Why State and Local Economic Development Programs Cause So Little Economic Development

Most evaluations conclude that state and local business financing to stimulate economic development outside big cities does not achieve the explicit goals. The programs have little influence on either the level or the distribution of economic growth. This article discussed two possible explanations for why the results are poor.
First, the article postulates that from a technocratic viewpoint, these programs would be more successful if the program’s designers and implementers had known what to do to achieve the program’s desired results, applied existing knowledge of what kind of program can be most effective and what makes a program work, used appropriate analysis, and had information needed to make the right decisions. Simply put, if these people acted more wisely, the programs would have done better. Sometimes these programs are indeed created with little analytic input and with little or no analysis of alternative policies for achieving the same results. As a result, achieving the goals would be accidental. While this view may be necessary it is not sufficient in explaining the failure of economic development programs.
An alternative view is an analysis of the political economy of economic development programs. This is research on the political imperatives facing elected officials and from studies of bureaucratic behavior. This research posits that elected officials pursue economic development efforts in an environment where programs probably cannot work.

Dewar, Margaret E., Why State and Local Economic Development Programs Cause So Little Economic Development, 12 Economic Development Quarterly 68 (1998), available at http://edq.sagepub.com/cgi/reprint/12/1/68.