Week Thirteen: Economic Development and IGRs

Objectives for Week Thirteen In-class Case from Week 12 In-class Case from Week 12 Challenges of Attracting Economic Opportunity Challenges of Attracting Economic Opportunity Locational v. Entrepreneurial Approaches to Economic Development Policy Locational v. Entrepreneurial Approaches to Economic Development Policy Incentives and Strategies Incentives and Strategies Goals and Politics of Development Policy Goals and Politics of Development Policy

HASCO Case Study Integrated program with case manager that coordinated services – local organizations would participate to help their clients receive Section 8 vouchers Integrated program with case manager that coordinated services – local organizations would participate to help their clients receive Section 8 vouchers Changes in HUD policy Changes in HUD policy Undermined partnerships, eliminated caseworker Undermined partnerships, eliminated caseworker Reduced # of participants, changed selection criteria Reduced # of participants, changed selection criteria

Development Policy What are the goals of economic development policy? What are the goals of economic development policy? What are the conditions that promote economic growth? What are the conditions that promote economic growth? What are the tools government uses to promote economic growth? What are the tools government uses to promote economic growth? Salomon – Interdependence in Policy-making Salomon – Interdependence in Policy-making Pluriformity Pluriformity Self-referentiality Self-referentiality Asymmetric interdependencies Asymmetric interdependencies Dynamism Dynamism

Context of Development Policy Local Characteristics Local Characteristics Presence of Competitive Pressures Presence of Competitive Pressures Intense competition, today and historically Intense competition, today and historically Mobility of capital and labor Mobility of capital and labor Uncertainty in Impact of Tools Uncertainty in Impact of Tools What matters? What matters? Informational Disparities Informational Disparities What are others doing? What does the company want? What does the future hold? What are others doing? What does the company want? What does the future hold? Suboptimal outcomes = strong possibility Suboptimal outcomes = strong possibility

Operating in a Constrained, but Competitive Environment Match or surpass incentives Match or surpass incentives Improve informational position Improve informational position Reduce out-migration of labor/capital Reduce out-migration of labor/capital Enhance stock of labor/capital Enhance stock of labor/capital

Strategies for Development Locational (supply-side) Locational (supply-side) Reduce costs of doing business Reduce costs of doing business Impact of tax incentives? Impact of tax incentives? Entrepreneurial (demand-side) Entrepreneurial (demand-side) Enhance attractiveness of location for potential industry Enhance attractiveness of location for potential industry Workforce development Workforce development Retaining versus Recruiting Retaining versus Recruiting Adapting to changing context Adapting to changing context

Institutional Impact of the Tax Reform Act of 1986 Type of Governmental Authority Percentage Change, Airports+53.9% Parks and Recreation +47.6% Hospitals+37.5% Non-water Utility +32.1%

Institutional Impact of the Tax Reform Act of 1986 Birm, AL Hunt, AL Det, MI GR, MI Private Activity, $233m$147m$40m$34m Private Activity, $131m$234m$12m$13m Public Activity, $101m$18m$410m$9m Public Activity, $125m$268m$1,000m$190m

Adapting to the Surrounding Context Adopt innovations and circumvent regulations Adopt innovations and circumvent regulations Diversity of development tools and diversification of local industry Diversity of development tools and diversification of local industry Outcomes-based performance measures Outcomes-based performance measures Shift away from supply-side to demand-side Shift away from supply-side to demand-side

How Do We Measure Development Policy Success?

What Trends in Development Policy Might We Anticipate in the Coming Years?

Course Concepts Implicated by Development Policy Proper role and responsibility of different levels of government Proper role and responsibility of different levels of government Mobility of capital and population Mobility of capital and population Intergovernmental competitive pressures Intergovernmental competitive pressures Incentives and inducements are intergovernmental in nature Incentives and inducements are intergovernmental in nature Externalities Externalities Importance of information Importance of information Constraints on policy-makers Constraints on policy-makers

Readings for Next Week Chapters One, Three, Five and Six, Reflections on Regionalism, ed. Bruce Katz Chapters One, Three, Five and Six, Reflections on Regionalism, ed. Bruce Katz Read Managing Urban Growth case (online) Read Managing Urban Growth case (online)