Showing papers in "Economic Development Quarterly in 1999"

Human Capital-Based Strategy for Regional Economic Development

Abstract: Regional policy makers have always wrestled in vain to come up with regional economic development policies that are coherent and uniform and can be defended on economic grounds. However, most policies are either ad hoc or based on political considerations. The relevant literature dealing with regional economic development strategies is fragmented. It also does not provide any guidance to formulate an overall long-term strategy based on an integrated analytical foundation. It incorporates elements like entrepreneurship, human capital, workplace training, capital accumulation, R&D effort, innovations, technology, and technological cycles. This article proposes a human capital accumulation strategy for regional economic development that not only integrates the above diverse elements of the literature into a cohesive analytical framework but also provides the rationale for it to be part of a long-term policy for economic development on efficiency grounds.

What are “Third-Wave” State Economic Development Efforts? From Incentives to Industrial Policy

Abstract: “Third-wave” state economic development strategies have been widely acknowledged to reduce high-stakes incentives and promotions and have shifted emphasis from firm-based programs to broader regional programs. Although the change is well documented, less consensus has emerged about what has taken their place. Based on analysis of economic development programs in 16 states competing for high-technology industry, the study documented that the emerging third-wave economic development efforts—especially leadership, information, and brokering—are the essential tools by which states can establish their industrial policies. These policies are based on extensive strategic planning, public-private partnerships, foundations of technology, human resources and capital, and the development of strategic industrial clusters. The report concludes that the third wave is a state policy direction that focuses rather than replaces earlier strategies and that downplays expensive programs by mobilizing many established state p...

“Every Breath You Take... ”: The Demographics of Toxic Air Releases in Southern California

Abstract: In this article, the authors investigate the relationship between ethnicity and potential environmental hazards in the metropolitan Los Angeles area Using a variety of techniques, including geographic information systems (GIS) mapping, univariate comparisons, and logit, ordered logit, and tobit regression analysis, the authors find that, even controlling for other factors such as income and the extent of manufacturing employment and land use, minority residents tend to be disproportionately located in neighborhoods surrounding toxic air emissions The results generally support the propositions of the proponents of “environmental justice”; in the conclusion, they consider what this might mean for urban land use and environmental policy

Metropolitan Development as a Complex System: A New Approach to Sustainability

Abstract: A major national debate is under way about the effects of the regulation of development and land use patterns on metropolitan economies. Because this is often framed around whether sprawling development patterns are harmful or beneficial to the economy and environment, we are seemingly presented with an either/or choice. This article asserts that the debate misses the reality that metropolitan development occurs as part of a complex system. If we view metropolitan development as a complex system, there is no fundamental conflict between environmental goals and economic development. Examining the case of California, the authors demonstrate how the relationship between these is part of a larger system involving fiscal policy, governance structure, infrastructure policy, and other factors. The authors propose three strategies for improving metropolitan system performance to ensure sustainable metropolitan economies and environments: developing and using indicators for self-organizing urban systems, collabora...

The Case Against Targeted Industry Strategies

Abstract: Targeted industry studies and strategies have been widely used in economic development practice since the 1970s, and their use continues to grow. In spite of their longevity, targeting as a method never has been formally or rigorously evaluated. This article looks at dozens of studies and strategies and concludes that targeting is based on poor data, unsound social science methods, and faulty economic reasoning and is largely a political activity. Targeting studies could be improved somewhat by making their methods more transparent, encouraging use of competing studies, and building in a required evaluation component.

Do Business Tax Incentives Contribute to a Divergence in Economic Growth

Abstract: A lack of detailed data on state tax incentive programs has limited the assessment of their economic impacts. However, in 1987, the Nebraska legislature, as part of its new business tax incentive initiative, required that the state Department of Revenue collect data on all business tax incentive agreements and report findings yearly. Nebraska’s legislative mandate produced a unique data set for assessing the impact of a business tax incentive program. Using these data, this article evaluates business tax incentives across Nebraska’s 93 counties during 1987 to 1995 and concludes that qualifying business investment (a) had a positive and statistically significant impact on economic growth for low-unemployment counties, (b) had no statistically significant impact on economic growth for high-unemployment counties, and (c) tended to be undertaken in areas with historically higher investment activity, thus contributing to greater economic performance differences among counties in the state.

The Contribution of Home-Based Business Income to Rural and Urban Economies

Abstract: During the past decade, many rural and urban residents have turned to home-based self-employment as a means of providing for themselves and their families. Home-based work can be considered a form of community development for its potential as an alternative or supplemental income source for residents and for its economic multiplier effect on a community and region. This article reports results from a nine-state study on home-based employment—who does it and what they do—and estimates its economic impact on communities. Suggestions for building a supportive environment for home-based and microenterprises are discussed.

Entrepreneurial Neighborhood Initiatives: Political Capital in Community Development:

Abstract: Community-based organizations are struggling to find alternative strategies to successfully leverage assistance and resources to improve their neighborhoods. This article offers a three-pronged formula for sustainable community development based on an entrepreneurial approach to undertake neighborhood initiatives. Economic, social, and political capital are necessary ingredients to generate independent community-based strategies that residents and investors can manage over the long term to achieve financial and social successes. Two community organization cases are compared to determine whether different approaches to local government for community development programs and funding represent different strategies and, ultimately, different levels of success.

Moving Beyond the Modeling of Regional Economic Growth: A Study of How Income is Distributed to Rural Households:

Abstract: This article discusses the use of regional economic modeling techniques to determine the household income distribution impacts associated with various economic sectors. Determining the distribution...

Regional Efficiency in the Manufacturing Sector: Integrated Shift-Share and Data Envelopment Analysis

Abstract: In this article, the authors propose an approach to investigate regional economic structure, sectoral productivity, and relative efficiency by using a modified shift-share model and data envelopmen...

Directing Benefits to Need: Evaluating the Distributive Consequences of Urban Economic Development

Abstract: Evaluation of targeted development programs is made difficult by undefined or multiple goals, reliance on inappropriate aggregate units and levels for analysis, and neglect of distributional conseq...

Cost-Benefit Analysis: A Normative Perspective

Abstract: Policy makers rely on cost-benefit analysis (CBA) to help them select the best policies and projects to alleviate poverty. But CBA, as practiced in the United States, not only fails to inform policy makers about the best use of scarce resources but helps make poverty worse for many people. International donor organizations—the United Nations, Organization for Economic Cooperation and Development, and World Bank—have sophisticated CBA methods that could better serve policy makers in deciding how to help poor people. The authors look at the results of CBA in four economic development venues—enterprise zones, military base redevelopment, sports stadiums, and business incentives—for developing a critique of cost-benefit practices. A brief program is offered to correct cost-benefit practice, but it is concluded that reform must come not from policy makers and policy analysts who now use CBA but from outsiders who want to influence political systems on behalf of poor people.

When is a Cost Really a Benefit? Local Welfare Effects and Employment Creation in the Evaluation of Economic Development Programs

Abstract: This article claims that the local welfare effects of employment generation are often treated inadequately in the evaluation of economic development programs. Opportunity costs of labor are often either ignored or overstated, resulting in misleading indicators of welfare changes. Appropriately accounting for these costs requires recognizing employment creation as a benefit in terms of the chain reaction that it sets off in the local labor market. This article uses the concept of “job chains” and describes the different labor market circumstances in which they are likely to form. The local development of these chains, the impacts of in-migrants on their length, and the likelihood of their completion within the local area are all particularly important economic development issues with public policy implications. The article discusses the empirical estimation of these chains and their implications for evaluating the welfare impacts of alternative economic development projects.

Cluster-Based Development Strategies: Lessons from the Plastics Industry in North Central Massachusetts

Abstract: Much written attention has been given to the rise of technologically dynamic industrial regions. These regions are characterized by the spatial clustering of small firms into flexible production networks that have the ability to quickly respond to changing global markets. Case studies generally have been limited to high-tech manufacturing clusters, even though mature industrial regions have demonstrated similar traits. A case study of the plastics industry in north central Massachusetts gained a formative perspective on a mature industrial cluster and an appreciable understanding of the correlation between the industry’s spatial concentration and organization of production. The case study findings have clear implications for regional economic development. Planning for industrial development will need to rely more on “grounded” contextual analysis, give greater focus to local capacity building, and devise more formalized networks of institutional support.

Inner-City Firms and the Employment Problem of the Urban Poor: Are Poor People Really Excluded from Jobs Located in their Own Neighborhoods?:

Abstract: This article investigates whether the employment problem of the urban poor has been exacerbated by inner-city employers and their use of hiring practices that limit local employment opportunities for residents of these neighborhoods. By using the Urban Poverty and Family Life Study’s survey of Chicago-area employers, this article estimates the effects of neighborhood poverty on a firm’s recruitment and screening practices while also estimating the impact of hiring practices and neighborhood poverty on the employment of local residents. The results suggest that the level of poverty in a firm’s neighborhood does not alter screening practices but significantly reduces recruitment through personal referrals and media advertisements. However, these different recruitment patterns do not significantly reduce a firm’s employment of neighborhood residents. Nor does firm-level neighborhood poverty affect its employment of neighborhood residents. Overall, these results suggest that inner-city residents are not excluded from jobs located in their own neighborhoods.

Toward an Empowerment Zone Evaluation

Abstract: Traditional social and economic development program evaluations are based on measurable program goals, with discrete program components, a control group, and the potential to generalize from findings. Although this works for programs with well-defined outcomes, limited participation, and a narrow focus, it does not work for programs that depend on community action or seek to promote community development. Strategies for social change involve comprehensive, flexible programs that do not lend themselves to conventional evaluation methods. In this article, the authors describe how they attempt to overcome the difficulties of more traditional evaluations through action research. The authors present what they believe to be the most important elements of action research and describe how they incorporate those elements in their approach to evaluating the Empowerment Zone program.

To Target or Not to Target, That’s the Question: A Response to Wiewel and Finkle:

Abstract: The gist of the Wiewel (1999 [this issue])/Finkle (1999 [this issue]) criticisms of my article is that I am a free-market advocate and, by inference, a capitalist—and that this accounts for differences between our perspectives, theirs, of course, representing the “shining path.” There are worse things than being accused of advocating for less, much less, government intervention in economies. I take this as a compliment. But Wiewel and Finkle are wrong to cast this debate as a difference in ideology, grounded only in rhetoric. Circumstantial evidence casts considerable doubt on targeting’s efficacy, as shown in my point-by-point response below.

The Effect of State Appropriations on Export-Related Employment in Manufacturing:

Abstract: State governments use economic development programs to strengthen the economic bases of their states, increase tax revenues, and preserve and increase job opportunities. Export promotion organizations are a key element of these programs. This article attempts to partially address the lack of evaluative literature regarding the effectiveness of export promotion programs by providing an analysis of the relationship between state appropriations and export-related employment in manufacturing. The findings support the suggestion that state appropriations for export promotion result in higher employment for firms that are directly involved in exporting their products overseas. No evidence is found of a relationship between appropriations and employment in firms that produce the components of export products.

The Employment Fulcrum: Evaluating Local Economic Performance:

Abstract: This article considers two aspects of publicly reported macroevaluations of local economies: the emphasis on job growth and the problematic relationship among the desired outcomes of local economic performance. At issue is the extent to which a jobs focus is either deceptive or in some other way detracts from our understanding of how local economies work. The purpose of this investigation is to create more sensitivity to the representational and political qualities of macroevaluations. Data from New York City are used to illustrate the argument.

Critical Perspectives on Local Development Policy Evaluation

Abstract: Local economic development policies and programs should integrate the reality that values are inherent in the design and conduct of any evaluation. This article outlines the content of several atte...

Are Poor People Really Excluded from Jobs Located in their Own Neighborhoods? Comments on Reingold and Some Additional Evidence from the Multi-City Study of Urban Inequality

Abstract: Interviews with employers located in poor inner-city neighborhoods reveal that they view nearby workers as unproductive and frequently troublesome. This suggests that these employers may exclude poor people from jobs located in their own neighborhood. Some rare quantitative evidence is provided by Reingold based on data from the Urban Poverty and Family Study’s survey of Chicago-area employers. His results are cause for optimism because they suggest that exclusion does not occur. However, his analysis treats all poor neighborhoods the same, regardless of their racial composition. I provide evidence from the Multi-City Study of Urban Inequality Survey of Employers that suggests that poor people are excluded from jobs in their own neighborhood if the neighborhood contains a plurality of Blacks, but exclusion does not occur if the neighborhood has a plurality of either Whites or Hispanics.

Policy Research in an Imperfect World: Response to Terry F. Buss, “The Case Against Targeted Industry Strategies”

Abstract: It is a sign of the coming of age of economic development research that tough questions are being asked about the quality of the data, how solid the conclusions from research are, and when we are better off with limited data and knowledge than without them. Buss makes a valuable contribution in raising these issues. He goes too far in damning all studies because individual errors appear in some of them and is wrong in calling the studies atheoretical. His ideological bias causes him to attack any tinkering with the free market; on that basis, all economic development efforts are inappropriate. However, more external review of targeting studies and more evaluation of targeting programs would greatly improve the quality of data, studies, and economic development policy and practice.

The Case Against Targeting Might Have Been More...Targeted

Abstract: This article reviews Terry Buss’s analysis of economic development targeting. Targeting is an effort by economic developers to focus investment on industries, facilities, and companies based on the...

The “More Means More” Assumption: Congruence Versus Contingency in Local Economic Development Research:

Abstract: This article focuses on the conceptual and methodological foundation of local development policy adoption studies. It reexamines the prevailing supposition of congruence between context and policy and revisits the accepted rationale for choosing particular policies by introducing a performance component into the model. From this perspective, policy adoption is not determined purely by external circumstances—the lesson of studies that find a congruent link between context and policy—but such adoption is also strategic. By using a data set used in similar research, a contingency model indicates that the economic development policy adoption patterns of cities can be explained in terms of the proper fit between the policy and the local economic context. Because the pursuit of effective economic development policies is a significant factor in policy adoption, the model presented here is an applicable alternative to the standard congruence research approach offered in the literature.

Has Discrimination Disappeared? A Response to William Julius Wilson

Abstract: William Julius Wilson, in his book, When Work Disappears, notes that 80% of interviewed Black employers (and 74% of Whites) who provided comments on “job skills, basic skills, work ethic, dependability, attitudes and interpersonal skills” expressed negative views of inner-city Blacks. The author suggests that there are problems in Wilson’s research methodology that may too quickly lead to his notion that inner-city joblessness is far more apt to be the result of “unflattering behaviors” of poor Blacks rather than the persistently discriminatory assumptions and hiring practices of employers. Wilson’s findings are compared with those from the author’s own employer interview study. Only 4 of the 44 employers interviewed felt that Black workers had poorer work ethics and attitudes than Whites. Reasons are presented for the differences, and the article concludes with a brief discussion of the policy implications of these findings.

New Estimates of the Impact of EDA Public Works Program Investments on County Labor Markets

Abstract: The U.S. Department of Commerce’s Economic Development Administration (EDA) makes public works investments in distressed areas throughout the nation. In this study, these investments are found to have significantly positive effects on county employment levels after controlling for a variety of geographic, economic, and demographic factors. The investments have no significant effect on employee compensation. The estimates indicate that EDA public works investment provides counties with jobs at relatively low cost, suggesting that such investments are an effective means of job creation and retention in targeted counties. The article’s final section qualifies this conclusion somewhat, discussing the possibility that EDA investments act as a proxy for a coordinated local economic development strategy and evaluating the potential benefits of ameliorating regional decline.

Response to Comments by William M. Bowen

Abstract: We appre ci ate the obvi ous and con struc tive care that Bill Bowen (1999 [this issue]) has taken in com ment ing on our piece. Fur ther prog ress in under stand ing envi ron mental equity depends on ana lysts of his rigor, and we join him in wel com ing more and bet ter qual ity research into these ques tions. Of course, we con fess to feel ing damned by faint praise, espe cially his assess ment that our work is “among the best in the often rather bleak larger body of empiri cal research.” Indeed, nearly his entire cri tique is about the field as a whole. Of his three spe cific criti cisms of our piece—(a) that we offered a cur sory lit era ture review, (b) that our loca tion choice may be arbi trary and our inclu sion of non in dus trial cen sus tracts prob lem atic, and (c) that we failed to con sider spa tial depend ence—only the first is both accu rate and unique to our work. We make three cen tral points below. First, liv ing proxi mate to a known toxic release can pres ent a real risk to health and is, at best, per ceived to be a haz ard (U.S. Coun cil on Envi ron men tal Qual ity, 1980). Sec ond, although we have not dem on strated cau sal ity (and can not, given cer tain limi ta tions of the Toxic Release Inven tory [TRI] data), our evi dence does dem on strate that prox im ity to TRI releases—and hence, real and/or per ceived real risk—is dis pro por tion ately dis trib uted by race in south ern Cali for nia, thus set ting the stage for exactly the sort of cau sal ity research and for mal risk assess ment Bowen wants. Third, that race mat ters, even after con trol ling for income, resi dent job mix, indus trial land use, and popu la tion den sity, is not “largely irrele vant in terms of mak ing bet ter pol icy deci sions”; rather, the results here should at least raise pub lic pol icy flags with regard to both siting deci sions and infor ma tional flows.

A Case Study of the Enterprise Zone Program: “EZ” Avenue to Minority Economic Development?

Abstract: This article explores Pennsylvania’s enterprise zone program as an economic development strategy in one city—Philadelphia. Given the underlying corporate-centered focus of economic development policies, it focuses on whether such policies can effectively reduce the high rate of joblessness for central-city residents as well as increase the rate of business development for minority business owners. To have a long-term impact on minority communities, economic development policies should identify ways to increase minority economic development through entrepreneurship and job creation strategies.

Just-in-Time Intervention: Economic Development Policy for Apparel Manufacturing in San Francisco

Abstract: The apparel manufacturing industry in San Francisco has experienced considerable growth since the late 1980s due to changes in retailing, the increasing flexibility of the industry, the influx of Asian immigrants, and the availability of industrial space adjacent to the central business district. However, the continued growth of the industry is in jeopardy because of rising labor costs in comparison to offshore and Mexico locations, as well as new competition for space in the industrial district from multimedia and residential uses. Current economic development efforts targeted at the apparel industry are attempting to facilitate a transition to higher value-added manufacturing, open up new markets, and foster cooperation in the industry. This article highlights some of the obstacles such endogenous policies face and argues that more traditional supply-side initiatives to reduce land, labor, and capital costs may be necessary first to preserve the industry.