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Abstract
This article assesses the forces that drive governments to engage in economic development activity and attempts to explain why communities adopt different strategies to bring about the common goal of economic well-being. I address this issue at the state policy level by assessing the relationship between economic development strategy and theories of policy adoption in a pooled times series analysis using indicators of interstate competition, fiscal stress, and state ideology collected between 1983 and 1994. I find that economic development strategy choices are largely a function of interjurisdictional competition. The implications of my findings are discussed.
... However, this does not necessarily mean that the federal government remains silent when it comes to state economic performance. Saiz (2001) notes that the devolution of power from Washington to state and local governments, not only produces policies of questionable efficiency, but also limits innovation. He suggests that studies of economic development should include the effect of federal government action on reducing the negative effects of interjurisdictional competition in pursuing economic development. ...
... In the contemporary economy, such traditional incentives as capital and labor for production to reduce factor cost are no longer important inducements to attracting firms and businesses (Feldman and Francis, 2004). To this end, economic policies of states have been directed by innovation capacity that stimulates the potential not only to create new economic opportunities, but also to ensure economic growth (Hall, 2007;Hall and Howell-Moroney, 2012;Kwon, 2009;Saiz, 2001). Thus, states' economic development policies are focused on removing social and economic hurdles that may impede policy innovation. ...
... The theory of fiscal decentralization suggests that subnational governments promote economic efficiency by providing public goods that meet different preferences of individuals, increasing accountability of subnational officials, and allowing experimentation and innovation in the pubic-service production process (Oates, 1972;Stansel, 2005). Such benefits of a higher fiscal decentralization suggest that states with more fiscal capacity not only exercise higher innovation capacity, but secure their own source revenues, which in turn translates to economic development (Saiz, 2001;Shin, 2018). Thus, states can expect that an increase in federal welfare funds would secure the state budget on welfare programs that the states have not adequately dealt with; and thereby increase state innovation capacity to generate strategic and progressive economic development programs by lowering the cost of performing redistributive activity and increasing slack resources to be transferred into the regional economy. ...
Despite years of increased federal welfare spending, it is unclear how federal financial investments in welfare areas influence state economies. Based on the theory of functional federalism, this paper examines the impact of federal welfare spending on state economic performance. Employing error correction models, this research finds that state economic growth and volatility are directly observed by the long-term impact of welfare spending. The results also show that increased federal welfare spending boosts state economic performance indirectly, by motivating states to generate higher innovation capacity, especially, in knowledge-based economic development programs. This research extends our understanding of the determinants of state economic performance by addressing intergovernmental redistributive transfers, and state government’s innovation capacity.
... The existing literature has considered the determinants of local economic development policy at the city (Basolo and Huang 2001;Lewis 2002;Reese 2006;Reese and Malmer 1994), state (Fleischmann, Green, and Kwong 1992;Saiz 2001), and, to a lesser extent, county (Dewees, Lobao, and Swanson 2003;Lobao and Kraybill 2005) government levels. Local governments offer a variety of economic development incentives to achieve specific policy goals. ...
... Likewise, existing evidence suggests geographic remoteness has an important effect on development policy. Dewees, Lobao, and Swanson (2003) find rurality is negatively related to economic development policies, while Saiz (2001) finds characteristics of neighboring counties and states influence economic development policy. ...
... Other studies have investigated the impact of various economic indicators on the type of economic development policy. Poverty (Dewees, Lobao, and Swanson 2003;Fleischmann, Green, and Kwong 1992), unemployment (Saiz 2001), and median income affect economic development policy and policy makers may react to local economic conditions when forming these policies. For example, slower growing locations may be more aggressive in economic development policy, all else equal-whereas Loveridge et al. (2010) find that this is often due to the public's high rate of time preference for community job creation. ...
AbstractU.S. states and localities often engage in economic development policies using incentives and abatements for specific firms or industries. Yet, there is very little empirical evidence suggesting that such policies are successful. Why, then, do governments engage in these policies? In order to answer this question, we employ a model that considers not only geographic and economic factors, but also, in a novel application, local political conditions. A unique survey of U.S. county governments forms the basis for our empirical assessment of both traditional economic development policies and new‐wave policies. Using probit, Poisson, negative binomial, and spatial econometric models, we find evidence that the use of incentives is inversely related to local economic conditions. Furthermore, we find Republican counties are more apt to use incentives, though counties dominated by one political party are less likely to use them.
... Economic development also constitutes an important policy area for many states, especially those with scarce resources. Many governors try to retain and develop jobs, attract and maintain businesses, and increase revenue (Bingham and Bowen 1994;Saiz 2001). States spend billions on economic development programs, and by 1994, the 50 states created more than 900 separate programs to encourage economic development (Saiz 2001;Saiz and Clarke 1999). ...
... Many governors try to retain and develop jobs, attract and maintain businesses, and increase revenue (Bingham and Bowen 1994;Saiz 2001). States spend billions on economic development programs, and by 1994, the 50 states created more than 900 separate programs to encourage economic development (Saiz 2001;Saiz and Clarke 1999). ...
... Many considerations motivate state and local officials to actively pursue development projects, despite evidence that these plans neither create new wealth nor generate jobs (Dewar 1998). As agents for state governments, governors may provide businesses with attractive fiscal packages to compete against bordering states (Saiz 2001;Wolman 1988;Peterson 1995). Elected officials may also adopt economic development projects that hold little promise of producing projected benefits to show constituents they are doing something about the state's problems (Dewar 1998;Wolman 1988). ...
Regime theory argues that local actors shape city politics even though state government sets the rules under which urban players act. Regime theorists typically do not focus on conditions under which governors assume important roles in local regimes. The authors examine major economic development projects in New Orleans to highlight conditions under which extralocal actors, namely, governors, become involved in local regimes. A scarcity of both resources and business leaders in New Orleans, competition with other states, and political considerations motivated Louisiana governors to increase their participation in New Orleans’s urban development regime. Governors constituted part of the mobilization effort to move the city from a caretaker regime to a progrowth regime. They used their authority, fiscal resources, and leadership skills to assume this greater role. Gubernatorial participation in the regime benefited governors, New Orleans mayors, and major businesses at the expense of tourists, working-class and poor residents, the state legislature, and the state’s business reputation.
... Pursuit of economic development policies in the new economy may be driven by factors beyond the changing economic environment and competition. Studies have directly investigated intra-and inter-state political and institutional characteristics that drive economic development policy decisions (Saiz, 2001;Kwon, Berry, & Feiock, 2009). They focus on internal state factors (political and socioeconomic conditions) and external factors (policy learning and interstate competition; Berry & Berry, 1990;Mohr, 1969). ...
... State pursuit of economic development is affected by fiscal conditions (Saiz, 2001). Regional fiscal condition almost always motivates decision makers to pursue economic development policies (Rubin, 1990). ...
Functional theory suggests that each level of government expands in the arena in which it can best perform, reducing the price of federalism. Focusing on the functional pattern of American federalism, we suggest that increased federal welfare spending increases state government performance in so-called ‘new economy’ development policy areas by helping states to minimize welfare costs and divert more own-source resources into economic development. Our central focus is on the direct and indirect empirical relationships between federal welfare spending and state new economy performance. We use an index of innovation capacity that reflects the cumulative performance of myriad overlapping and mutually dependent state policies intended to bring about new economy development; this index measures state new economy development performance by focusing on the observable outputs of such polices rather than the adoption, implementation or substance of individual policy choices. Mediating variables (state fiscal comfort and administrative capacity) measure the indirect impact of federal welfare spending on state new economy performance. We find that federal welfare spending stimulates state new economy development directly, but also indirectly through its positive impact on both state fiscal comfort and administrative capacity. Our findings suggest that federal intergovernmental transfers continue to be an important policy mechanism with spillover effects for state economies.
... These policies typically involve foregone revenue and are budgeted over a number of years. Rigorous application of cost-effectiveness criteria to such policies at the time of the competition is often precluded by political pressure to get the deal done or overshadowed by media coverage framed in terms of winners and losers (Gabe & Kraybill, 2002; Markusen & Nesse, 2007; Saiz, 2001a). 2 ED policy makers thus have strong incentives to meet firms' demands. ...
... " A long time " means that these programs have survived for more than a decade (since the 1994 edition of the Directory of Incentives). " Adverse circumstances " means that their neighbors rely heavily on locational strategies, a situation which generally leads states to reduce their reliance on entrepreneurial strategies (Saiz, 2001a). 5 If rent seeking is an important explanation for the enactment and maintenance of ED programs with entrepreneurial attributes, we are more likely to observe entrepreneurs advocating and supporting the strong and durable programs in this group of cases than others that are weaker and shorter-lived. ...
"Entrepreneurial" economic development strategies at the state level in the United States, which focus on nurturing home-grown, high-growth businesses, lack immediate payoffs for politically powerful constituencies, a condition that would seem likely to limit their appeal compared to the alternative "locational" strategy of attracting large investments from elsewhere. Nonetheless, many U.S. states have added programs with entrepreneurial attributes to their economic development portfolios in recent years. This paper explores how the political obstacles to such programs have been overcome. In a few cases, an institutional innovation in the policy-making process drew in new participants who provided ideas for and support to programs with entrepreneurial attributes. More commonly, the preferences of executive branch officials, especially governors, appear to have been critical to the enactment and implementation of such programs. This finding suggests that economic development policy making may be more technocratic than is commonly believed. Copyright 2008 by The Policy Studies Organization.
... The significance of welfare states in the innovation debate comes from public investment in creating favorable conditions for innovation capacity in an economy (Hall & Howell-Moroney, 2012;Kwon et al., 2009;Saiz, 2001). The private sector supports innovation-promoting initiatives through individual firms' investments in innovation, and the public sector through the education system and the support for research and development. ...
This article assesses the impact of welfare state systems on the performance of economies in creating the appropriate conditions for innovation and increased competitiveness. Since the 1970s, welfare systems have been regarded as disruptive influences on economic growth. This situation was exacerbated by the intensification of globalization and the emergence of new economies, which led to the need for initiatives to promote innovation and competitiveness, not least in the EU with so many different types of welfare state. To investigate the impact of welfare state systems on innovation performance and competitiveness, we used the European Innovation Scoreboard (EIS), which is based on a variety of indicators, as well as various essential indicators proposed by EU2020 innovation, such as the number of patents and the level of education and employment. The results obtained from the performance of five welfare state clusters of European countries have shown that the most comprehensive welfare states, primarily those in the Nordic countries, have been the most successful in achieving innovation goals and have long been ranked as innovation leaders in Europe. Moreover, public resource allocation for innovation leads to a more comprehensive agenda, including employment promotion, gender equality goals, and sustainability concerns. Welfare costs seem not to reduce competitiveness. And it is competitiveness itself that encourages the development of advanced social security systems.
... 11 This measure of economic development policy type utilizes a policy index that takes the policy type as a function of overall state economic development spending. 12 These policy types further reflect the heterogeneity of economic policymaking at the state level and underscore the importance of policy leadership and authority relationships distinct from actual policy outcomes or fiscal flows. Saiz's three types are locational, entreprenurial, and infrastructural. ...
... The demand-side theory, the newer theory of economic growth, suggests that the government's development policies should be designed to discover and to improve new markets, increase productive capacity, and increase the quality of jobs for indigenous industries (Mahroum and Al-Saleh 2013). Scholars find that states that increase strategic efforts on innovative economic development programs including research and development programs (R&D) and education would attract more industries and businesses (Hall and Howell 2012;Saiz 2001). Thus, I estimate models that include total state spending on R&D and on total educational resources, which are divided by state population and are measured in 2001 dollars. ...
A small, but growing, body of literature examines how corporate tax policy affects foreign firm location decisions in the United States. Yet, existing studies have not investigated how taxing choices interact in different state institutional characteristics, particularly a degree of fiscal independence of a local government in a state. The large literature on fiscal decentralization suggests that taxing and spending powers delegated to subnational governments correlate positively with growth, due to enhanced economic development at the local level. Based on this argument, the level of fiscal decentralization within a state should moderate the impact of state corporate tax policy on foreign direct investment inflows. This research empirically assesses the moderating impact of the level of fiscal decentralization on foreign direct investment (FDI) inflows in the 50 American states by source country between 1977 and 2006. The empirically derived results suggest that a higher degree of fiscal decentralization in states offsets the negative impact of a corporate tax on FDI.
... Most of the states that spent little did not award a large incentive package in the time period. 9. We chose manufacturing because the descriptive data suggest that subsidy spending is dominated by large manufacturing firms (see Table 2) and is commonly used in other scholarly applications (e.g., Saiz, 2001). It is also a rough control for the size of the state economy, as states with larger economies generally have greater manufacturing bases. ...
Scholars focus on interstate competition and intrastate economic conditions as the primary determinants of state economic development policies, including direct subsidies. New data from the Good Jobs First Subsidy Tracker illustrates large differences in subsidy spending across the states and that established firms are the disproportionate beneficiaries. In light of this new evidence, we argue that the political presence of the business sector within the state is an important determinant of state subsidy spending. A large political presence helps forward industry interests before government and has the potential to capture state governments. We find support for the cultural capture model by demonstrating that a greater number of lobbyists and campaign contributions from businesses leads to more subsidy spending, all else equal. We conclude that subsidies, and which companies receive them, are a product of both politics and economics.
... For instance, Kneller and McGowan (2011) use a difference-in-differences technique to address endogeneity bias of tax policy on firm entry and exit dynamics (Fig. 1). Saiz (2001) finds that the economic and political situation of counties affects economic development policies designed and implemented in neighboring counties. As Plummer (2010) argues, spatial dependence in entrepreneurship research is more imminent than most researchers care to admit. ...
The last two decades marked a turning point for entrepreneurship policy, highlighting the crucial role of public policy to generate the conditions that encourage business creation and expansion. As more states design and implement entrepreneurship policies of their own, understanding how these policies can support and harness the full potential of entrepreneurship becomes more critical. This paper uses a quasi-market framework for development competition (Feiock in Journal of Urban Affairs, 24, 123–142, 2002. doi:10.1111/1467-9906.00118) to report on the effects on economic growth of an entrepreneurship policy implemented in 2004 in the state of Kansas as part of the Kansas Economic Growth Act. Specifically, it studies the impact of tax credit funds provided by one of its programs, the Entrepreneurial Community (E-Community) partnership, on the economy of adopter counties between 2007 and 2010. The results from this study indicate the program has no conclusive effects on five general indicators of local economic and entrepreneurial activity.
... There is simply no hard evidence to guide an explicit method of ensuring fairness. For example, what should be counted as good potential business sectors (Martin, 2001) – e.g. the goods of future high income elasticity of demand for deserving a governmental support on related R&D – is widely subjective. Such effort was evidenced in past Japanese industrial promotion strategy (Itoh et al., 1988). ...
The past concepts of institutional complementarity and the National Business System have given us some ideas about economic governance but they have failed to provide any core theory. However, recent studies on the contrasting influences of altruistic culture and family value reveal the possibility of finding a new insight into economic governance theory around the balance between the self-transcendence dimension and private innovative driving forces. It is found that the pro-society value, which supports fiduciary culture for government officials and general citizens, may be a major driving force that shapes characteristics and sets the limit of economic development, a perspective with substantial potential impact on economics, political science and other social sciences in general. Based on John Dixon's (2003) governance concept, a system of economic governance - consisting of legal, social, market, private hierarchical and public hierarchical institutions - is created and compared with existing evidence. The pro-society value and fiduciary culture tend to explain the dynamics of the interaction among these institutional capitals and influences, contributing to various economic governance systems across countries. An influence-based model of economic governance is hypothesized for further study.
This article evaluates central Dallas tax increment financing (TIF) districts to compare development outcomes in an area with a major professional sports arena to others without a similar anchor. Using a comparative case study approach to assess quantitative and urbanism performance, the project is primarily concerned with whether the arena makes a substantial difference in property assessment values and urbanist revitalization. This study finds that the most successful TIF subsidized redevelopment in the Dallas core has been seen where private parties with a winning vision have assembled sufficient land to attain a critical mass from which further construction can gain momentum. In the absence of this combination or initial developer interest, outcomes have been disappointing despite similar City efforts and core proximity. While the arena-anchored district has been eventually successful in generating construction value, gains have come at a far higher relative public cost than other effective districts.
Political scientists and policy scholars have traditionally looked at the role of welfare and tax policies in shaping income inequality. Less attention has been paid to the key policy area of economic development. But states spend billions on economic development incentives each year to encourage firms to locate in their state. The few studies that have examined the impact of economic development policy on inequality have found mixed results, and have not considered who shapes and benefits from economic development policy when identifying possible causal mechanisms. I argue that increased incentive spending leads to increased inequality through either a market conditioning effect (incentives disproportionately boost the incomes of top earners prior to taxes) or a redistributive effect (incentives allow wealthy firms, investors, and employees to keep income that would otherwise be taxed and transferred). These mechanisms are tested using data on incentive spending and inequality across the 50 states from 1999 to 2014. The findings demonstrate that incentives increase income inequality via a redistributive effect only. This effect, though, is relatively large, long-lasting, and robust to different measures of incentive spending. Despite using economic development incentives to try to generate greater prosperity, state governments may be inadvertently exacerbating inequality.
Research shows that when the more liberal Democratic Party controls the national government, unemployment is lower, but whether liberal state governments are associated with lower unemployment has not been examined. We argue that more left-leaning governments in the U.S. states have the same preference for and willingness to use government to reduce unemployment, but that the greater resource and policymaking constraints that the states face during economic downturns limit their ability to shape unemployment to economic growth periods. We find evidence for these arguments in an analysis of the U.S. states for the period of 1975–2010. Specifically, when economic growth is low, liberal state governments are associated with increases in unemployment rates similar to or even somewhat higher than conservative governments, but when growth is moderate to high, liberal state governments are associated with greater-than-expected reductions in unemployment. We also provide some evidence that different state spending decisions between liberal and conservative state governments may explain these patterns.
Does the partisan composition of state governments in the United States influence the location decisions of foreign multinational companies? This article argues that it does. We contend that partisan differences over state economic development policies still exist. Whereas Republicans tend to prefer an investment-driven (supply-side) growth model, Democrats favor a consumption-driven (demand-side) path to growth. Both sets of policies are of value to foreign direct investment; thus, multinationals do not favor one party over the other. A useful blend of policy measures is sought by foreign firms, making split state government preferable over unified government. Our arguments are comprehensively tested in a time-series cross-section analysis covering the period 1977–2004, with results supporting our claims.
Despite the important role governors have played in shaping states’ economic development strategies, existing quantitative studies of state economic development policymaking have paid only scant attention to the factors that influence governors’ decisions about economic development policy. This study investigates these factors using a unique data set of gubernatorial economic development proposals generated by content analyzing hundreds of major legislative addresses delivered by governors during the 12-year period from 1995 to 2006. The findings reveal that gubernatorial economic development policymaking is only partially an attempt to solve a state’s economic problems. Economic policy making by governors appears to be driven largely by a desire to compete for new business investment during periods of economic expansion.
International relations scholars need to look beyond the national level because U.S. states and governors are increasingly important actors in world politics. One way to look at their international activities is by examining the ways in which U.S. states seek to attract foreign direct investment (FDI), just one research puzzle at the nexus of international relations and U.S. state politics, two fields that rarely talk to one another. After pointing out the gaps within theories from international relations and international political economy, this paper describes the evolving global roles of both U.S. states and governors and shows how U.S. states attract FDI through the use of their international offices and governor-led overseas missions. Empirical findings indicate that U.S. states' international offices and a higher level of economic interdependence help states attract FDI, and the paper argues that extension of institutional approaches from IPE may be valuable for future research about the international capabilities of subnational governments and their leaders.
The United States has experienced a significantdevolution of social and economic policy responsibilities to the states sincethe early 1970s. In an attempt to improve tax bases and generate jobs, stateand local governments have adopted proactive economic development policies thattarget favored industries, promoting state intervention in the privatemarketplace. The development of these policies is examined here in terms of:(1) the articulation of class interests, (2) state-level politicalinstitutions, (3) prior political legacies, (4) underlying production regimes,and (5) interactions of strong political institutions and classmobilization. An annual pooled cross-sectional time series design is used to capture theadoption of entrepreneurial, industrial recruitment, and labor marketregulation development policies in the lower 48 states. Results highlight theenduring role of class and state capacities to mediate and condition theeffects of organized class actors in the United States. In addition to businesspower and strong state capacities, the political legacies of 1930s welfarepolicy innovations and mezocorporatist bargaining potential condition theeffects of business power. (LKB)
Many scholars have argued that there are strong incentives for states to spend less money on redistributive or consumption
programs, such as welfare, and more on developmental or investment programs, such as highways. Yet, over the last few decades,
the proportion of state budgets allocated to expenditures intended to develop human and physical capital, specifically education
and highways, has declined. In real terms, spending on virtually every government program has increased but expenditure increases
to redistributive programs have been much greater than those to investment programs. Why this shift has happened despite theory
predicting the contrary has not been adequately examined in a way that considers multiple developmental programs and multiple
ways of conceptualizing spending over a substantial time period. We undertake this task in the following article using a large,
cross-sectional time series data set of state budgeting toward K-12 education, higher education, and highways from 1965 to
2004. We test competing theories of the determinants of state spending using these data and then discuss the factors that
we believe have led to the relative de-emphasis on developmental programs. We find that the most consistent predictors of
state developmental spending patterns are federal grants, the state of the economy, and interstate and intrastate competition.
Neil Brenner argues that contemporary scholarship often neglects the changing contexts of regionalism and thus overstates the possibilities for organizing new political responses to changing economic conditions. Drawing on Brenner's analysis, this paper examines the politics of regionalism in Greater Boston, a metropolitan area where state government plays the dominant role in policymaking. It examines how state elected officials have responded to the region's volatile economic context, and in particular how they have attempted to enhance the region's competitive advantage through tax cuts, deregulation and downsizing government. Their successes, however, have complicated efforts to reform local land use regulation, an issue increasingly seen as central to the region's economic future.
Tensions between the United States government and state governments increased during the Bush Administration, 2001--2008. Blame was typically placed on the Administration's conservative policy preferences. This article analyzes how the issue of stem cell research was managed during those years in Washington, DC and how the states responded. The case highlights contradictions in the Bush Administration's brand of conservatism, how this promoted interstate competition, and why state governments had to wrestle with major policy dilemmas. Concerns surrounding moral principles, scientific progress, and economic competitiveness produced a patchwork of state funding and regulatory regimes. That outcome has not been ideal from several perspectives. Advances in biotechnology and other controversial areas of science will force future national and state governments to confront similar policymaking challenges. Copyright 2009, Oxford University Press.
Political scientists disagree on whether our political and economic structures dispose policymakers to consider the views of business as more important than the views of other interests in society. This study examines the view that members of five state legisla- tures hold of business and labor. The findings support the structural explanation. Because traditional means of influence-lobbying and campaign support, for example-explain less of the importance legislators attach to business interests than to labor interests, the influ- ence of business seems to derive in part from structu
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.
Since the founding of the Republic, Americans have engaged in “endless debate” about the division of fiscal and regulatory responsibilities among levels of government. The controversy has often involved the concomitant question of the optimal role of government as a whole. The issue has been not only which level of government should do what, but also what government at any level should do.
Regressions on data jointly structured in space and time, commonly referred to as the pooling of cross sections of time series, can be formidable both in the strength of their design properties and in the number of special statistical problems encountered with them. This essay deals briefly with the potential applications of pooled design and more extensively with the special statistical problems commonly associated with analysis in space and time together. Four estimators--ordinary least squares, least squares with dummy variables, error components, and an adaptation of Box-Jenkins ARMA models to the pooled estimation problem--are reviewed, with an effort to suggest where each may find application in political science research. The four estimators are then illustrated by analysis of the regional dynamics in party issue polarization over issues of racial desegregation in the U.S. House of Representatives
Government organizations are neither immortal nor unshrinkable. 1 Like growth, organizational decline and death, by erosion or plan, is a form of organizational change; but all the problems of managing organizational change are compounded by a scarcity of slack resources. 2 This feature of declining organizations-the diminution of the cushion of spare resources necessary for coping with uncertainty, risking innovation, and rewarding loyalty and cooperation-presents for government a problem that simultaneously challenges the underlying premises and feasibility of both contemporary management systems and the institutions of pluralist liberal democracy.
This paper examines the effect of public opinion on public policy in the American states. We use a new measure of state public opinion, liberal-conservative ideological identification of state electorates, derived from aggregating CBS News/New York Times national opinion surveys. Regression and LISREL are used in the analysis to demonstrate that state opinion is a major determinant of state policy. Citizen preferences are markedly more important than state social and economic characteristics in accounting for patterns of policy liberalism in the states. These results constitute a major challenge to economic development as an explanation of state policy.
Some observers, including many "doomsday" futurists, have contended that a pre dominant characteristic of future society will be extreme scarcity. Viewing this as sumption of extreme scarcity as plausible (though not necessarily most probable), this conjectural essay considers some of the possible effects of sustained scarcity, particu larly sharp declines in public spending and public employment, on public organization behavior. The focus is on the effects of scarcity on four types of strategic choices in public organizations: domain selection, development and deployment of technology, organization structure, and organization process. Arguments are developed that public organizations facing sustained scarcity could be expected to: constram their domain definition, allow domarn selection to dictate technology, seek clientele suited to existing technologies, and, m general, take actions that will ensure that existing technologies are employed at capacity. Further, we argue that narrow efficiency criteria will become paramount and will give rise to more formal, centralized, and rigid organization structures and a habituation of organizational responses to environ mental change.
In this article, the author analyzes the substance of state-level economic development programs and distills their essential attributes to create measures that distinguish locational from entrepreneurial economic development strategies. After assessing the validity and reliability of the measures, the author assesses whether these strategies are associated with economic growth. Findings indicate that entrepreneurial economic development strategies increase manufacturing employment but have no effect on changes in total state product or aggregate employment. Industrial recruitment strategies are found to have a negative effect on employment growth in the finance, insurance, and real estate sectors. No positive “spinoff” effects to secondary or tertiary economic sectors are associated with either strategy.
This article provides a new method for measuring state-sponsored economic development programs. Using confirmatory factor analysis, the authors derive estimates for five supply-side and three demand-side policy packages, consistent with the theoretical framework proposed by Eisinger in The Rise of the Entrepreneurial State: State and Local Development in the United States. The authors provide state-level estimates of each policy dimension for the appropriate years between 1970 and 1992 that are amenable to a variety of state-level research designs. These estimates have advantages over other recent efforts to measure state economic development strategies.
States compete for investment by offering a variety of incentives to businesses. Because these incentives play only a small role in corporate deliberations, some observers worry that public resources may be allocated inefficiently and inequitably as a result of bidding wars between the states. An empirical analysis of the effects of competition suggests these fears are exaggerated: Interstate rivalries have only a limited impact on development policy choices. Consequently, proposals to end the war between the states will not eliminate the inefficiency and inequity often attributed to development policy. More effective reforms must await a political explanation of who gets what, when, and how in state politics.
State governments have adopted a wide variety of policies to promote economic development over the past two decades. There has been little progress, however in developing a clear conceptualization of the general strategies that underlie these programs or in assessing their impact on economic growth. Using confirmatory factor analysis, the authors examine a wide range of these policies, finding evidence of three general approaches: (1) an entrepreneurial approach focusing on new firm and technology development; (2) an industrial recruitment strategy emphasizing financial incentives for the relocation or expansion of existing enterprises; and (3) a deregulation approach that minimizes governmental control over private enterprise. These policies are modestly associated with particular regions of the United States. The entrepreneurial strategy appears to boost new business incorporations, and the recruitment approach reduces business failures. The results complement and extend other attempts to measure state economic development strategy.
Subnational economic development in the United States is characterized by a multiplicity of policy instruments. Economic development professionals typically work with only a few of the many possible kinds of instruments. To engage more effectively in economic policymaking, practitioners should have an overview that arranges potential policy instruments in a logical order. Drawing upon a tradition of political economy, this article makes such a classification. The classification uses the principle that, to affect the economy, government exercises power through generic policies. When the policies are directed at individual businesses, the policies can be cross-classified against a typology of business functions. When not directed at individual businesses, the policies shape market structure, define and limit forms of enterprise, and engage government itself in enterprise. These distinctions yield a scheme that classifies a complete tabulation of policy instruments.
ABSTRACT Berry, Ringquist, Fording and Hanson’s [BRFH] (1998) measures of state citizen and government,ideology have been widely used ,in state politics research. The measures ,rely on unadjusted ADA and COPE ratings for a state’s members,of Congress to infer information about (i) the ideological orientation of the electorates that selected them, or (ii) state legislators and the governor from the same state. Some ,have argued that unadjusted interest-group ratings are an
This paper investigates one of the perennial mysteries in the area of state and local finance, the provision of tax and other subsidies to business by federal, state and local governments in the face of solid evidence that such incentives do little to nothing to influence business location or job creation. The paper looks at the upsurge in such governmental aid in the last decade and considers whether this upsurge has occurred because such aid is more efficacious than it used to be or whether it has occurred for political reasons unrelated to its effectiveness. Copyright 1986 by The Policy Studies Organization.