The Art and Dubious Science of Targeting and Picking Winners

If you are an economic developer, you can’t avoid it. You have to choose to help some companies and not help others. Resources are limited, some firms are too controversial to help, and some firms and sectors are supposeably more likely to positively impact your community. Be it manufacturing, green or technology, the right target revitalizes your community. The wrong target gets you a newspaper article and a pink slip. Every community is in a race to be most competitive and targeting the right firms, sectors, and gazelles is the way you win the race. But don’t fall off the horse!

Deauville-Clairefontaine_obstacle_2The media call it “picking winners” and they are quick to criticize when your so called winner comes in last place, or doesn’t create the jobs or pay the taxes they said they would. There is a Solyandra in the closet of every economic developer.

The think tanks and academics throw pages of data at you and tell you these are the sectors and firms you must work with if your community is to stand a prayer at being competitive. They call it “targeting” and targeting their politically correct sectors earns you a seat in heaven. Target a politically incorrect sector and they call it “deal-making”, a misappropriation of scarce tax payers dollars, and an abuse. Either its a gazelle or a skunk.

Need some help figuring out who to help and who can be safely ignored? Try any one of these articles and reviews and you will be guaranteed to be even more uncertain but maybe bit more effective.

That is The Art & Dubious Science of Targeting & Picking Winners.

Articles in 'The Art and Dubious Science of Targeting and Picking Winners'

Questioning the Value of Economic Multiplier Estimates

What if anything do estimated economic multipliers really mean? What are some basic principles policymakers should use when thinking about the prospective impact of new projects in their communities? Click Questioning the Value of Economic Multiplier Estimates and see what Edward G. Keating, Irina Danescu, and Robert Murphy from the RAND Corporation have to say?

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No Interrupting Peter Thiel: Zero to One

If entrepreneurialism, venture capital, and tech start up are your thing–this is exactly the kind of info you need to help evaluate proposals, perform due diligence on applications, understand tech business plans, and in general, familiarize yourself with technology business formation. Otherwise, this book can be a great crib sheet to follow the TV hit “Silicon Valley”. It is alleged by some that Thiel is the inspiration for the show’s character, Peter Gregory. I recommend Zero to One because it challenges our conventional principles about young tech companies, and introduces the reader to a new way of thinking and offers economic developers new ideas on how to evaluate potentially successful tech start up. Or if you prefer, it does make HBO’s Silicon Valley more hilarious.

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Is Joel Kotkin Economic Development's Martin Luther?

The book jacket describes Joel Kotkin’s the New Class Conflict as a “call to arms and a unique piece of analysis about the possible evolution of our society into an increasingly quasi-feudal order”. The image of Kotkin as Martin Luther posting his famous 95 Theses came to my mind Using metaphors gleaned from the medieval world, Kotkin, the iconoclastic but extraordinarily insightful master of Curmudgeons, describes a new ruling class he believes dominate much of contemporary America. What has this got to do with economic development? Plenty! Kotkin’s description/critique of this New Class and its devastating consequences to our society and economy delivers a powerful blow to several prominent economic development strategies. Anyone in economic development can’t ignore this book–no more than the Pope could ignore the Protestant Reformation.

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Speaking as a Unit of Human Capital

This inequality debate is nothing but potential trouble for economic developers? An economic developer can potentially produce inequality no matter what he or she does. The first step in dealing with inequality is to understand what causes it. For one answer we turn to Brink Lindsey, Human Capitalism: How Economic Growth Has Made Us Smarter–And More Unequal. Lindsey presently with the Cato Institute was a former Senior Research Fellow at Kauffman. His argument turns knowledge-based economics, a popular economic development approach, on its head–suggesting it inadvertently plays a major role in causing inequality.

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The Road Less Traveled: For Economic Developers who have the Courage to be Different

As an economic developer you’re not supposed to do it–pick winners, that is! Can’t really be done, we’re told–just like timing the stock market. This advice is a truism and like all truisms, it’s true up to a point. No doubt it is correct that one cannot consistently pick winners and avoid losers.  There’s one problem […]

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How Can I Create My Favorite State Ranking?

This article examines some of the methodological underpinnings of state economic rankings and what this means for interpreting rankings. State rankings typically are comprised of multiple measures and indicators, and the creators of these indexes face a difficult decision concerning which measures and indicators to include or exclude when making an overall ranking. This issue is compounded when rankings employ different weights to different components of measures and indicators, valuing one measure or indicator over another. We construct a hypothetical state ranking of entrepreneurship and innovation to demonstrate issues with selecting state economic rankings are both pervasive and popular.

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Business Climate and the Second War Between the States

In October 2011 the Curmudgeon wrote a review entitled “Business Climate in the New Normal”. This is both a MAJOR rewrite and a SIGNIFICANT update. Business Climate and the Second War Between the States (Or Do We Mean the Political Parties) Everyone in economic development has heard about state business climate and the ratings and rankings that are published by virtually every Think […]

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The Ghost of Christmas Future:

The last installment of the Oscar-Forgotten Small Business Trilogy finally has arrived.In the third installment, the all too predictable Ghost of Christmas Future, delves into the horrible underlying, real-life story behind start ups and gazelles and how (if) a young and promising economic developer can hitch them up to his/her community revitalization. The issue endsoptimistically by offering a few suggestions on how a sub-state economic developer can actually use some of this Think Tank babble.

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The Ghost of Christmas Present: Ok, It's Not True But Is There a Truism That Is True?

  The first article in our Tolkien-like small business trilogy asks (asked) the question if , as claimed in the Economic Development  truism, “small business is the nation’s best and greatest job creator” is actually true and literally correct. A related question that follows from the Truism is: “Are start ups the best, most dynamic job creators […]

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Confessions of a Serial Tax Abater

There’s nothing more controversial in the life of an economic developer than to provide a property tax abatement to a company. Yet, it is done more and more and is a central tool in just about all our economic development strategies. In his most recent review, Confessions of a Serial Tax Abater, the Curmudgeon provides some perspective, analysis, critique and guidance. He also vents and critiques a prominent review in the academic literature on tax abatement. Not to be missed, check out and read all the sordid details about property tax abatement in Confessions of a Serial Tax Abater.

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