Economic Development Overview Arthur C. Nelson, Ph.D., FAICP University of Utah Arthur C. Nelson,...
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Transcript of Economic Development Overview Arthur C. Nelson, Ph.D., FAICP University of Utah Arthur C. Nelson,...
Economic Development Overview
Economic Development OverviewArthur C. Nelson, Ph.D., FAICPUniversity of Utah
Arthur C. Nelson, Ph.D., FAICPUniversity of Utah
Key Economic Development Goals
Key Economic Development Goals
Create jobsImprove wagesReduce unemploymentEnhance tax baseCreate economic resilienceAdvance family and social quality of
lifeStabilize declining/stagnating areasImprove competitivenessEstablish economic linkages
Create jobsImprove wagesReduce unemploymentEnhance tax baseCreate economic resilienceAdvance family and social quality of
lifeStabilize declining/stagnating areasImprove competitivenessEstablish economic linkages
Purposes of Purposes of GovernmentGovernmentPurposes of Purposes of GovernmentGovernment
GrowthGrowthEconomic, cultural, social, quality of lifeEconomic, cultural, social, quality of life
StabilityStabilitySoften down-turns, provide certainty and Soften down-turns, provide certainty and
predictabilitypredictabilityDistributionDistribution
Elevate lesser-endowed to elevate all of societyElevate lesser-endowed to elevate all of societyAllocation Allocation A Major Planning Role A Major Planning Role
Allocate resources efficiently, such as land, Allocate resources efficiently, such as land, natural natural resources, public budgets, etc.resources, public budgets, etc.
GrowthGrowthEconomic, cultural, social, quality of lifeEconomic, cultural, social, quality of life
StabilityStabilitySoften down-turns, provide certainty and Soften down-turns, provide certainty and
predictabilitypredictabilityDistributionDistribution
Elevate lesser-endowed to elevate all of societyElevate lesser-endowed to elevate all of societyAllocation Allocation A Major Planning Role A Major Planning Role
Allocate resources efficiently, such as land, Allocate resources efficiently, such as land, natural natural resources, public budgets, etc.resources, public budgets, etc.
Allocation and Allocation and EfficiencyEfficiency
Allocation and Allocation and EfficiencyEfficiency
Technical efficiencyDMV; DABC Examples
“Pareto” efficiencyAt least one person better off and no one worse off
“Potential” efficiencyThe gains of the winners are larger than the losses
of the losersCompensatory efficiency
Losers get compensated from gains
Technical efficiencyDMV; DABC Examples
“Pareto” efficiencyAt least one person better off and no one worse off
“Potential” efficiencyThe gains of the winners are larger than the losses
of the losersCompensatory efficiency
Losers get compensated from gains
Allocation and EquityAllocation and EquityAllocation and EquityAllocation and EquityHorizontal equity
Equal protectionVertical equity
Ability to payEquity of endowments
Inherent advantages by birth, connections, etc.Equity of process
Some people can get ahead of the lineEquity of outcomes
Jobs from Ivy League admission based on “legacy”
Horizontal equity Equal protection
Vertical equity Ability to pay
Equity of endowmentsInherent advantages by birth, connections, etc.
Equity of processSome people can get ahead of the line
Equity of outcomesJobs from Ivy League admission based on “legacy”
Why Government Provision?Why Government Provision?Private goodsPublic goodsMerit goodsSpillovers and free-ridersMonopoliesPrice and income sensitivity
Private goodsPublic goodsMerit goodsSpillovers and free-ridersMonopoliesPrice and income sensitivity
Private GoodsPrivate GoodsWhich of the following ought to be left
to the market to determine the price?HamburgersCarsClothesNational parksClean air
Which of the following ought to be left to the market to determine the price?
HamburgersCarsClothesNational parksClean air
Public GoodsPublic GoodsCan’t exclude:
No admission costs or paying billsCan’t congest:
Enjoyment or quality is not reduced with more users
No one worse off with more people using itExamples
National defenseLighthousesAir (assuming no one pollutes – separate issue)
Can’t exclude:No admission costs or paying bills
Can’t congest: Enjoyment or quality is not reduced with more
usersNo one worse off with more people using it
ExamplesNational defenseLighthousesAir (assuming no one pollutes – separate issue)
Merit GoodsMerit GoodsMay be exclusive (have to pay to
use) or “congestible” (new users erode enjoyment of existing users) but not both.Beaches, community parks, cable TV
Future value to society may be more than current value in the market.Education, farmland
May be exclusive (have to pay to use) or “congestible” (new users erode enjoyment of existing users) but not both.Beaches, community parks, cable TV
Future value to society may be more than current value in the market.Education, farmland
Spillovers and Free Riders
Spillovers and Free Riders
Spillovers (aka “externalities”)City approves development creating traffic
congestion in the adjacent citySolution: Internalize externalities
Free-riderAffordable housing in one city used to help
provide the work force in another.Solution: All cities share in providing
affordable either directly or through regional financing schemes.
Spillovers (aka “externalities”)City approves development creating traffic
congestion in the adjacent citySolution: Internalize externalities
Free-riderAffordable housing in one city used to help
provide the work force in another.Solution: All cities share in providing
affordable either directly or through regional financing schemes.
What IS Economic Development?
What IS Economic Development?
Economic development is the increase in the standard of living of the population.
Is the process & policies to improve economic, political, and social well-being of people.
Competing though not exclusive measures:Aggregate economic improvement higher
average wages though skewed to top endIndividual economic improvement Higher median wages (half earn more and half earn
less) lower end benefits
Economic development is the increase in the standard of living of the population.
Is the process & policies to improve economic, political, and social well-being of people.
Competing though not exclusive measures:Aggregate economic improvement higher
average wages though skewed to top endIndividual economic improvement Higher median wages (half earn more and half earn
less) lower end benefits
ED ConceptuallyED Conceptually
Economic development means social & and technological progress.
Implies a change in the way goods and services are produced, not just an increase in production achieved using the old methods of production on a wider scale.Transitioning from manual automobile
assemble to robotic assembly
Economic development means social & and technological progress.
Implies a change in the way goods and services are produced, not just an increase in production achieved using the old methods of production on a wider scale.Transitioning from manual automobile
assemble to robotic assembly
Measuring EDMeasuring ED
Economic Growth usually means an increase in quantitative output; it may or may not involve development.
Economic growth often measured by rate of change of gross domestic or gross regional product (percent GDP/GRP increase per year.)
GDP/GRP is the aggregate value- added by the economic activity within an area.
Economic Growth usually means an increase in quantitative output; it may or may not involve development.
Economic growth often measured by rate of change of gross domestic or gross regional product (percent GDP/GRP increase per year.)
GDP/GRP is the aggregate value- added by the economic activity within an area.
ED OutcomesED Outcomes
ED usually intended to improveLiteracy rates (education)Life expectancy (health)Poverty rates “New theory” of ED adds improvement
to Leisure time Environmental quality Social justice
ED usually intended to improveLiteracy rates (education)Life expectancy (health)Poverty rates “New theory” of ED adds improvement
to Leisure time Environmental quality Social justice
Economic Development Policy
Economic Development Policy
ED Policies encompass three major areas:1 Government action to achieve price
stability, high employment, and sustainable growth.Monetary policies adjusting interest ratesFiscal policies spending or cutting taxesRegulating financial institutionsModifying trade, and tax policies
ED Policies encompass three major areas:1 Government action to achieve price
stability, high employment, and sustainable growth.Monetary policies adjusting interest ratesFiscal policies spending or cutting taxesRegulating financial institutionsModifying trade, and tax policies
Economic Development Policy
Economic Development Policy
2 Programs that provide Infrastructure such as highways, schools, parksServices such housing, crime preventionEducation
3 Job creation and retention throughBusiness finance & marketingNeighborhood developmentSmall business dev & business retention/expansion Technology transferReal estate development.
2 Programs that provide Infrastructure such as highways, schools, parksServices such housing, crime preventionEducation
3 Job creation and retention throughBusiness finance & marketingNeighborhood developmentSmall business dev & business retention/expansion Technology transferReal estate development.
Economic Development Profession
Economic Development Profession
Economic development professionals:Provide leadership in policy-makingEngage in business recruitment through
analysis and marketingAdminister policy, programs, and projects.
Economic development professionals:Provide leadership in policy-makingEngage in business recruitment through
analysis and marketingAdminister policy, programs, and projects.
Economic Development Profession
Economic Development Profession
Economic development practitioners Work in public offices at the state, regional, or local
level In public-private partnerships organizations partially
funded by local, regional, state, or federal tax money.
Economic development organizations (EDOs) are individual entities and sometimes departments of local governments.
Their role is to seek out new economic opportunities and retain their existing business wealth.
Economic development practitioners Work in public offices at the state, regional, or local
level In public-private partnerships organizations partially
funded by local, regional, state, or federal tax money.
Economic development organizations (EDOs) are individual entities and sometimes departments of local governments.
Their role is to seek out new economic opportunities and retain their existing business wealth.
Economic Development Profession
Economic Development Profession
Other organizations also engage in economic development on their own or in
partnership with others. Understand why.News mediaFoundationsUtilitiesSchoolsHealth care providersFaith-based organizationsColleges, universities, research institutions.
Other organizations also engage in economic development on their own or in
partnership with others. Understand why.News mediaFoundationsUtilitiesSchoolsHealth care providersFaith-based organizationsColleges, universities, research institutions.
ED CompetitionED Competition Intense competition between communities
and states for new economic development projects.
Economic incentives include:Tax incentivesHelp with investment capitalDonated land and goodsLabor force training
Trick is to tailor incentives to prevent opportunity costs
Intense competition between communities and states for new economic development projects.
Economic incentives include:Tax incentivesHelp with investment capitalDonated land and goodsLabor force training
Trick is to tailor incentives to prevent opportunity costs
ED Professional Technical Roles
ED Professional Technical Roles
Community profiling tools and database templates to measure community
assets versus other communities Job creation, economic output, and
increase in taxable base most common measurement tools.
ED professionals do not create jobs, but facilitate the process.
Community profiling tools and database templates to measure community
assets versus other communities Job creation, economic output, and
increase in taxable base most common measurement tools.
ED professionals do not create jobs, but facilitate the process.