Prof. Scott Campbell
Urban Planning 539 Overview:
University of Michigan Economic Development Policies
Typologies of ED policies
Place-based vs. industry-based vs. occupation-based, etc.
e.g., what are you emphasizing?
a friendly business climate; agglomeration economies; a
good offering of local amenities to attract a highly educated
workforce; low-cost labor and land; a tight network of
innovative firms; aggressive economic development tools
(e.g., IRBs, TIFs); proximity to universities, research parks,
airports, etc.; active neighborhood-based involvement;
protectionism; free-trade; to name just a few.
Choices / Priorities in ED Policies
•How do you define the public interest?
•How you view the relationship between the public and private
sectors, and one’s willingness to work within the market, be
entrepreneurial and/or pragmatic.
•What tools do you use?
•Where do you stand on the equity versus efficiency debate?
•Where do you stand on the policy intervention versus market
incentive debate?
•How much risk can you handle?
Three Waves of Economic Development
Source: Blakely, Edward J and Ted K Bradshaw. 2002. Planning Local Economic Development Theory
and Practice: Third Edition. Sage. Page 45: Table 2.3
Component First Wave Second Wave Third Wave
Location assets Discount them to Reduce taxes Build regional
attract outside and provide collaboration
business incentives to all
businesses
Business focus Outside firms Assist all local Create context
firms for better
relations among
firms
Human Create jobs for Develop training Utilize workforce
resources local programs training to build
unemployed businesses
people
Community Physical Social and Leadership and
Base resources physical development of
resources quality
environment
Another historical view….
Fitzgerald, Joan and Nancey Green Leigh. 2002. Economic Revitalization: Cases
and Strategies for City and Suburb. Sage. pp. 10-26
PHASE Selective characteristics
1. State Industrial Recruitment (starting in the Create good business climate (taxes, loans,
1930s) infrastructure, etc.) • “greasing the skids” for
business • corporatist paradigm
2. Political Critiques of Local Economic Focus on who is paying and who benefits. ED
Development Activity (starting in the late 1960s) actors as political agents • political economic
analysis • critique of “smokestack chasing” •
recognition of tension between footloose capital
and communities •
3. Entrepreneurialism and Equity Strategies Two separate movements: Promoting high tech
(mimic Silicon Valley) and pushing
equity/redistribution (e.g., Mayor Harold
Washington’s initiatives in Chicago, 1980s).
4. Sustainability with Justice Balancing economic development, social justice
and environmentalism. Brownfield development.
5. Privatization and Interdependence Market solutions (e.g., Michael Porter’s
competitive inner cities) and regional/metropolitan
strategies.
Multiple Strategies and ... Multiple Goals
Boosterism, Place Marketing Employment
Investing in comparative advantages Higher wages
Human capital development Lower poverty
Developing markets Reduce inequality
Creating clusters, agglomeration Increase human capital
economies Increase living conditions
Infrastructure (physical, technical, Job attraction and retainment
social) Capacity building
Smokestack chasing, Business Increase multipliers
attraction: taxes, etc. Sustainable growth
Partnerships
Susan E. Clarke Gary L. Gaile, The Next Wave: Postfederal Local Economic
Development Strategies, in Blair and Reese, 1998. (originally in EDQ in 1992)
Theme: the rise of the entreprenurial, risk-taking, partnership-making local state
Changes:
•a shift away from state and federal funding
•a rhetoric of devolution, local control and local entrepreneurship.
•A blessing in disguise? More local funding means more local control. [166]
This study: from 1978 to 1989: did federal cuts affect the level of local economic
development efforts. and if funding sources shifted to localities, were the
localities more risky or cautious?
So: initial data suggests that cities using these ED tools are faster
growing, with lower taxes, fewer government employees and
government expenditures.
[NOTE: could this be a spurious relationship? That is, other
factors are influencing both variables?]
Trends
•a shift from traditional federal sources (e.g., UDAG, EDA) to public-
private partnerships, revenues from redevelopment projects, TIF,
revolving loan funds, one stop permit shopping, below market rate
bonds, enterprise zones, trade missions abroad, etc. [see table
13.2, page 169] [see also Table 13.3, p.170]
•with the federal withdrawal, the local setting is more competitive,
fragmented
•emphasis on entrepreneurial, market based strategies [167]
•a shift from wealth creation rather than subsidize locational
decisions or employment strategies.
•Greater tolerance for risk: public capital used for its investment
potential. A view of economic development projects as a "portfolio"
(some are winners, some are losers).
•Shift to entrepreneurial interest in generating new businesses,
not just retaining old ones.
More Trends
•More specialized, custom-tailored deals
•Use of linkages
•With the creation of all these new specialized (dedicated) funding
tracks (e.g., TIFs, enterprise zones, etc.) the result is: funding
stays within economic development, rather than getting put into
general revenues. [171]
•A shift from social criteria to market feasibility [173]
•The reemergence of downtown as a locus of development
•Greater use of non-profits
Reese, Laura A., and Raymond A. Rosenfeld "Yes, But . . . : Questioning the
Conventional Wisdom About Economic Development." Economic Development
Quarterly , Vol. 15, No. 4, November 2001, pp. 299-312 • Gloucester
• Cornwall
•Economic development policy making is largely about economics and politics,
• local government structure matters in determining policy processes and
• Cadillac
resultant policies,
• fiscal and economic stress force cities to approve costly incentives for private
• Oakville
businesses,
• the composition of local governing regimes largely determines policies,
• cities with similar governing regimes will have similar approaches to
• Allen Park
economic development,Romulus
•
• businesses are a critical part of most local economic development regimes,
• businesses will always push for incentives to lower their costs of production,
• local economic development policies and processes will vary depending on
the extent of business and/or citizen input into the decision-making process,
and
• cities employing a broad array of economic development techniques or most
• Coshocton
incentives allowed by state law are “shooting at everything that flies” and lack
• Fairborn
• Kettering
rational focus in their economic development efforts.
Reese, Laura A., and Raymond A. Rosenfeld "Yes, But . . . : Questioning the
Conventional Wisdom About Economic Development." Economic Development
Quarterly , Vol. 15, No. 4, November 2001, pp. 299-312 • Gloucester
• Cornwall
• Cadillac
• Oakville
• Allen Park
• Romulus
• Coshocton
• Fairborn
• Kettering
Reese, Laura A., and Raymond A. Rosenfeld "Yes, But . . . : Questioning the
Conventional Wisdom About Economic Development." Economic Development
Quarterly , Vol. 15, No. 4, November 2001, pp. 299-312 • Gloucester
• Cornwall
• Cadillac
• Oakville
• Allen Park
• Romulus
• Coshocton
• Fairborn
• Kettering
Reese, Laura A., and Raymond A. Rosenfeld "Yes, But . . . : Questioning the
Conventional Wisdom About Economic Development." Economic Development
Quarterly , Vol. 15, No. 4, November 2001, pp. 299-312 • Gloucester
• Cornwall
• Cadillac
• Oakville
• Allen Park
• Romulus
• Coshocton
• Fairborn
• Kettering
Reese, Laura A., and Raymond A. Rosenfeld "Yes, But . . . : Questioning the
Conventional Wisdom About Economic Development." Economic Development
Quarterly , Vol. 15, No. 4, November 2001, pp. 299-312 • Gloucester
• Cornwall
• Cadillac
• Oakville
• Allen Park
• Romulus
• Coshocton
• Fairborn
• Kettering
“Assessing Readiness for Economic Development Strategic Planning:
A Community Case Study” Christine M. Reed; B. J. Reed; Jeffrey S.
Luke JAPA 1987
Beatrice, Nebraska