Abstract

Large technology firms pose new challenges for local economic development in the 21st century. They are attractive targets for local economic developers because they have the potential of providing permanent, well-paying jobs. This article examines two mega-economic development deals. Amazon’s proposed second headquarters in Queens and Sidewalk Labs’ Quayside proposal for the Toronto waterfront pit large and prosperous Big Tech firms against local governments with healthy economies. Amazon abandoned the New York City site it had chosen, rather than open new negotiations with local officials and citizens. Sidewalk Labs withdrew from the Quayside proposal after two and a half years of negotiation focusing mostly on the size of the proposed development. Although the potential benefits may be substantial, incentivizing Big Tech’s location decisions may be well beyond the means of most cities, especially those with distressed economies.

Highlights

  • Over the past few decades, local economic development efforts, in North America, have been affected by deindustrialization and the growth of information technology

  • Manufacturing employment in North America has declined as a result of both automation and the transfer of routine production activity to lower wage locations (Bluestone, 2003)

  • The types of incentives offered to the developers highlight the cumulative or path dependent nature of local economic development policies

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Summary

Introduction

Over the past few decades, local economic development efforts, in North America, have been affected by deindustrialization and the growth of information technology. The ‘new economy’ of the 21st century places greater emphasis on services and investments in human capital (Alcaly, 2003; Glaeser & Saiz, 2004). Manufacturing employment in North America has declined as a result of both automation and the transfer of routine production activity to lower wage locations (Bluestone, 2003). The Computer Revolution has led to expansion of new highly skilled jobs, but it has exacerbated the uneven growth of urban areas (Berger & Frey, 2015). The primary objective of this article is to assess how this ongoing economic restructuring has affected economic development practices in North America.

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