Local Economic Development

John P. Blair is a Professor of Economics at Wright State University where he teaches courses in urban economics and local economic development. He received a Ph. D. from West Virginia University. He has served as a consultant for a variety of state and local governments as well as private agencies. He has written numerous books and articles about urban issues and public policies. Blair’s academic articles have appeared in such journals as Land Economics, Growth and Change, and Economic Development Quarterly. Michael C. Carroll is the Director of the Center for Regional Development and Associate Professor of Economics at Bowling Green State University. Prior to joining BGSU, he served on the faculty at Muskingum College and West Virginia State University. Dr. Carroll’s business experience includes positions as corporate controller, operations manager, and president. His research interests focus on regional economic development and social economics. He is Editor-in-Chief of Regional Science Policy and Practice and Associate Editor of Economic Development Quarterly. His writings have appeared in a variety of academic journals including, the Journal of Economic Issues, Annals of Regional Science, and the Industrial Geographer. Dr. Carroll also authored A Future of Capitalism: The Economic Vision of Robert Heilbroner (Macmillan and St. Martin’s Press) 1998. He earned his Ph.D. from Colorado State University.

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• Chapter 1. Local Economic Development in a Global MarketHow Economists View the WorldModels and AssumptionsIndividual Behavior and Utility MaximizationIdeological Perspectives on Market OperationsHow Markets WorkSupply and DemandSupply, Demand, and EfficiencyMarkets Are Not Always EfficientThe Role of ProfitsEconomic Development DefinedCareers in LEDThe Nature of RegionsTypes of RegionsLocal, National, and Global Economic DevelopmentChapter 2. Business Location, Expansion, and RetentionLocational FactorsInertiaTransportation Cost Minimizing ModelsProduction CostsNational Political Climate and StabilityOpportunity CreationThe Decision Making ProcessMotivationsPractical Limitations on the Choice ProcessSteps in the Corporate Site Selection ProcessChanging Relative Importance of Locational FactorsSurveys of Location FactorsSurvey Findings Past to PresentConducting Business Retention and Expansion Programs3.Markets, Urban Systems, and Local DevelopmentDemand and Market AreasDemand in a Spatial SettingCompetition for MarketsThreshold Demand and RangeDeterminants of Market SizeThe Urban Hierarchy and Urban SystemCentral PlacesGoods and Services According to Urban RankChanging Urban PatternsAn Evaluation of the Central-Place ApproachConsiderations Extraneous to Central-Place TheoryTransportation CostsMarket Overlap, Rate Absorption, and Price DiscriminationProduct DifferentiationAgglomeration EconomiesInstitutional FactorsNon-employment Residential Locations and CommutingEmpirical EvidenceGlobalization and Urban (City) SystemsHow to Measure Areas of InfluenceSurvey TechniquesReilly’s Law of Retail GravitationProbabilistic ModelsRetail SpendingAn ExampleHinterland Expansion Strategies4.Economic Interdependence and Local StructureAgglomeration EconomiesInternal Agglomeration EconomiesDirect Sales Purchases LinkagesLocalization EconomiesUrbanization EconomiesRecapCluster AnalysisMeasures of Economic StructureNorth American Industrial Classification System (NAICS)Location QuotientsEstimating Export Employment with Location QuotientsSurveys to Determine Export ActivitiesCoefficients of SpecializationOccupational StructureOther Aspects of Regional Structure5.Regional Growth and DevelopmentStages of GrowthIndustrial Filtering (Life Cycle Model)Adding New Work to OldHow Do Cities Move from One State to the Next?Circular Flow DiagramElements of the Circular Flow ModelEquilibrium and ChangeThe MultiplierThe Export Base Theory of GrowthThe Formal Income ModelHow to Operationalize the Export Base ApproachImpact Studies and Export Base ForecastsCritique of the Export-Base ApproachPrimacy of ExportsImport SubstitutionProductivityExports Not Always ExogenousSmall versus Large RegionsFeedbacks among RegionsNon-basic Activities May Not IncreaseLong-Run Instability of the MultiplierExcessive AggregationSupply-Side ApproachesIntermediate InputsEntrepreneurshipCapitalLand (Environmental Resources)LaborSupply and Demand Side Approaches: A Synthesis6.Additional Tools for Regional AnalysisShift and Share AnalysisAn ApplicationCritiqueEconometric and Simulation ModelsEconometric ModelsCaveatsImportance-Strength AnalysisInput-Output: AnalysisThe Transactions TableThe Table of Direct CoefficientsThe Table of Direct and Indirect CoefficientsInput-Output Applications7.Institutionalist Perspectives on Local DevelopmentExternal Benefits from Economic DevelopmentJob and Income CreationFiscal ImprovementPhysical ImprovementsWho Benefits From Growth?Characteristics of Resource SupplyOpponents of GrowthSubsidies, Competition and Economic DevelopmentIs Local Economic Development a Zero Sum Game?Inefficiency and OversubsidizationDiscretionary versus Entitlement SubsidiesCost Minimization versus Human Capital StrategiesSocial Capital and Economic DevelopmentGeneric Economic Problems and Social CapitalAmbiguous Reception of Social CapitalSocial Capital and Local Development StrategiesUsing Social Capital to Mitigate Economic Development ConflictsSocial Network Analysis: Getting the Right People to the TableTargeting Development EffortsCluster-Based Economic Development8.Local Economic Development in a Flattening WorldModels of Trade and Resource FlowsComparative AdvantageResource MobilityEconomics of MigrationRetiree-Migrant Development StrategyMobility of CapitalInnovations and IdeasSpatial DiffusionImplications for Regional DevelopmentMobility and Development PolicyJobs-to-People versus People-to-JobsImmigration and Urban Development9. Land UseWhat Gives Land Value?Land Rents and ValueThe Nature of Rent, Productivity and AccessHighest and Best UseThe Land Development ProcessDeveloper GoalsThe Market StudyEnvironmental Impact StatementsProfit FeasibilityThe Development DecisionImplications of Financial Analysis for LEDLand-Use PatternsThe Monocentric City ModelThe Desity GradientRoads and Axial DevelopmentAgglomeration and the Multiple-Nuclear CitySpeculationChanging Land Use PatternsEvaluating Metropolitan Spread (Urban Sprawl)Land Use and Economic Development ToolsZoning and Its CriticsFlexibility and Land Use RegulationsThe Eminent Domain ControversyRights to Land and Economic Development10. Housing and Neighborhood DevelopmentFundamentals of Housing EconomicsHedonic PricingUncertainty, Market Imperfections, and CompetitionResidential Location and Neighborhood ChangeThe Filtering-Down TheoryThe Trade-Off ModelThe Cultural Agglomeration ModelThe Tiebout ModelThe Aggregate Economic Fallout ModelInitiating and Perpetuating the Change ProcessHousing Policy IssuesRent Control versus Market ForcesIncome Support versus Housing AssistanceSupply versus Demand Side AssistanceGhetto Dispersal versus Ghetto ImprovementDwelling-Unit versus Neighborhood DevelopmentLinkage Between Local Housing and Global Financial MarketsRetail and Commercial NeighborhoodsThe Social Economy of NeighborhoodsCommunity Development CorporationsCooperativesCommunity Gardens11. Poverty and Lagging RegionsThe Nature of PovertyConceptual ApproachesDemographics of PovertySpatial Concentrations of Urban PovertyRegional Linkages: The Spread and Backwash EffectsEmpirical Studies of Spatial LinkagesSpatial Linkages and Theories of Spatial PovertyPolicy IssuesStrengthening LinkagesImproving ProductivityAddressing Wage RigiditiesEmployment Guarantee Schemes in IndiaIncome Support12.Local Governance, Finance, and Regional IntegrationSpatial Perspectives on Government FunctionsDistribution and the Race to the BottomLocal AllocationPublic Transportation – An ExampleSize and Scope of Local GovernmentsEconomies and Diseconomies of ScaleDecision-Making CostsImproving Government EfficiencyUsing Prices and FeesLocal Taxation and Economic DevelopmentAccountabilityIntergovernmental CompetitionIntergovernmental Grants and CoordinationRearranging FunctionsPrivatizationMarket Based Reforms in EducationFiscal Impact and Benefit-Cost StudiesFiscal Impact StudiesBenefit-Cost Analysis13.Local Economic Development PlanningThe Future and Local DevelopmentConcern with Values and AttitudesTechnological ChangeSystems OrientationImportance of TimingPlanning Perspectives on Development PolicyThe Planning ProcessLimits of PlanningPlanning and Future Studies ToolsDelphi ForecastingGamesScenariosEnvironmental ScanningAbout the Author