The triple bottom line refers to economic, environmental, and social value of an investment and is related to the concept of sustainable development. The triple bottom line is increasingly salient to economic development related disciplines, yet the topic has received little attention within the field of economic development. This study offers three substantive responses to that gap. First, triple bottom line economic development is introduced and defined. Second, research regarding whether and how practitioners prioritize and engage in triple bottom line economic development is presented. Third, implications for the field are considered, including the centrality of the concept to economic development and recommendations to advance theory and practice in this regard.
This study examines whether state movie production incentives are effective in attracting and/or retaining movie production. The issue is of significant policy interest because of the large amounts spent by states for such subsidies. This study finds that while movie production incentives were effective in increasing the number of film production employment and establishments for a few states such as New York and California from 1998 to 2011, there was no discernable increase across all states. Much of this noneffect appears because of a "crowding out" effect due to the sheer number of states with incentives.
In 2005, the Supreme Court’s Kelo v. New London ruling reaffirmed governments’ right to use eminent domain for economic development purposes. Widespread public backlash over the ruling resulted in numerous states quickly passing laws restricting the use of eminent domain for such purposes. This study uses the swift and uneven response of state legislatures to the public outcry that followed Kelo to test the empirical question of whether restrictions on eminent domain affect states’ ability to fulfill their economic development goals. Results indicate that states that restricted the use of eminent domain following the Kelo ruling experienced no adverse effects in terms of state employment and gross state product or county employment and county income in the states’ most dense counties.
Proponents of social capital theory have long argued that it is not only in the best interest of civic life to build social capital but that social capital is vital for the economic health of communities. Yet past studies have failed to distinguish among different types of social capital and have relied on inaccurate measures of economic health. This study reexamines what has become conventional wisdom by analyzing the social capital of American metropolitan areas and its impact on economic well-being. It improves on past studies by examining different types of social capital (i.e., trust, group membership, social networks) and substituting the change in competitive-advantage jobs from shift-share analysis for total job growth and other traditional economic development measures of wealth creation. The study finds that bridging social capital positively affects the economic welfare of communities with respect to job creation.
This study investigates how service delivery of employment-related federal programs administered at American Job Centers (AJCs) changes as local unemployment increases. The authors analyze the impact of such changes on labor market outcomes of program participants using data for the Trade Adjustment Assistance (TAA) participants. The authors find that the demand for TAA services increases substantially when local unemployment increases. A 5% to 10% increase in unemployment raises training enrollment through the TAA program by nearly 13 percentage points and increases participation duration by more than 9 weeks. Our results do not support the concern that a sudden rise in the demand for AJC services might deteriorate the quality of service delivery and outcomes. In fact, although increases in local unemployment are generally harmful to displaced workers, occupational training during this time is effective at reducing the size of wage loss by at least 46%, resulting in a 3.4% average increase for wage replacement rates.
Cities are a significant source of economic growth and prosperity, but they may also contribute to social and economic problems, including unemployment, poverty, and inaccessible financial institutions. The authors have gathered a unique panel data set for Toronto that locates financial institutions by census tract and links this information to census public use microdata from 1981 to 2006 to show that mainstream financial institutions have migrated to the suburbs and that, simultaneously, so-called fringe financial institutions, especially payday lenders, have expanded their operations in the inner city. The authors then use panel regression models and, among other results, find that census tracts with low income are less attractive to mainstream institutions over time and more attractive to fringe institutions, which provide more limited and expensive services. The results imply that the dynamics of the location of financial institutions may present an additional barrier to upward economic mobility for inner-city residents.
This study focuses on quantifying the economic impact of the automotive industry on Alabama’s economy using a static regional computable general equilibrium model. The findings suggest that the automotive industry has a disproportionate impact across Alabama in terms of a series of indicators including gross state product, employment, and household welfare. Benefits accrue primarily to counties in which the auto plants and their suppliers are located. The spillover effects into nonautomotive-plant counties are modest and about evenly distributed. Middle-income households are the largest gainers, and this is true across all counties, including the Black Belt, a region across the South where rural poverty is concentrated. Despite its rapid growth, the auto industry continues to constitute a small fraction of the state’s economy (less than 3% of gross state product). Thus, overdependence on a cyclical industry is as yet not an issue for policy makers.
The authors examine major aspects of the connection between social capital and economic development in U.S. counties. They test the conclusions of Putnam, who saw associations as a force for positive development, and Olson, who concluded the opposite. The authors find that Putnam organizations have a negative effect on income, while Olson organizations have a positive effect by decreasing levels of income inequality. Drawing on the literature distinguishing between bridging versus bonding, the authors show that bridging capital has a positive effect on development by increasing per capita income, while bonding capital has a neutral effect on both per capita income and income inequality. Finally, religious variables are tested for their relationship with economic development. Overall, congregation density has a negative influence by increasing per capita income and income inequality, controlling for geographic type. Congregations with bridging characteristics have a mixed effect on development by decreasing income and decreasing inequality.
This study examines the role of public investments in inducing small firms to develop risky, early-stage technologies. It contributes to expanding our understanding of the consequences of high-technology policies by investigating in more depth the effect of the Small Business Innovation Research (SBIR) program on the innovation effort and ability to attract external capital of small business start-ups using a new sample and estimation approach. The authors found empirical evidence that the public cofinancing of private research and development has a positive effect on the innovation propensity of small high-tech start-ups. However, contrary to theoretical expectations, they did not find any significant "certification effect" of receiving an SBIR award on attracting follow-on investment. What the authors discovered is a different certification effect: SBIR recipient firms are more likely to attract external patents. This finding confirms that enterprises need to orchestrate a portfolio of internal and external knowledge assets to produce innovations with unique competitive advantage.
Policy makers and economic developers are increasingly interested in the impacts of local food systems, yet attempts to obtain accurate estimates are often complicated by a lack of available data. Utilizing a unique data set from producers in New York, the authors examine the extent of differential purchasing and sales patterns for small-scale direct agriculture (SDA) producers. The supplemental data are integrated into a regional input–output model to assess the total effects and distributional implications of equivalent policies targeted to agriculture sectors. The authors demonstrate that SDA producers have different expenditure patterns than other agricultural producers and, for equivalent policy shocks targeted toward agriculture industry expansion, have lower total employment and output impacts but higher effects on labor income and total value added than non-SDA producers. The results underscore the importance of collecting appropriate data for analysis and outline the local economic benefits of small-scale local food system participants.
This research builds on previous work that developed the context for understanding art, design, and culture in local and regional economic development by investigating U.S. cultural institutions housing collections of industrial and product design and exploring their connections to economic development. The research question guiding this inquiry is, "How are collections of industrial and product design functioning as components of economic development strategies?" The analysis of 11 key-person interviews identified indirect connections to economic development among the case institutions, including events, programming, membership groups, and university partnerships. The study concludes by outlining a framework that builds from these existing connections and offers additional strategies for improving the integration of cultural institutions and design collections in design-based economic development approaches.
The patterns of where households live within the Chicago Metropolitan Statistical Area are examined over the 1990 to 2010 period with respect to their socioeconomic characteristics. It is seen that city–suburban differences in educational attainment have been eliminated over time. This is particularly the case for non-Hispanic Whites living in Chicago who have become substantially more likely to have a college degree relative to their suburban counterparts. In contrast, educational attainment has a rising propensity of African Americans and Hispanics to suburbanize, especially those households containing children of school age.
An effort to secure a local government subsidy for a professional sports venue or event typically cites findings from a private consultant’s economic impact analysis on its purported benefits to the jurisdiction(s) offering the subsidy. Scholars have consistently expressed concerns regarding the ability of the public, and the officials that represent them, to detect the deficiencies that often plague such an analysis. We review the previous academic research to identify a common set of concerns regarding this form of analysis. These concerns are the basis for a list of 20 evaluative questions to consider in a critical assessment of an economic impact study. To illustrate the practicality of these questions, we ask them of previous studies regarding the economic impact of different professional sport venues or events in five different U.S. cities.
Over the period 2001-2011 national employment in all 21 North American Industry Classification System (NAICS) industries has trended downward. The change in employment appears to be correlated with the regional redistribution of employment. This study explores changes in manufacturing employment between 2001 and 2012 as influenced by initial state-specific socioeconomic characteristics, state policy, market access, and state- and industry-specific conditions. The analysis is conducted for all 21 NAICS manufacturing industries to observe patterns and deduce information about factors that most consistently and frequently influence manufacturing employment in these industries across the United States.
In this research note it is shown that by applying cointegration and causality techniques to U.S. state-level panel data there is a negative long-run relationship between unionization and income inequality in the United States and that causality is unidirectional from unionization to inequality.
The purpose of this study is to explain urban wage differentials with a special focus on educational levels. The authors explore whether the share of people with a bachelor’s degree or higher in the community matters to the wages of those within specific educational cohorts, accounting for cost of living, human capital externalities, consumer externalities, policy factors, and local labor market conditions. Using data for all U.S. Metropolitan Statistical Areas between 2005 and 2012, the authors find that the presence of more highly educated people will result in a higher median wage in the community overall, as do many studies, but that this factor does not significantly increase the wage for any individual education cohort. These results are hidden if we only look at the entire workforce in the aggregate.
While the relationship between arts businesses and redevelopment has been studied extensively in world-class cities, it remains understudied in weaker market cities. With tight municipal budgets, shrinking cities cannot afford to not understand both the benefits of the arts for downtown redevelopment and the impact of redevelopment on the arts. Using block-level data for a U.S. shrinking city’s downtown (St. Louis), this study finds that the arts have neither anchored redevelopment nor been driven out of the downtown by redevelopment. The latter finding signals an opportunity for shrinking cities to harness the benefits of the arts in downtown redevelopment.
Does business ownership reduce the wealth disparity between Black and White households? The author uses Panel Study of Income Dynamics (PSID) data on family wealth in 1999 through 2009 to examine the levels of wealth and changes in wealth of entrepreneurs and workers among Black and White families. Black entrepreneurs (self-employed) have higher wealth levels and more upward wealth mobility than do Black workers. The upward wealth mobility of Black entrepreneurs is equivalent to that of White entrepreneurs, while the wealth mobility of White entrepreneurs is greater than that of White workers. These findings are consistent with Black entrepreneurship reducing the wealth disparity between Black and White families.
Although policy evaluations have raised significant concerns about the effectiveness of individual incentives such as tax abatements and special taxing districts, they beg the question of whether, in the right combination, these tools might actually work. This research focuses on this question: Are some incentives more effective in particular combinations as they would normally be applied in reality? Based on an assessment of five widely used economic development programs in the state of Michigan, the research concludes that even in combination, many commonly used incentives have no relationship to the economic health of city residents. Programs that include performance guarantees, particularly related to jobs, appear promising. For many, particularly smaller, cities offering no economic development incentives also appears to be a promising course of action.
Technological concentration and innovation have been identified as important forces behind growth, and entrepreneurship has been recognized as an important link between new knowledge and economic growth. This article examines the influence of entrepreneurship and technology concentration on employment growth in U.S. metropolitan areas (MSAs) over the course of the last full business cycle from 1991 to 2007. The findings are in support of the efficacy of entrepreneurship together with high technology expansion in job creation. The findings question the view that entrepreneurship in and of itself, or a high but not growing high technology concentration, can be strong contributors to employment growth. In contrast, this analysis indicates that MSAs with growing high-tech activities and above-average entrepreneurship can be expected to add jobs much faster than other MSAs. The findings suggest a need for a more targeted approach to economic development and job creation.
Observers of state economic development policy in the United States have identified two conceptually distinct approaches, often termed industrial recruitment and entrepreneurial policies, and debated the extent to which a "third wave" of policy emergent during the 1990s represents a conceptually distinct approach to economic development. Data limitations and conceptual confusion have hindered efforts to distinguish state economic development strategies and to update existing typologies to reflect contemporary practices. This article uses data from the Council for Community and Economic Research’s Expenditures Database in 2007 to evaluate the extent to which the states follow conceptually distinctive economic development strategies. We find that the states’ economic development expenditures reflect a high degree of conceptual hybridity rather than strict adherence to supply-side industrial recruitment or demand-side entrepreneurial development.
Research into tax increment financing (TIF) effectiveness has yielded mixed results, often under extensive controls. Until recently, no study had considered or controlled for the potential effects of internal management practices, including preproject planning and postimplementation performance measurement, on TIF performance. This study draws on evidence from 72 TIF projects in the Dallas–Fort Worth (DFW) Metroplex to subject the recently proposed administrative theory of TIF performance to empirical validation. Regression analysis is used to determine the correlation between two key TIF district management practices (preimplementation risk assessment and postimplementation performance measurement) and project performance. The authors empirically examine differences in management practices across TIF districts within the same regional economy, and findings lend support to the theory that TIF management practices play an important role, alongside other factors, in determining project performance.
The Supreme Court decision in Kelo v. New London (2005) authorized the use of eminent domain for economic redevelopment provided that there are sufficient spillover benefits to the public. This article examines the economic basis for this decision and tests the conclusions using cross-state data on "development takings" over the period 1998 to 2002. It also examines the political responses by states to limit such takings in the aftermath of Kelo. The results are consistent with the economic justification for eminent domain as a means of overcoming the holdout problem.
Many tax incentive zones encourage employers to hire workers in distressed places. A well-developed literature on hiring low-skilled workers has much to say about why such zones have resulted in little employment for nearby residents of distressed areas but has not informed evaluation or policy for zones. Using the Detroit Empowerment Zone experience as a case, this article finds that referrals, usually from employees, determined hiring, resulting in industrial districts with few local workers and retail districts with many more, with workplaces segregated by race and ethnicity. Although skill requirements and screening approaches should not have excluded many qualified local workers, employers in industrial areas had negative stereotypes of workers from nearby neighborhoods. Trusted intermediaries such as community-based organizations may enable tax incentive zones to produce jobs for local workers by breaking down stereotypes and inserting a new "mouth" in the word-of-mouth hiring practices.
Regional economic development strategies are becoming increasingly popular with policy makers. Yet the role of government in cluster development and sustainability is not clearly understood. This research attempts to fill the gap between cluster theory and public administration by testing a political/institutional context model. A total of 24 in-depth interviews focusing on the shipbuilding cluster in Alabama, Louisiana, and Mississippi were completed. Results indicate that the political culture of the region is a major limiting factor for the development of governance structures suitable for cluster-based economic development and upgrading. However, public administration’s network governance theory provides an ideal framework to build governance structures more suitable for cluster-based economic development and upgrading.
State initiatives that build innovation capacity by supporting local academic research, attracting eminent scholars, and building research excellence have become prominent among the 50 states over the past 30 years. This article focuses on three programs: University Research Grants, Eminent Scholars, and Centers of Excellence. We include examples for each of the state programs and trace the historical evolution of program attributes. Our objectives are to differentiate program attributes to improve understanding of state science initiatives and to begin to assess how programs contribute to the ultimate goal of creating economic growth. Our empirical analysis demonstrates evidence of the long-term impact of these three programs in building state innovative capacity. The article concludes by outlining how these data may be used in future analyses.
Rubin sounded an alarm indicating that economic development practitioners were less than strategic in their economic development incentive adoption when he declared that developers "shoot anything that flies, claim anything that falls." This article builds on the work of those who have focused on the determinants of incentive adoption in three ways. First, relying on matched cases of survey respondents to the 1999 and 2004 International City/County Management Association Economic Development Survey improves on using a single survey. Second, unlike previous efforts that relied mostly on ordinary least squares estimators to predict the total number of approaches adopted, this article uses a count model and distinguishes between types of approaches. Finally, this article accounts for city- and state-level impacts. This article finds that economic development decision making is strategic, partly determined by state-level effects, and is dependent on the types of economic development practices.
The contribution of state renewable energy portfolio standards (RPS) to green business and job growth is controversial. This research estimated the contribution of RPS to state green industrial growth empirically by stipulating and econometrically controlling for a range of state economic growth variables and, having done so, adding RPS variables. Our modeling framework assumed that if RPS have any effect on the green economy in a state, the effect occurs after a period of social and economic adjustment processes that began when the RPS were enacted. Our findings indicate that the presence of RPS have no discernible effect one way or the other on green job growth, but the persistence of RPS through time does cause an increase in the number of green businesses.
Policy researchers often have to estimate the future effect of imposing a policy in a particular location. There is often evidence on the effects of similar policies in other jurisdictions but no information on the effects of the policy in the jurisdiction in question. And the policy may have specific features not reflected in the experiences of other areas. It is then necessary to combine the evidence from other locations with detailed information and data specific to the jurisdiction in question, with which to simulate the effects of the policy in the new jurisdiction. We illustrate and use this approach in estimating the impact of a proposed living wage mandate for New York City, emphasizing how our ex ante simulations make use of detailed location-specific information on workers, families, and employers using administrative data and other new public data sources.
Economic development agencies seek industries to benefit their local economies. This article investigates how manufacturing composition affects a region’s income and educational attainment using data for individuals and Metropolitan Statistical Areas (MSAs) from 1970 through 2009. The results provide an understanding of the importance of changes in industry composition on the well-being of residents of an MSA. Using fixed-effects regressions, we model individual educational attainment and real income as a function of manufacturing composition, allowing for nonlinearities through squaring manufacturing composition. Across MSAs, high levels of manufacturing are associated with lower educational attainment and higher income; however, higher growth in manufacturing decreases both educational attainment and income.
Prior research on the impacts of public capital stocks on economic growth has generally used either national macroeconomic or multijurisdictional regional data. This study attempts to contribute to this area of the discipline by using time series data for a single metropolitan economy. To allow for both short-run and long-run effects, an error-correction modeling framework is used for the empirical analysis. Because comprehensive public infrastructure stocks are not published for El Paso, Texas, estimates for those variables are calculated using information regarding annual public capital investment data. Estimation results indicate that physical infrastructure investment may disrupt short-run economic growth but does improve long-run metropolitan economic performance.
This article constructs an unbalanced panel data set based on a varying sample period of 1980-2004 for 17 OECD countries to analyze the impact of information and communication technology (ICT) on productivity growth. This article divides ICT capital stock into three categories, namely communication equipment, information technology (IT) equipment (hardware), and software, and uses them together with telecommunication demand and personal computer (PC) penetration rate as productivity-related explanatory variables. It then estimates a macro production function using micro models for ICT investment, telecommunication demand, and PC penetration. The estimation results suggest that the three categories of ICT capital stock, together with telephone and PC penetration rates, positively and significantly influence productivity growth in the selected high-income economies. Moreover, once the level of digitalization reaches 20%, it also provides a networked contribution to productivity growth.
Industrial recruitment continues to play a significant role in the development of manufacturing industries in the U.S. South. Still, there are signs of shifting practice that not only emphasize a different set of regional advantages from earlier decades but equally help bolster those same advantages to anchor outside firms to the region. This article presents a case study of the strategic use of industrial recruitment to build out North Carolina’s biopharmaceutical manufacturing industry. This case study helps shed light on how recruitment practices can be designed and improved to support continued manufacturing job growth, but in ways that also limit the recruitment of potentially footloose establishments. As such, it presents an alternative perspective to recent studies of industrial recruitment that focus narrowly on efforts to limit or curb locational incentives for industry attraction.