Economic Development Quarterly recent issues

Emergence of Nanodistricts in the United States: Path Dependency or New Opportunities?

Shapira, P., Youtie, J. — 2008-07-28

Multiple economic development theories suggest that research and innovation in emerging technologies will cluster in certain locations rather than being equally distributed among all regions. If this is the case, this distributional pattern has implications for where future economic opportunities and future risks will be concentrated. In this article, the authors probe nanotechnology research and commercialization at a regional level. The study examines the top 30 U.S. "nanodistricts," or metropolitan areas that lead in nanotechnology research activity, during the 1990 to 2006 time frame. The authors explore the factors underlying the emergence of these 30 metropolitan areas through exploratory cluster analysis. The results indicate that although most of the leading nanodistricts are similar to top cities in previous rounds of emerging technologies, new geographic concentrations of nanotechnology research have surfaced as a result of having made concentrated investments in nanotechnology R&D into a single institution.

The Push-Pull Effects of the Information Technology Boom and Bust: Insight From Matched Employer--Employee Data

Hotchkiss, J. L., Pitts, M. M., Robertson, J. C. — 2008-07-28

This article examines the inflow and outflow of workers to different industries in Georgia during the information technology (IT) boom of the 1990s and the subsequent bust. Workers in the software and computer services industry were much more likely to have been absent from the Georgia workforce before the boom but were no more likely than workers from other industries to have exited Georgia's workforce during the bust. Consequently, Georgia likely experienced a net gain in worker human capital as a result of being an area of concentration of IT-producing activity during the IT boom.

The Economic and Workforce Development Activities of American Business Associations

McCormick, L. E., Hawley, J. D., Melendez, E. — 2008-07-28

Renewed scholarly interest in clusters of firms has increased attention on institutions—including business associations—that serve them. Scholars investigating "labor market intermediaries" also wonder to what extent employers' associations conduct workforce development. Much research has been done on business associations in Europe and less developed countries; less studied are those in the United States. This article fills this gap by reporting survey results from 716 American business associations. The article asks, To what extent do American business associations engage in economic development activities beyond lobbying? Does involvement in economic development predict involvement in workforce development? and Are those who engage in more strategic economic development activities more likely to conduct strategic workforce development? Using regression analysis, we find that a substantial share are involved in more strategic economic and workforce development activities and that economic development—specifically, more strategic activities—is a strong predictor of engagement in workforce-related activities.

Crime's Impact on the Survival Prospects of Young Urban Small Businesses

Bates, T., Robb, A. — 2008-07-28

The authors investigate the empirical link between prevailing levels of crime and the viability of small businesses. Using confidential microdata from the U.S. Census Bureau's Characteristics of Business Owners Survey, they find, on balance, that young firms operating in high-crime niches in urban America appear not to be disadvantaged by crime. Crime's impact may certainly be harmful, with other factors being constant, but the crux of the findings is that other factors are not constant. Firms most negatively affected by crime do not appear to be less viable than otherwise identical firms reporting that crime has no effect on their businesses. High-crime niches may in fact be rational choices for some business owners, present and potential.

Strategic Responses by Canadian and U.S. Exporters to Increased U.S. Border Security Measures: A Firm-Level Analysis

Vance, A. — 2008-07-28

After September 11, 2001, the U.S. and Canadian federal governments increased restrictions on materials and people crossing the border. Antiterrorism regulations have introduced costly compliance requirements, clearance delays, and unpredictable border wait times for companies conducting business across the international border. A recent study suggests that many Canadian and U.S.-based exporters intend to counteract these costs by implementing strategies including geographic supply chain reconfiguration. Strategic adjustments of this nature could have profound effects on the geography of North American supply chains, the structure and volume of bilateral trade, and the management of just-in-time delivery systems. This project follows up on the previous study via personal interviews with 35 businesses that had indicated an interest in geographic strategies. Preliminary findings suggest that firms are quickly adjusting to new security requirements and are improving communication channels throughout their cross-border supply chains to stay abreast of new developments.

Banking on the Margin in Canada

Buckland, J., Dong, X.-Y. — 2008-07-28

This article analyzes the socioeconomic characteristics of the financially excluded in Canada using the 1999 Statistics Canada Survey of Financial Security and two surveys sponsored by the Financial Consumer Agency of Canada in 2001 and 2005. The authors find that financial exclusion is more concentrated among low-income Canadians; low-income, low-level of assets, and single-parent statuses are correlated with being unbanked. A review of banking preferences of low-income people indicates that economically disadvantaged households are more concerned about convenience and not as interested in new banking technologies.

Response to May 2007 Article by Frank Giarratani, Gene Gruver, and Randall Jackson on Industry Agglomeration

Duke Kominers, S. — 2008-07-28

Ten new steel plants were constructed in the United States from 1989 to 2001, each taking advantage of new steel slab casting technologies that gave scrap-based minimills access to the flat-products market. This market had been served previously exclusively by ore-based integrated mills. Some of the new minimills were built in established steel industry agglomerations. Others were built in greenfield locations with little or no prior steelmaking activity. This research, based on direct observation and plant visits, brings new evidence to bear on the nature and importance of agglomeration economies associated with steel production by analyzing industry clusters related to the advent of slab casting by steel minimills. The authors find that industry clusters can plan an important role in the process of market entry; however, certain product and firm characteristics can shape the nature of industry agglomerations and their effect on firms and regions.

Rejoinder to Scott Duke Kominers

Giarratani, F., Gruver, G., Jackson, R. — 2008-07-28

Book Review: Short, J. Rennie. (2004). Global Metropolitan: Globalizing Cities in a Capitalist World. New York: Routledge

Marcuse, P. — 2008-07-28

Overhauling and Revitalizing Federal Economic Development Programs

Markusen, A., Glasmeier, A. — 2008-04-10

Although federal economic development has fallen on hard times in the past decade, it remains important, especially in rural areas. In addition, the federal government can play key regulatory roles. We review the still powerful case for place-based approaches but argue that a number of program and policy reforms are pressing. Programs should place greater emphasis on human capital than they have and should explore the potential for consumption base strategies. Incentive competition should be regulated nationally. Greater coordination of economic development strategies across federal agencies is badly needed, and Congress should explore blocking up federal funding regionally. Better targeting and performance standards should be implemented and changes in crude place-based eligibility explored. Finally, rigorous and relevant evaluation research should be methodically undertaken, the results disseminated, and programs subsequently redesigned. We believe that these reforms can revitalize the practice of federal economic development and invigorate political support for it.

An Effective Overhaul of Federal Economic Development Policy: Response to Markusen and Glasmeier

Drabenstott, M. — 2008-04-10

Markusen and Glasmeier propose an intriguing overhaul for federal economic development policy. Many elements of their prescription are badly needed. However, their remedy does not fully embrace a conclusion that much of the rest of the world has reached—that economic development policy is about helping "regions" compete in the global economic race. The secret to overhauling federal economic development policy, therefore, probably lies in positioning federal policy to supply the ingredients most essential to competitive regions. Four ingredients appear to be especially important going forward: strategy, governance, innovation, and entrepreneurship.

Repurposed Federal Economic Development Programs: A Practitioner's Perspective

Singerman, P. — 2008-04-10

Markusen and Glasmeier offer a policy-driven road map for a restructured and revitalized federal role in economic development for the federal Economic Development Administration (EDA). A review of EDA's history and a survey of similar programs suggest that, in addition, long-term political sustainability requires program appropriations specific as to amount, finite as to duration, and appropriate as to the level of economic distress. EDA should (a) substantially increase funding and expansion of the local planning and technical assistance network; (b) enhance relationships with state governments; (c) rebuild the agency's regional and state office infrastructure; (d) focus the national office on a robust role in research, evaluation, demonstration, and dissemination; (e) allocate major funding for significant national problems such as out-sourcing, public infrastructure replacement, and climate change transition; and (f) provide a hold-harmless funding component for traditionally distressed communities.

Opportunities for Economic and Community Development in Energy and Climate Change

John, D. — 2008-04-10

Climate change is an economic development issue, not just an environmental issue. Private businesses have begun to invest heavily in low-carbon technologies, but market imperfections, including uncertainties about new technologies, mean that public dollars will also be required. Billions of public dollars will be available from auctions of emissions allowances for research and development, deploying low-carbon energy technologies, changes in public infrastructure, and adaptation. A distributed approach, with state, local, and federal economic and community development agencies playing important roles, could ensure wiser investments of public resources.

A Cautious Look Into Reconfiguring Federal Economic Development Programs

Finkle, J. A. — 2008-04-10

The current state of federal economic development programs needs to be renovated in order to improve efficiency and limit bureaucratic barriers. As it now stands, each year economic development programs are liable to face significant funding cuts or possible elimination. In this response article, Jeffrey Finkle, President and CEO of the International Economic Development Council (IEDC), highlights the obstacles in how economic development programs are currently delivered and what mechanisms must be employed to create an environment that fosters these programs that are significant in communities across the country.

Rejoinder: History, Leadership, Place Prosperity, Rationales, Competitiveness, Outcomes: A Response to Drabenstott, Finkle, John, and Singerman

Markusen, A., Glasmeier, A. — 2008-04-10

Measuring the Connection Between Workforce Development and Economic Development: Examining the Role of Sectors for Local Outcomes

Harper-Anderson, E. — 2008-04-10

Scholars, practitioners, and policy makers have all called for greater connectivity between workforce development and economic development to more efficiently connect people to jobs and improve regional competitiveness. Economic and policy changes of the last decade have created a fertile environment for collaborative models of achieving workforce and economic development goals simultaneously. Employing survey results from 170 workforce administrators across the United States, the author uses regression analysis to examine the factors that influence connection and to understand the relationship between this connection, the use of sector-based strategies, and development outcomes. The results suggest that connectivity is increasing and has a positive influence on the use of sector-based strategies. In addition, both the level of connection and the use of sectors have significant influence on achieving desired outcomes. Understanding and enhancing the strategic linkage across the two functions are critical for connecting people to jobs and building strong economies.

State R&D Tax Credits and High-Technology Establishments

Yonghong Wu, — 2008-04-10

This empirical research examines the effects of state research and development (R&D) tax credits on the size of the high-technology business sector. In addition to a description of federal and state R&D tax credit programs, this article estimates a model that relates each of the two alternate measures of high-technology establishments in each state to state R&D tax credit, controlling for other factors. The results show that the initiation of a state R&D tax credit has significant and positive effects on the number of the state's high-technology establishments relative to its population or total business establishments. This research provides empirical evidence about the role of state R&D tax incentives in technology-based economic development.

Proximity Matters? European Union Enlargement and Relocation of Activities: The Case of the Spanish Automotive Industry

Bilbao-Ubillos, J., Camino-Beldarrain, V. — 2008-04-10

This article centers on the potential attractiveness of central and east European countries' (CEEC) economies for industrial groups given their comparative economic and institutional characteristics. The authors focus on the possibility that cars and components production may be relocated from plants currently operating in Spain to plants in new member states of the CEEC and that new investments under corporate internationalization strategies may go to those countries seeking to take advantage of the benefits inherent in setting up in states such as Slovenia, Slovakia, the Czech Republic, Hungary, and Poland. The authors look at the key variables for decision making and compare the theoretical probabilities with assessments drawn up by firms themselves concerning location factors on the basis of information gathered during field work.

The Ineffectiveness of Location Incentive Programs: Evidence From Puerto Rico and Israel

Schwartz, D., Pelzman, J., Keren, M. — 2008-04-10

Many countries use location incentives programs to attract investment into a recipient country as a whole or to priority regions, with the goal of promoting growth. The authors focus on two cases, both involving location-related incentives programs, one to shift resources to disadvantaged regions within a country (Israel) and the other to shift investment flows from the United States to a possession (Puerto Rico). In both cases, the programs led to increased employment in the short run but did not alter the fundamental economic problems of these areas. The authors show that there is a governmental failure in their operation of location-related incentives programs and that these governments find it difficult to discontinue incentive programs once they have been introduced.

Book Review: Myers, D. (2007). Immigrants and Boomers: Forging a New Social Contract for the Future of America. New York: Russell Sage

White, S. B. — 2008-04-10

Creative Class and Economic Prosperity: Old Nostrums, Better Packaging?

Reese, L. A., Sands, G. — 2008-01-14

Cultivating the Creative Class: And What About Nanaimo?

Sands, G., Reese, L. A. — 2008-01-14

Despite widespread adoption of creative class economic development strategies, one of its basic tenets—the connection between community tolerance (running through talented individuals and high-tech employment) and economic health and growth—has not been sufficiently tested. This analysis of 40 midsized Canadian urban areas finds a connection between diversity and gay and creative populations and economic health. Neither high-tech employment nor economic growth, however, was found to be linked to the other measures. Although there is some evidence that amenity- and creative class-based economic development strategies can be effective, they do not appear to be sufficient in themselves. Other local policies (e.g., basic marketing to tourists, infrastructure improvements, and traditional business attraction and retention strategies) combined with a measure of "place luck" seem to be important ingredients as well.

Defining the Creative Economy: Industry and Occupational Approaches

Markusen, A., Wassall, G. H., DeNatale, D., Cohen, R. — 2008-01-14

This article reviews conceptual and operational issues in defining the creative sector and its arts and cultural core. Some accounts use establishment data to measure creative industry employment, some use firm-level data, and others use occupational data. The authors examine how cultural-sector employment is conceptualized in three pioneering cultural economy studies driven by distinctive policy agendas and constituencies. Choices about which industries, firms, and occupations to include affect the resulting size and content of the cultural economy. In comparing these three studies and others, the authors show that the Boston metro's creative economy varies in size from less than 1% to 49%, although most cultural definitions range from 1% to 4%. The authors explore how policy makers might use a combination of methods to produce a richer characterization of the regional cultural economy and reflect on the relevance of good numbers to cultural policy and creative region formation.

Inequality in the Creative City: Is There Still a Place for "Old-Fashioned" Institutions?

Donegan, M., Lowe, N. — 2008-01-14

Creative class theory, now a mainstay of local economic development policy, has a dark side: Cities that have a larger creative talent pool are also likely to have greater income inequality. Richard Florida, in acknowledging this disturbing trend, has assigned a new role to the creative class—helping low-wage service sector employees harness and express their creative energy and talent. In this article, the authors explore the complex relationship between creative workers and earnings inequality in the context of the broader urban economy. Drawing on this analysis and an expansive body of literature on urban income inequality, the authors propose an alternative set of policy actions aimed at mediating creativity and inequality through a deepening of traditional labor market institutions and legislative supports. In contrast to claims that these are obsolete solutions in the new economy, the authors argue they are necessary for the long-term sustainability of the creative economy.

Intermediate Steel-Industry Suppliers in the Pittsburgh Region: A Cluster-Based Analysis of Regional Economic Resilience

Treado, C. D., Giarratani, F. — 2008-01-14

The experience of intermediate steel-industry suppliers in the Pittsburgh region offers valuable insight into how traditional industrial clusters can serve as a source of economic resilience in regions like Pittsburgh, where a "signature" industry contracts or relocates. The authors find that intermediate steel-industry suppliers in Pittsburgh remain an important part of the region's economic base, serving as a significant source of export income from national and international markets. Survey results offer a description of the cluster's characteristics. An important subset of firms in this cluster relies on key contacts in the region such as suppliers, partners, and business networks for collaboration on product development or marketing. By recognizing and supporting local linkages of these kinds, policy initiatives can help to strengthen such clusters and contribute to a region's economic resilience.

Book Review: Hackler, D. L. (2006). Cities in the Technology Economy. Armonk, NY: M. E. Sharpe. Phillips, F. (2006). Social Culture and High-Tech Economic Development: The Technopolis Columns. New York: Palgrave MacMillan

Kelly, M. C. — 2008-01-14

Permanently Failing Organizations? Small Business Recovery After September 11, 2001

Graham, L. T. — 2007-10-22

Small businesses in Lower Manhattan after September 11, 2001, paint a telling portrait of vulnerability after disasters. This qualitative analysis of recovery for small retail and service firms with 50 or fewer employees is based on ethnographic fieldwork, interviews, and documentary research from September 2001 through 2005. A postdisaster emphasis on place-based assistance to firms conflicted with macro-level redevelopment plans for Lower Manhattan. Small business recovery was impeded as aid programs responded to a new sense of urgency, attachment to place, and prestorm conceptions of the neighborhood at the expense of addressing community-wide economic changes accelerated by the disaster. Ingredients for effective programmatic response to the shifting environment and recovery needs of small businesses include (a) long-range planning assistance and relocation options, (b) intelligence on all redevelopment initiatives that affect firms' recovery, and (c) a blend of grants and loans that acknowledges realistic disbursement schedules of private versus public monies.

Morality and Economics: Public Assessments of the Adult Entertainment Industry

West, D. M., Orr, M. — 2007-10-22

In this article, the authors examine citizen attitudes toward the adult entertainment industry. Using the results of a public opinion survey of a northeastern American city, the authors find that morality is more important than economics in attitudes about adult entertainment. The authors look at assessments regarding the number of adult entertainment clubs, the overall regulatory environment, and specific policy remedies for dealing with the industry (police raids, higher taxes, tighter zoning, or clustering establishments). On nearly every one of these factors, religion and morality are more important to people's attitudes than their views about the economic contributions of the industry. These results have important implications for theories emphasizing the economic basis of public policy making.

Canonical Analysis of University Presence and Industrial Comparative Advantage

Nagle, M. — 2007-10-22

Technology transfer is a key component in the relationship between high-technology economic development and university knowledge production. Modeling the relationship between the output of universities and the economic growth resulting from that output, however, can be problematic. The primary issue stems from defining the scope of technology transfer and from accounting for the technical capacity of regions to absorb academic innovation. This article uses canonical correlation analysis to study this relationship via labor concentrations in high-technology industry and university R&D in areas relevant to those industries. The results indicate that moderately strong relationships do exist, most notably between computer and electronic equipment industries and academic R&D in engineering, life, and physical sciences. Recommendations include a stronger specification of human capital and regional economy interactions as predictive factors in the theory and several policy directives if such relationships exist at the local level.

Job Creation and the Knowledge Economy: Lessons From North Carolina's Life Science Manufacturing Initiative

Lowe, N. J. — 2007-10-22

Knowledge-intensive industries are expected to provide long-term economic prosperity for their host regions. The question persists whether these industries can also generate quality, stable jobs for a wide range of workers in these regions, particularly those with limited academic training. This article examines North Carolina's effort to respond to this challenge by integrating workforce and economic development functions in an effort to anchor life science manufacturing establishments in the state. By coordinating training, recruitment, and research activities, state agencies are influencing the location and employment strategies of life sciences firms in ways that are helping to foster a more socially inclusive transition to the knowledge economy.

Did a Strong Economy in the 1990s Affect Poverty in U.S. Metro Areas? Exploring Changes in Poverty in Metropolitan Areas Over the Last U.S. Business Cycle, 1992-2003

Gittell, R., Tebaldi, E. — 2007-10-22

This article considers whether the economic transformation in the United States during the 1990s included the reduction of poverty in metropolitan (metro) areas. The authors investigate poverty change over the last business cycle, a period of overall strong economic growth. Their analysis identifies evidence of both poverty reduction and persistence. Findings show a general decline in poverty, with decline greatest in the metro areas with the highest poverty rates at the beginning of the last business cycle. Yet the relatively strong economy did not move the metro areas with the highest poverty from their relative position. The article documents that the underlying factors affecting metro-area poverty will have to be changed to fundamentally address poverty in high-poverty-rate metro areas. Reliance on changes in the macro economy will not be sufficient.

Book Review: Fitzgerald, J. (2006). Moving Up in the New Economy: Career Ladders for U.S. Workers. Ithaca, NY: Cornell University Press

Edwards, M. — 2007-10-22

Ong, P., & Loukaitou-Sideris, A. (Eds.). (2006). Jobs and Economic Development in Minority Communities. Philadelphia: Temple University Press

Isaac, C. B. — 2007-10-22