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The Politics of Local Economic Development
Abstract
This article, written in conjunction with the 10th anniversary of Economic Development Quarterly, reviews the literature on the politics of local economic development. It asks what is known-and not known-about this topic. The article summarizes, assesses, and critiques the literature; indicates its shortcomings; and suggests paths for future research. It examines what the literature says about the forces driving local governments to engage in economic development activity, the factors that account for variation in such activity, the way local officials think about economic development-including its political logic-and the political activity that characterizes local economic development policy. With respect to the local politics of economic development, the article focuses on the interests involved and particularly on the question of how dominant business is in the process, the nature and degree of conflict, and the openness of local economic development decision making to public participation.
... Officials make economic development decisions within the context of a polycentric system of governments where neighboring local governments compete with each other in a political marketplace for capital (Ostrom et al., 1961). Due to strong electoral incentives (Jensen & Malesky, 2018;Wolman & Spitzley, 1996), the fear of capital flight (Brueckner, 2000), and the prospect of outmigration of mobile citizens (Buchanan, 1971;Tiebout, 1956) into neighboring local governments, local officials often prioritize economic growth through development-oriented policies at the expense of using redistributive-oriented policies to promote equity and benefit the needy (Peterson, 1981). ...
... Even theories that use a variation of the mobility argument are premised on city officials and residents believing the local expenditure assumption holds true. For example, many city officials prioritize development over redistributive policy , often based on perceived economic and political reasoning (Jensen & Malesky, 2018;Minkoff, 2012;Wolman & Spitzley, 1996). Greater private sector concentration in the economic development planning process increases the usage of development-over equity-oriented policies (Deslatte & Stokan, 2020;Stokan et al., 2021). ...
Local governments make important public service decisions based on a critical assumption from urban political economy scholarship that development activities lead to economic growth, while redistributive activities do not. Using the Community Development Block Grant (CDBG) program, we test this local expenditure assumption by exploring the differential effectiveness of CDBG activities on individual and neighboring residential and commercial property values. To this end, we challenge the notion that development policies frequently improve economic returns while redistributive policies do not. We analyze the economic impact of 16 different CDBG activities on more than seven million properties between 2004 and 2017 in Dallas County, Texas. We find strong evidence that, contrary to conventional wisdom, redistributive policies can yield positive economic returns while development expenditures have mixed results. These findings have important implications for local governments seeking to grow their economy equitably.
... First, increased utilization of data facilitates more precise and purposeful government processes. Second, public officials explicitly adopt and formalize routines and decision rules to mitigate risk (Wolman & Spitzley, 1996). With the increased instrumentality of data, routines and decision rules can be formalized and quantified with extreme precision and consistency. ...
The growth and expansion of "Big Data" is fundamentally changing public service delivery. Big Data is getting "bigger," and public organizations will have new opportunities to cultivate and challenges to address. To understand the effects of the growth of data on public organizations, we introduce the Public Data Primacy (PDP) theoretical framework, which builds on existing scholarship through four propositions about data, technology, and its use in the public sector. The framework posits that public sector work will become increasingly data-centric as data continues to get "bigger." Ultimately, the PDP leads to two predictions about the public sector. First, we predict that the primacy of data in the delivery of public services is inevitable. Second, this forthcoming reality will require public servants to adopt new models of public service oriented around data. The PDP theoretical framework provides a systematic lens in which public administration scholarship can evaluate the future of data growth and its impacts upon public service delivery. Keywords Big data · AI · Public service delivery The growth of "Big Data" is fundamentally altering how public organizations make decisions and provide public services. Public employees plan and deliver public
... Construction can disrupt traffic and business activity. Elected officials seeking to attract economic development and new residents might also worry about reputational harm from acknowledging that a community's infrastructure has deteriorated [37]. As representatives for their communities in broader regional and economic development settings, elected officials may be sensitive to the complaints and reputational damage caused by short-term disruptions. ...
Investment in U.S. drinking water infrastructure is not keeping pace with need, contributing to water service failures that threaten public health, economic development, and community water security. Many explanations for lagging investment focus on the motivations of local elected officials, but those explanations are not rooted in research on elected officials’ own expressed views. We surveyed a representative nationwide sample of approximately 500 city and county officeholders about their perceptions of need for investment and barriers to meeting that need. Analysis of closed-ended and open-ended question responses reveals that the main barriers to investment are financial: incumbents weigh the cost of capital projects against the debt burden and affordability challenge created by those investments. Their concern about public opposition to rate increases is an important constraint on decisions to invest in water infrastructure. Our results also demonstrate disparities across communities in the perceived fiscal burden of water infrastructure. The great majority of elected officials expressed little concern about the condition of infrastructure in their own communities, but concern about infrastructure condition was positively correlated with concern about making investments, pointing to the financial stress for decision makers who bear the expense of deteriorating water systems.
This chapter unearths the current neoliberal governance urban agenda in Chicago vis a vis how neoliberal actors operate along the southwest side of Chicago from 2011 to 2021. In particular, this chapter chronicles this governance, through Emanuel’s and Lightfoot’s administrations, as it has worked all across Chicago, while it briefly describes the strategies and rhetoric these actors create and work through to advance their plans in the current southwest side redevelopment incursion. Chicago’s neoliberal urban governance pushes to build a city that celebrates vibrancy, growth, and globalization efforts while it deepens and expands spaces and infrastructure for cultural and aesthetic consumption as means to attract investment.
At a time when mid-size cities around the country are growing rapidly and taking on all kinds of development, it is important for scholars to understand residents’ views on development. This paper reviews some of the extant literature on urban development conflict, with a focus on the legacy of urban renewal, models of citizen participation, urban redevelopment, and the back-to- the-city movement towards an understanding of resident opposition to development. The literature review also helped create a framework to answer three questions: (1) what is (or are) the central conflict(s) over urban development in Stamford, Connecticut since 2007, (2) considering a new wave of development in the South End neighborhood and the ensuing influx of residents, how do new and old residents view the benefits of current development, and (3) how similar or dissimilar are these conflicts and views compared to the urban renewal era? To answer these questions, this paper considered the South End neighborhood in the city of Stamford, Connecticut as a case study. Through a review of Zoning Board minutes/testimonies since 2007, newspaper articles, and conversations with two experts, it was possible to catalog residents’ views of recent development and identify differences between old and new residents. Surprisingly, Stamford residents have expressed little opposition to development, unlike other cities. While most of the literature focuses on large cities such as New York and Washington, D.C., this study aims to expand the existing literature by using a mid-size city as a case study.
Are municipal-level local option sales taxes (LOST) in Texas associated with long-term economic development outcomes? The Texas 4a and 4b LOST options fund economic development projects managed by a dedicated municipal-level economic development corporation (EDC). Instead of short-term outputs, we consider associations with three primary long-range outcomes: property value growth, population growth, and new home construction. Three regression analyses examine economic growth between 2011 and 2015 for Texas municipalities while controlling for county-level nesting effect, local capacity, and other contextual factors. The implementation of the 4a industrial development LOST shows a small significant positive association with population growth, albeit at the .10 level. The 4a LOST is also selected as part of the optimal model for property value growth despite not being significant. Implementation of the broader 4b community development LOST is not found significant nor included in any of the three outcome-based models. In each case, the county-level nesting effect is highly associated with economic development outcomes, while municipal-level capacity measures, such as property tax collected per capita, household median income, and the percentage of 4-year college graduates also show strong associations. Municipalities more dependent on the manufacturing sector show a significant negative association with all three economic development outcomes.
To determine why state governments often use tax-based incentives, this study focuses on five major tax-based incentives: job creation tax credits, investment tax credits, R&D credits, property tax abatements, and customized job training subsidies. The statistical results indicate that a state government’s prevailing political ideology influences the choice of economic development activities. Accordingly, a more liberal state is less likely to use property tax abatements and customized job-training subsidies, and more likely to use job creation tax credits and R&D tax credits. Further, competition does not operate to trigger tax-based incentives. State economic conditions are not significantly related to the use of incentives. This result could imply the prevalence of political factors in the use of incentives.
Immigration has been found to be an economic stimulus to cities increasing entrepreneurialism, driving up wages for all workers, reducing crime, and rejuvenating local neighborhoods and business areas. Given the array of potential benefits of immigrants, local governments may consider attracting and supporting immigration as an economic development tool. Using data from two national surveys conducted by the International City/County Management Association on immigrant supportive and economic development policy, the research finds that generally, the use of immigrant supportive policies is less prevalent than more traditional economic development policies. Further, local officials do not appear to be conceptualizing immigrant supportive policies as part of their economic development efforts. Yet, there are municipalities and counties that balance the use of the two types of policies.
This paper presents a new conceptual scheme in understanding urban policymaking. The proposed "political choice" model synthesizes the urban literature in economic constraint, political institutions, and public policy. I argue that local politics operates within the general context of structural constraint and can be differentiated by policy arenas. However, within each arena noneconomic factors generate a wide range of policy alternatives which may or may not reinforce the policy thrust of the structural constraint for the city as a whole. Hence, urban policymaking can be the result of political choice as well as economic consideration.
In their continued considerations of political inequality, urban scholars are especially concerned with less visible influences surrounding community decision making, and have employed such concepts as potential power, nondecision making, and anticipated reactions. However, these concepts leave some patterns of influence unexplained. There is also a dimension of power in which durable features of the socioeconomic system confer advantages and disadvantages on groups in ways that predispose public officials to favor some interests at the expense of others. Public officials make their decisions in a context in which strategically important resources are hierarchically arranged. Because this system of stratification leaves public officials situationally dependent on upper-strata interests, it is a factor in all that they do. Consequently, system features lower the opportunity costs of exerting influence for some groups and raise them for others. Thus socioeconomic inequalities put various strata on different political footings.
Economic development policy in the United States is at a critical juncture. The changing world economic order, global competition, and economic stagnation at home have prompted calls for reform. Yet, the growing recognition of the problems that confront the economy has not produced a coherent set of strategies to address these issues. These authors focus on political and bureaucratic factors that retard the reform of economic development policy. An understanding of how these factors shape economic development policy is critical to proposing workable reforms. This analysis of the dynamics of economic development policy provides information about the relationship between government and the people.
Economic development, in its most general sense, is a process through which a community's material and social well-being is increased. For American cities, the interaction of federalism and capitalism makes the pursuit of economic development a competitive process. This study assesses the nature and extent of interjurisdictional competition for economic development by surveying 84 public- and private-sector actors in 31 Southeastern cities. The findings indicate that the competition ethos is pervasive, with cities establishing aggressive economic development programs to compete with larger, economically diverse jurisdictions.
After establishing a way of classifying economic development incentives, this article examines four different explanations of why cities differ in their willingness to provide such incentives to encourage business growth. In order of explanatory power the explanations are citizen need, administrative capacity, fiscal stress, and the process of growth. Specific types of cities are more willing to use some incentives than others. Some underlying rules are suggested to explain why city officials make the decisions they do about economic development issues. It is the symbolic value of the actions rather than their concrete consequences that motivate much of local economic development activity.
This essay is a critique of Paul Peterson's treatment of developmental politics in City Limits. In contrast with Peterson's view of the city as a utility-maximizing entity with a unitary interest in development around which consensus can be built and public action organized, we argue that conflict and the pursuit of particular interests are characteristic of the developmental arena in city politics. The consequences of development projects are often uncertain, and, as policy moves from general concept to operational reality, coalition building and conflict management become essential. Policy reflects these processes. With regard to the specifics of Peterson's argument, once a distinction is made between the politics of announcement and the politics of execution, Peterson's characterization of New Haven's Mayor Richard Lee as "able servant" of the city's unitary interest in development appears questionable. Similarly, on close examination, Peterson's depiction of Oakland's council-manager government as "inefficient slave" of that city's business-backed redevelopment program can also be challenged. The New Haven/Oakland comparison suggests that developmental policies are influenced by the political character of a community's governing coalition.
Placed within a larger politico-economic order, city governments are captives of many slowly changing forces that shape and limit community choices. This article seeks to conceptualize some of these dependency relationships and evaluate their historic impact on the politics of urban economic development. The central argument is that the major components of the liberal-democratic political economy have interacted during American history to precipitate three major eras of urban development politics; in each, the prevailing strategies for promoting urban development and the political arena for determining policy has differed. Changing obstacles to popular control of economic development policy have limited the opportunities for community choice and democratic governance.
This research explores the nature of local economic development decision making. A central theoretical issue common to all types of urban research is the extent of independence and rationality that public decision makers exhibit during the policymaking process. The author argues that local political decisions do matter in the economic development arena; in other words, cities are not totally constrained by external forces but make certain bounded choices. However, the data indicate that economic development policies are not likely to be the result of rational, systematic weighing of costs and benefits. Rather, economic development policy largely is driven by professional decision rules emanating from economic development professionals.