Week Thirteen:Week Thirteen:

Economic Economic Development and Development and

IGRsIGRs

Objectives for Week Objectives for Week ThirteenThirteen

In-class Case from Week 12In-class Case from Week 12 Challenges of Attracting Economic Challenges of Attracting Economic

OpportunityOpportunity Locational v. Entrepreneurial Locational v. Entrepreneurial

Approaches to Economic Development Approaches to Economic Development PolicyPolicy

Incentives and StrategiesIncentives and Strategies Goals and Politics of Development Goals and Politics of Development

PolicyPolicy

HASCO Case Study HASCO Case Study

Integrated program with case Integrated program with case manager that coordinated services – manager that coordinated services – local organizations would participate local organizations would participate to help their clients receive Section to help their clients receive Section 8 vouchers8 vouchers

Changes in HUD policyChanges in HUD policy Undermined partnerships, eliminated Undermined partnerships, eliminated

caseworkercaseworker Reduced # of participants, changed Reduced # of participants, changed

selection criteriaselection criteria

Development PolicyDevelopment Policy What are the goals of economic What are the goals of economic

development policy?development policy? What are the conditions that promote What are the conditions that promote

economic growth? economic growth? What are the tools government uses to What are the tools government uses to

promote economic growth?promote economic growth? Salomon – Interdependence in Policy-Salomon – Interdependence in Policy-

makingmaking PluriformityPluriformity Self-referentialitySelf-referentiality Asymmetric interdependenciesAsymmetric interdependencies DynamismDynamism

Context of Development Context of Development PolicyPolicy

Local CharacteristicsLocal Characteristics Presence of Competitive PressuresPresence of Competitive Pressures

Intense competition, today and historicallyIntense competition, today and historically Mobility of capital and laborMobility of capital and labor

Uncertainty in Impact of ToolsUncertainty in Impact of Tools What matters?What matters?

Informational DisparitiesInformational Disparities What are others doing? What does the What are others doing? What does the

company want? What does the future hold?company want? What does the future hold? Suboptimal outcomes = strong possibilitySuboptimal outcomes = strong possibility

Operating in a Operating in a Constrained, but Constrained, but

Competitive EnvironmentCompetitive Environment Match or surpass incentivesMatch or surpass incentives

Improve informational positionImprove informational position

Reduce out-migration of Reduce out-migration of labor/capital labor/capital

Enhance stock of labor/capitalEnhance stock of labor/capital

Strategies for Strategies for DevelopmentDevelopment Locational (supply-side)Locational (supply-side)

Reduce costs of doing businessReduce costs of doing business Impact of tax incentives?Impact of tax incentives?

Entrepreneurial (demand-side)Entrepreneurial (demand-side) Enhance attractiveness of location for Enhance attractiveness of location for

potential industrypotential industry Workforce developmentWorkforce development

Retaining versus RecruitingRetaining versus Recruiting Adapting to changing contextAdapting to changing context

Institutional Impact of the Institutional Impact of the Tax Reform Act of 1986Tax Reform Act of 1986

Type of Governmental Type of Governmental AuthorityAuthority

Percentage Percentage Change, 1987-Change, 1987-

9292

AirportsAirports +53.9%+53.9%

Parks and RecreationParks and Recreation +47.6%+47.6%

HospitalsHospitals +37.5%+37.5%

Non-water UtilityNon-water Utility +32.1%+32.1%

Institutional Impact of the Institutional Impact of the Tax Reform Act of 1986 Tax Reform Act of 1986

Birm, Birm, ALAL

HuntHunt, AL, AL

Det, Det, MIMI

GR, GR, MIMI

Private Activity, Private Activity, 1980-19861980-1986

$233$233mm

$147$147mm

$40m$40m $34m$34m

Private Activity, Private Activity, 1987-19931987-1993

$131$131mm

$234$234mm

$12m$12m $13m$13m

Public Activity, Public Activity, 1980-19861980-1986

$101$101mm

$18m$18m $410$410mm

$9m$9m

Public Activity, Public Activity, 1987-19931987-1993

$125$125mm

$268$268mm

$1,000$1,000mm

$190$190mm

Adapting to the Adapting to the Surrounding ContextSurrounding Context

Adopt innovations and circumvent Adopt innovations and circumvent regulationsregulations

Diversity of development tools and Diversity of development tools and diversification of local industrydiversification of local industry

Outcomes-based performance Outcomes-based performance measuresmeasures

Shift away from supply-side to Shift away from supply-side to demand-sidedemand-side

How Do We How Do We Measure Measure

Development Development Policy Success?Policy Success?

What Trends in What Trends in Development Development

Policy Might We Policy Might We Anticipate in the Anticipate in the Coming Years?Coming Years?

Course Concepts Course Concepts Implicated by Implicated by

Development PolicyDevelopment Policy Proper role and responsibility of different Proper role and responsibility of different levels of government levels of government

Mobility of capital and population Mobility of capital and population Intergovernmental competitive pressures Intergovernmental competitive pressures Incentives and inducements are Incentives and inducements are

intergovernmental in nature intergovernmental in nature ExternalitiesExternalities Importance of information Importance of information Constraints on policy-makersConstraints on policy-makers

Readings for Next WeekReadings for Next Week

Chapters One, Three, Five Chapters One, Three, Five and Six, and Six, Reflections on Reflections on RegionalismRegionalism, ed. Bruce , ed. Bruce Katz Katz

Read Managing Urban Read Managing Urban Growth case (online)Growth case (online)