Economic Development Quarterly RSS feed -- OnlineFirst Articles

Entrepreneurs and Job Growth: Probing the Boundaries of Time and Space

Henderson, J., Weiler, S. — Thu, 12 Nov 2009 11:19:50 PST

Although scholars have long emphasized the importance of entrepreneurs to long-term growth prospects, entrepreneurship often receives less attention by policy makers than traditional industrial recruitment efforts as regional growth engines. The effects of entrepreneurship may be more subtle than the latter approaches, but business creation can have significant effects across both space and time. This article first sketches the important relationship between innovation, entrepreneurship, and growth and then empirically assesses the relationship between entrepreneurship and job growth across U.S. labor market areas and counties. Three key findings emerge. First, entrepreneurship is systematically related to job growth; furthermore, this relationship increases in intensity over time. Second, entrepreneurship has the greatest impact on the county in which it occurs but also generates positive spillovers for job growth in neighboring counties. Finally, the impact of entrepreneurship is greater in denser, more urbanized settings where such businesses can leverage the advantages of a thick marketplace.

"Can We Seal the Deal?": An Examination of Uncertainty in the Development Process

Kimelberg, S. M. — Thu, 12 Nov 2009 11:19:49 PST

Studies of firm location decisions suggest that an organization’s desire to reduce the uncertainty associated with operating in a new or unfamiliar location plays a role in determining where it will choose to locate. To date, however, little attention has been paid to the experience of uncertainty in the preoperational phase (i.e., during the development process). When the development process in a given municipality is rife with ambiguity or unpredictability, it may deter firms from moving there, even if the location is attractive on the basis of its long-term operating economics. This study draws on in-depth interviews to explore how real estate professionals experience uncertainty while navigating the development process. The findings reveal that real estate professionals’ conceptualizations of uncertainty reflect five related, but distinct, themes: municipal support, community opposition, process, cost, and feasibility.

Locational Choices of the Ethanol Industry in the Midwest Corn Belt

Haddad, M. A., Taylor, G., Owusu, F. — Wed, 14 Oct 2009 13:23:57 PDT

The Corn Belt has experienced a rapid expansion of corn-based ethanol plants. This has provided researchers the opportunity to examine the relative importance to the renewable fuels industry of several location factors previously identified as important to agro-industries. Using probit regressions, this study identifies the factors significant to ethanol firms’ location decisions in the four-state study area of Iowa, Illinois, Minnesota, and Nebraska. In Iowa and Illinois, where corn is largely ubiquitous, firms move beyond corn supply to consider other localized factors in their decision-making process. Factors such as rail access, population density, and proximity to blending terminals emerge as significant considerations. Probit regressions comparing states reveal the competitive advantages that each offers to ethanol firms. The importance of the findings to economic development professionals is discussed and areas for future research are suggested.

Education Spending and State Economic Growth: Are All Dollars Created Equal?

Deskins, J., Hill, B., Ullrich, L. — Wed, 14 Oct 2009 13:23:56 PDT

This article contributes to the literature on the effect of state and local education spending on U.S. state economic growth by separately analyzing higher and K-12 education spending and by taking into account the possibility that education spending may generate spillover effects to neighboring states. Results from a series of fixed-effects regressions using a 1992-2002 panel of state-level data indicate that increased spending on higher education generally exhibits a relatively large negative effect on private sector employment or gross state product growth when the increase in education spending is financed through own-source revenue. Results do not identify a statistically significant relationship between K-12 education spending and economic growth. This finding is an important clarification in the literature because an analysis of combined higher and K-12 education spending yields an overall negative effect. Results do not provide consistent evidence of cross-state spillover effects associated with either form of education spending.

Property Tax Exportation and Its Effects on Local Business Establishments: The Case of Massachusetts Municipalities

Wu, Y. — Wed, 12 Aug 2009 11:01:29 PDT

This empirical study describes property tax exportation to business properties in Massachusetts and investigates its effects on the location of private establishments. The author uses panel econometric techniques on 351 incorporated municipalities from 2001 to 2006. The results suggest that the level and relative share of property tax levied on businesses have a negative impact on their establishments. The rise in the share of tax levy on businesses by 50 percentage points relative to their share of assessed value could result in 5 fewer business establishments and 60 fewer private goods-producing industry jobs. Preliminary analysis also indicates that such a tax-exporting policy may be desirable from a revenue perspective, but the substantial loss in business activity should be considered.