State Economic Development Policy Research Articles

Ontological Modeling of the State Economic Development Policy for Cultural Industries

The article discusses an ontological approach to solving the problem of forming state policy of economic development of cultural and creative industries and the corresponding intellectual-information management systems. The purpose of this article is to develop an effective toolkit (based on ontologies) for making optimal decisions in the field of state regulation of the cultural and creative industries, taking into account the dynamic factors of the external environment. The ontological approach considered in the article assumes the presence of three levels of models: meta-ontology, models of subject areas of cultural and creative industries and models of making appropriate management decisions on the formation of economic development policy of cultural and creative industries. The novelty of the proposed approach lies in the purposeful nature of ontological modeling of such complex system as the state policy of economic development of cultural and creative industries. The system under consideration has certain goals, tasks, resources, processes, factors of influence, risks and other characteristics. These characteristics include, in particular, the structure of the model, the ability to highlight the essential objects of real relations of the considered subject areas, the ability to represent knowledge for the joint work of specialists in computer modeling, the processing of expert knowledge and the generation of management decisions within the framework of the corresponding intellectual-information systems.

The Pittsburgh Transition: Not Quite So Simple

Benjamin Armstrong’s article compares state economic development policies in Pittsburgh and Cleveland in the 1980s, the period of major regional economic restructuring. Armstrong argues that what separated Pittsburgh from Cleveland in the ensuring years was the state-mandated inclusion of the city’s universities as major economic development decision makers and the role that advanced technology played in Pittsburgh’s recovery—much more prominent than in Cleveland’s. The authors agree that the 1980s expanded stakeholders in the region’s traditional economic development strategies, but not to the extent that Armstrong argues, and that significant other factors have affected the two regions in recent decades. The authors also find that the divergence in economic trends between the two regions is not a strong as Armstrong suggests.

The impact of growth and innovation clusters on unemployment in US metro regions

AbstractMuch has been written by various scholars and practitioners over the years about the benefits of industrial clustering. The benefits of such clustering or local agglomeration economies supposedly include greater regional exports, greater employment growth, greater payroll growth, and greater new business establishment creation, among other impacts. However, the work for this article has not uncovered much if any literature on how agglomeration affects United States regional unemployment rates. Additionally, most growing industrial and innovation clusters over the last two decades or so require highly educated and skilled workers. Since most of the unemployed at any given time tend to be less educated and less skilled than most workers on average, any local and state economic development policies that focus on clustering must be careful in targeting lower unemployment rates as a policy goal or outcome. From a theoretical point of view, if greater clustering leads to greater employment growth and employment levels then greater clustering in a US metro area should yield lower unemployment rates than those which have lesser degrees of industry clustering on average. On the other hand, greater clustering and greater industry concentration in either declining industries or in those industries not in decline but at the same time not immune to bad cyclical downturns could yield greater unemployment rates and levels in metro areas which have these types of industries. Therefore, before pursing any policies which promote greater industry clustering, it would be useful for policy‐makers to know whether greater industry clustering or greater industry diversity makes a difference when it comes to unemployment rates for metro areas, which are usually defined as local job markets for most workers. This paper finds that, in general, greater clustering for ‘growth and innovation’ industries leads to lower unemployment rates in US metro areas, on average, after controlling for other factors which may impact local unemployment rates.

Captured Development

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.

Методический инструментарий оценки эффективности реализации государственной социально-экономической политики развития регионов России

Методический инструментарий оценки эффективности реализации государственной социально-экономической политики развития регионов России

State-by-state variations in high-tech employment through the great recession

This paper explores the relationship between state-level high-tech employment and state economic development, labor, and tax policies over the 2007–2012 period. During this period national high-tech manufacturing employment decreased, national high-tech service employment increased and the nation experienced a severe recession. Overall high-tech employment grew very little during this time period but changes in high-tech employment varied substantially from state-to-state. This paper asks why. A two-stage empirical model is developed and estimated. Among other things the results indicate that these policies did influence employment in the period although perhaps in unexpected ways.

High Road, Low Road, or Off Road? Economic Development Strategies in the American States

Observers of state economic development policy in the United States have identified two conceptually distinct approaches, often termed industrial recruitment and entrepreneurial policies, and debated the extent to which a “third wave” of policy emergent during the 1990s represents a conceptually distinct approach to economic development. Data limitations and conceptual confusion have hindered efforts to distinguish state economic development strategies and to update existing typologies to reflect contemporary practices. This article uses data from the Council for Community and Economic Research’s Expenditures Database in 2007 to evaluate the extent to which the states follow conceptually distinctive economic development strategies. We find that the states’ economic development expenditures reflect a high degree of conceptual hybridity rather than strict adherence to supply-side industrial recruitment or demand-side entrepreneurial development.

Focus on State Economic Development Policy

Focus on State Economic Development Policy

Independent, Local Broadband and Business Performance: A Multiple Case Study

Prior research has supported the notion that affordable, business-class broadband access is critical for businesses to thrive well into the 21st Century. For places that are still unserved and underserved by broadband providers, some local conglomerates, often spearheaded by local governments, have taken it upon themselves to provide broadband access through a municipal or public-private partnership model. A question remains as to whether these independent models are primarily used by specific types of businesses, or associated with certain business-related internet activities (including non-use) and self-reported improvements in business performance. Our previous research has already shown that differences exist in terms of business user satisfaction between these independent models and more mainstream, national broadband providers. Local businesses who used mainstream internet providers reported mixed satisfaction vis-a-vis businesses using independent local providers, even though research on residential users showed satisfaction scores for local providers as being uniformly higher than their mainstream counterparts. (Fortunato et al. 2013, under review). This paper uses primary survey research of local businesses of various sizes from a six-site multiple case study from Maine, Pennsylvania, and Wisconsin to examine the relationship between use of a local, independent provider and business performance, when compared to businesses using mainstream providers, and those who do not use broadband at all. The analysis examines whether the choice of a mainstream or local provider has also influenced business activities, and self-reported business performance, on several metrics such as increased sales and reduced operational costs. Other control variables, such as the length of time in business, size of business, and number of employees telecommuting or working remotely via internet will also be examined. Additionally, the paper examines differences in attitudes about broadband use in business, such as the importance of reliable, affordable broadband to succeed, across users of mainstream and independent local services, and those businesses that do not use broadband at all. While the implications of the digital divide are well-understood, this paper attempts to uncover associations that may suggest the impact of local, independent broadband delivery on overall local business effectiveness. This case study is not generalized to all business broadband users, but the paper aims to fill an important gap in the research where a more complete understanding of the impacts of local broadband development is required. We then detail the resultant implications of the study’s findings with regard to local, state, and federal economic and business development policy in an attempt to understand the value of independent broadband development compared to mainstream service proliferation, and whether policy could – or should – broaden its focus on independent service provision.

Democrats, Republicans—or Both? An Empirical Analysis of the Effects of the Composition of State Governments on FDI, 1977–2004

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.

Low Wages and Industrial Development: North Carolina's Economic Predicament

During the twentieth century, all governors of North Carolina used a variant of contemporary economic theory to justify the state's economic development policy of industrial recruitment. While every governor expressed optimism that this economic development policy would ultimately lead to success in overcoming the unemployment and poverty in the state, they would also express concern about the persistence of low wages. On the one hand, the governors touted the low wages as evidence of how competitive North Carolina could be as a location for branch manufacturing plants. In the next sentence, they would express optimism that eventually the low wages would give way to higher wages. The same economic theory of comparative advantage used to justify the industrial recruitment strategy, and its policy variant of using industrial recruitment incentives to lure industry to the state, can be turned on its head to explain the persistence of low wages and poverty in North Carolina.

Informing State Economic Development Policy in the New Economy: A Theoretical Foundation and Empirical Examination of State Innovation in the United States

This study considers recent evidence of state innovation capacity in order to better understand where new economy–type economic development is likely to occur and, by extrapolation, where strategies geared toward such growth are more likely to succeed. The research focuses on data from the National Science Foundation’s State Science and Engineering Profiles, supplemented by data from other sources. Factor analysis was performed on this data set to observe underlying common factors that explain the variability of the original data in fewer dimensions. The resulting factor scores—human capacity and financial capacity—were used to classify states into four categories of new economy resource density: lagging, low, developing, and progressive. The scores for the two resulting factors were then used as independent variables in subsequent regression analyses, demonstrating positive correlations among innovation capacity resources, actual innovations, and overall state economic performance.

Entrepreneurship, State Economic Development Policy, and the Entrepreneurial University

In this paper, we discuss the nature of the university-industry relationship and recommend specific policies to help achieve the goal of greater economic growth. We argue that state-supported research universities can be used to integrate entrepreneurship into state economic development and incubate entrepreneurial companies. Regional entrepreneurship policy is a new strategy that regards economic development as a process that goes from supporting research and development to creating and growing new businesses. Specifically, we believe that an entrepreneurial higher education system is a key to state-level economic policies. There is an opportunity at research universities to combine the human capital talent available on faculties with the needs and expertise of private industry to accelerate entrepreneurship and economic growth.

Local Government and the Implementation of Alabama'S Economic Development Policy

Political power affects not only the outcome (success or failure) of policy implementation, but also the design of structures used to deliver the policy. Beginning with the premise that the social construction of reality shapes the way policy recipients are perceived as well as the costs and benefits imposed upon them, we explore the effects of political power on the delivery of benefits to advantaged populations. More specifically, we examine the impact of local, or sub-state, government in shaping state economic development policy. To empirically probe the effects of power, we have chosen the case of Honda's investment in Alabama in 1999. We reach two conclusions. First, clarity of objectives is not detrimental to effective implementation. Second, implementation structures may be designed with fuzzy objectives and questionable linkages to outcomes in order to secure the highest level of support. Bureaucratic discretion is not simply a function of issues or need for accountability, but also a function of the incentives derived by political power.

Do State Economic Development Incentives Create Jobs? An Analysis of State Employment Tax Credits

Employment tax credits have become one of the primary tools of state economic development policy. A recurring question is whether these credits create jobs that would not have been created in their absence. This paper provides estimates of the employment impact of such credits by comparing the employment change in eligible firms that participate in employment tax credit programs with eligible firms that do not participate in such programs. Results from a switching regression model indicate that firms taking Georgia's Jobs Tax Credit created 23 to 28 percent more jobs than eligible firms not taking the credit between 1993 and 1995. The cost per job is $2280 to $2680 over the 1993 to 1995 period. While the maximum number of jobs potentially attributable to the program is small, the cost per job is also low especially when compared with firm-specific incentive packages.

GLOBALIZATION'S IMPACT ONSTATE AND LOCAL POLICY: The Rise of Regional Cluster‐Based Economic Development Strategies1

ABSTRACTWe propose proactive policies which allow state and local governments to participate in the global economy, offering opportunities and venues for effective development. We first develop the argument that the changing economic conditions associated with globalization call for a new approach to state‐local economic development policy. We then outline three assumptions which are critical to drive successful state and local economic development policy in a global environment. The major part of the analysis describes this new strategy of “regional cluster‐based economic development,” drawing extensively upon a case study of Cleveland's economic revitalization.

THE GROWNING INTERNATIONAL ACTIVITIES OF THE AMERICAN STATES1

ABSTRACTThis article examines state responses to the changing global economy, by exploring the growth of state international economic activities, variations in these activities, factors promoting and limiting state involvement in international affairs, and implications of these trends for the implementation of state economic development policies. Global economic competition, a changing domestic political and economic landscape, the modernization of state government, and increasingly open international markets have inspired states to increase their international activities. Consequently, dramatic growth in state international activities has occurred in the fields of trade promotion and economic development. Yet, state and local involvement in international affairs has not been universally accepted nor consistently funded.

State Fiscal Structure and Economic Development Policy

This essay adds a new dimension to the debate concerning taxes and business location decisions by raising a simple, but perhaps underappreciated point concerning political implications of state and local fiscal structure for state economic development policy. Low taxes may well be attractive to business owners and their employees; however, a fiscal structure that is not incentive‐compatible with economic expansion may end up frustrating public policies of all types aimed at promoting growth. Economic growth may be seen as increasing types aimed at promoting growth. Economic growth may be seen as increasing demands for public services, thereby placing upward pressure on tax rates faced by the original taxpayers. In Wyoming, this problem is compounded because the tax base is narrow and highly income inelastic and the incidence of taxes levied falls significantly on out‐of‐state residents who do not benefit from public services provided. Additionally, prospects for reducing the mismatch between taxpayers and public service beneficiaries appear to be limited because, quite understandably, state residents do not wish to pay more for public services for which they have historically paid cents on the dollar.

Measuring Tax and Incentive Competition: What Is the Best Yardstick?

FISHER P. S. and PETERS A. H. (1997) Measuring tax and incentive competition: what is the best yardstick?, Reg. Studies 31, 751-764. Although much research has been conducted on state and local government economic development policy in the US, there is no agreement on how tax and other incentives should be measured. There are serious problems with the widely used summary measures of tax burdens and incentive programme activity. The hypothetical firm approach provides the best yardstick for measuring incentives. We review this approach, identify its major assumptions and present empirical estimates of the sensitivity of results to these assumptions. We show how discretionary incentives can be incorporated into hypothetical firm models. FISHER P.S. et PETERS A. H. (1997) Comment mesurer la compétition entre les impôts et les encouragements? Reg. Studies 31, 751-764. Bien que l'on ait fait beaucoup de recherches aux Etats-Unis au sujet des politiques de développement économique locale et nationale, toujours estil que l'on n'est pas d'accord sur comment on devrait mesurer les encouragements, y compris les impôts. Les mesures sommaires du poids fiscal et de la disponibilité de primes qui sont beaucoup employées, posent d'énormes problèmes. La façon qui porte sur l'entreprise hypothétique fournit le meilleur point de repère pour la mesure des encouragements. On fait la critique de cette façon, identifie ses suppositions primordiales, et présente des estimations empiriques de la sensibilité des résultats à ses suppositions. On démontre comment on peut incorporer les encouragements discrétionnaires dans les modèles d'entreprise hypothétique. FISHER P. S. und PETERS A. H. (1997) Messung von Steuer-und Anreizwettbewerb: Was ist der beste Maßstab?, Reg. Studies 31, 751‐764. Obschon staatliche und o¨rtliche Wirtschaftsentwicklungspolitik in den Vereinigten Staaten Gegenstand zahlreicher Untersuchungen gewesen ist, gibt es kein U¨bereinkommen daru¨ber, wie steuerliche und andere Anreize zu messen seien. Die weithin benutzte Zusammenfassung von Messungen von Steurlasten und dem Einsatz von Anreizprogrammen werfen ernsthafte Probleme auf. Den besten Maßstab zur Messung von Anreizen stellt der Ansatz hypothetischer Firmen dar. Die Autoren besprechen diesen Ansatz, identifizieren seine Hauptannahmen, und legen empirische Scha¨tzungen der Genauigkeit der Ergebnisse fu¨r diese Annahmen vor. Sie zeigen, wie nach Ermessen vergebene Anreize in hypothetische Firmenmodelle eingebaut werden ko¨nnen.

Issue Definition in State Economic Development Policy

This paper examines whether an “issue definition” perspective developed by Baumgartner and Jones (1993) can account for the dynamics of state economic development policy. The analysis centers on a case study of Louisiana, and shows that efforts to redefine tax exemptions as a threat to the environment were only partially successful in leading to policy change. I speculate on the reasons for this failure, concluding with the fact that special conditions made it harder to redefine the economic development issue there. I argue further that the dynamics of issue redefinition differ by issue type and according to the level of government responsible for a particular policy.