairly small elite:
Political CEOs: governors and mayors
Development professionals in the public and private sectors: planners, development specialists, etc.
Specialists and episodic participants: labor leaders, bankers, real estate developers, etc.
This is similar to the postwar "progrowth coalitions" described by Mollenkopf (1983).
The policy domain in which these actors operate has certain structural elements. Eisenger's contention is that the domain is in the midst of an environmental transformation; that some of the structural elements are changing.
It is the new elements that define the "entrepreneurial state."
The entrepreneurial state
He discusses Schumpeter's concept of the entrepreneur: a risk-taker who exploits opportunities to produce new goods, new methods of production or transport, or new forms of organization that are unseen by others. The entrepreneur meets with skepticism and resistance, which he must overcome.
It is the entrepreneurs that drive the market and produce growth and change.
Eisenger says there are situations in which private entrepreneurial activity is insufficient to provide the economic growth we have come to expect. This is where the enterpreneurial state comes in, he says.
The enterpreneurial state seeks to identify opportunities on behalf of private actors that whose pursuit of the opportunities will serve public ends. The state becomes a partner in risk-taking.
The entrepreneurial state pays attention to the demand side of economic growth. Growth comes from exploiting markets. The state's role is to
identify, evaluate, anticipate, and even help to develop and create these markets for private producers to exploit, aided if necessary by government as subsidizer or coinvestor. (p. 9)
Yikes!
His main thesis
Subnational economic development policy has undergone a shift from almost exclusive reliance on supply-side location incentives to an approach that puts greater emphasis on demand-side policies.
This shift has important implications.
Demand-side policies promise opportunity for genuine capital formation and less interstate competition.
The shift to demand-side policy is a product of three shifts in environmental forces:
(1) Geographic shifts of people and jobs
The industrial diaspora south and west has increased interjurisdictional competition as northern states reacted to southern state policies.
(2) Changes in the federal political arrangement
A decline in federal aid to states and local governments
(3) Transformations in the nature of the economy
Globalization and the shift from manufacturing to service economy.
Eisinger, P.K. (1988). The Rise of the Entrepreneurial State: State and Local Economic Development Policy in the United States. Madison, WI: University of Wisconsin Press.
Posted by Chip on July 12, 2004 at 09:29 PM | TrackBack