Traditional Strategies and Tools of Local Economic Development

Business retention, revolving loan funds, tax increment financing, tourism, bond issuance, PILOTs, tax abatement…

All are examples of the core strategies and tools utilized every day by most economic developers. Sometimes controversial, oftentimes boringly commonplace, often misunderstood– and almost always in need of some explanation as to why they work and why economic developers use them.

In their day, they might have been sexy like clusters and innovation–but age and gravity has taken their toll. They are now pervasive. Like two aspirin, they work wonders but who cares anymore. We do!

The problem with our traditional strategies and tools is that people mess with them. In particular media,  academics and sometimes the research institutes and think tanks. Often when they translate our strategies and tools into academic and policy research, the description and analysis of these strategies and tools gets distorted–sometimes downright manipulated. Does the expression, hatchet job come to your lips?

Our initial focus is tax abatement. These days, those are fighting words, but as the old-time economic developers know, tax abatement was never very popular and was always under attack. Take a gander at how academic research has dealt with tax abatement. Over the next few decades, the Curmudgeon will also take a look at eminent domain, use of universities as an economic development tool, and maybe economic development zones, and real estate-based economic development.

Don’t fret over Traditional Strategies and Tools of Local Economic Development.

Articles in 'Traditonal Strategies and Tools of Economic Development'

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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Chambers of Commerce: First Wave Magicians of Main Street

Can you believe up to now no one has written a modern history of American chambers of commerce? Not until Chris Mead recently published his one-of-a-kind Magicians on Main Street. So let’s use Magicians of Main Street and investigate how well the conventional wisdom concerning the FIRST Wave of economic development holds up. If the First Wave doesn’t prove accurate–what does it say about the other two waves?

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The Vanishing Neighbor

Marc J. Dunkelman, The Vanishing Neighbor: the Transformation of American Community Why should an economic developer read a political sociology book? Because economic growth or decline is not simply the result of good and bad economics! Politics, cultural values, and changes in our personal lifestyles and relationships surprisingly can affect our success at the local and state levels. Despite its strange sounding name, the Vanishing Neighbor explores how economic changes generate societal changes with political consequences that make it difficult to develop effective solutions to address economic and social problems in our communities. What happens if societal change causes economic stagnation, inequality, and political gridlock? That’s what Dunkelman is trying to help us think through. Why does a vanishing neighbor change how we do our jobs?

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Quo Vadis–Whither Goest the "Margins of our Labor Force"???

Economic and workforce developers typically confront unemployment by providing basic or enhanced skills and repositioning the unemployed into “hot” occupations or growing industry sectors. Alan B. Krueger, Judd Cramer and David Cho, “Are the Long-Term Unemployed on the Margins of the Labor Market”, Brookings Papers, however, challenge this paradigm and wonder if the unemployed may be on the margins of the labor market–on the road to dropping out completely. Who is Alan Krueger–from 2011 to August 2013 he was President Obama’s White House Chair of the Council of Economic Advisors. So what does Krueger have to say?

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Are Economic Developers Still Held Hostage to the Mobility of Capital?

Economic development’s most deep-seated axiom is that capital is mobile, people can exit, and business can move to greener pastures. How do we get our collective hands around the sad fact nothing is tied down, and our job description/paycheck require us to wave some magic wand and make the problem go away? Paul Peterson’s classic City Limits (1881), questions whether a city can overcome the mobility of capital. Let’s update Peterson and see how things have changed.

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Bloomberg: The Neo-Liberal Economic Developer?

I’ve been reading stuff lately about the goings on in New York City. The new De Blasio administration is proclaimed by many to be the wave of the future? For me it’s too early to tell. Only fair to give the poor soul at least a full year before we see what his new approach shakes down to be. […]

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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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The New Normal II: Economic Developers, Export, and the Global Finance System

The New Normal II: Economic Developers, Export, and the Global Finance and Trade System
Fault Lines: How Hidden Fractures Still Threaten the World Economy by Raghuram Rajan
Now the Curmudgeon trespasses into the world of export, global finance, and trade. Boundaries obviously mean little to him–should they mean much more to you our community economic developer? Is export more risky than often portrayed? Plus an added feature–how the Fault Lines of Global Finance brought the United States into the New Normal. How did forty years of stagnant wage and income levels lead to the accumulation of massive amount of debt that made financial collapse unavoidable?

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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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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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The Triumph of the City

An instant best-seller, Edward Glaeser”s, The Triumph of the City, is an unabashed love sonnet for the world’s largest cities. Triumph appears to be a clarion call and a focused strategy of ensuring these large central cities are able to maintain their cutting edge as the engines of world prosperity. But does Glaeser want to save all cities? Or just a chosen few?

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The Great Reset

Richard Florida’s latest and greatest. Get his ideas on how we should deal with the “Opportunities” created by the New Normal and the Financial Crisis.

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Business Climate in the New Normal

The Curmudgeon thinks State Business Climate will be a very prominent economic development strategy during the New Normal period–for the wrong reasons. Sadly, that poor withered soul strongly believes that the concepts and methodologies, which underscore business climate as an economic development strategy, are seriously flawed. In his warped mind he sees the business climate strategy rests upon indexes constructed […]

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The Treasure of Sierra Madre (Hospital)?

Medical Development Trends, Urban Land, Vol. 69. Number 11/12, November/December 2010, P.46-61 This is not intended to be a review of the health care sector. Rather, the Curmudgeon hopes to raise the interest in the health care sector as a high priority target for a local business retention and expansion. Ever more interested in affairs […]

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Confessions of a Serial Tax Abater

New times and new realities command change and adaptation. The Journal of Applied Research in Economic Development is no exception. With the beginning of the New Year, Volume 8, we introduced our latest and greatest version of the Journal. The NEW Journal is exclusively online. The core of the new Journal will be two reviews, published each month, under the byline “In the Trenches”. “In the Trenches” is our “above the fold” cornerstone around which the reviews will focus, reflecting our central purpose of translating academic and think tank research into the language of local economic directors in the field. We invite your feedback and contributions.

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The Ugly

Any reader of the articles in “The Ugly” knows pretty quickly where their authors stand on tax abatement and incentives. If the title of the articles does not suggest a conclusion, the opening paragraph of Alan Peters & Peter Fisher’s, The Failures of Economic Development Incentives”, Journal of the American Planning Association, Vol.70, No 1, […]

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The Bad

In my professional life the two sources of information regarding tax abatement effectiveness seemed to issue from either Think Tanks/Institutes whose membership and revenue base was drawn from labor unions, or from academia. Conversely, in response, practitioners of local economic development, one after another, would counter any criticisms and outrage from academia or the Institutes […]

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The Good

The articles reviewed in this section are labeled “The Good” simply because they accept the existence of tax abatement and incentives. They acknowledge that under some circumstances tax abatement can be productive and useful and are searching to both understand how abatements actually operate in the field and how to improve their performance. The Economic […]

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Behold a Pale Rider

What is responsible for the controversy regarding the use of tax abatement in local economic development? Specifically, should the serial tax abater feel ashamed or proud for what he has done in his past life? It is the recipient that is the heart of the tax abatement controversy.Our take on this question is that the […]

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