Do Local Governments Listen to the Experts?
A Comprehensive Qualitative Analysis of Local Economic Development Policies
Seth Pipkin (University of California, Irvine)
When Amazon.com, Inc. announced its search for a second headquarters in 2017, 238 localities across North America worked to submit proposals. While the media and much of the general public focused on the spectacular incentive packages and which cities were poised to “win,” less attention was paid to how these proposals offer novel and sought-after information about how cities practice economic development policy across a wide range of areas. Localities were asked to offer highly systematic documentation of a wide range of economic development policies, and with an unprecedented degree of time and human effort they responded in earnest.
A Unique Window into Local Decision-Making
This research shifts our attention from a corporate contest to an unprecedented comparative dataset. By analyzing 106 detailed proposals (87 full-text, 19 partial) – from major metropolises to small towns across the US and Canada – the study provides the most comprehensive snapshot to date of local economic development (LED) strategies in North America. Unlike studies that examine a small set of in-depth cases or which rely on survey data, this study leverages these proposals’ remarkably detailed and similarly-structured views into the economic development policy “packages” that localities assemble.
The Surprising Dominance of the “Big Middle”
Much of the research on this topic posits a largely “either/or” relationship between two main types of economic development policy – “investments” in public goods like infrastructure and workforce investment, and “incentives” for individual firms such as tax subsidies and cash giveaways. They are generally viewed to arise from different, competing logics of local economic competition and political calculi. Adopting one type of policy is also normally assumed to make it difficult to set aside scarce resources for policies from the other style. Yet this paper finds that the vast majority of localities pursue a mixed policy approach. This “big middle” strategy, found in the large majority of proposals, balanced firm-specific incentives with broader public investments.
In practice, then, it appears that local policymakers hedge their bets, offering tax breaks while simultaneously investing in transit, education, and quality of life amenities.
Isomorphic Policy-Making in the Background
Our findings show that LED policy mixes tend to not be highly responsive to the specifics of local contexts, needs and resources. This implies a strong isomorphic tendency – that is, localities tend to gravitate toward conforming what they believe will be broadly perceived as best practices.
These isomorphic tendencies extend beyond the localities’ balances between incentive, workforce, and infrastructure policies into which policies are actually reported. While research observes the presence and advantages of more organizationally “complex” policies such as multi-stakeholder partnerships for workforce development and custom services to businesses, we found that these policies were under-reported, to the point where localities that have been documented to actively practice them did not mention them in their economic development policy profiles. This puzzling finding points to two main possibilities – that either localities don’t think their audiences will value these policies, or that local leaders themselves are not clear on what they are or how to describe them.
Exceptions Exist, and They are Diverse
While the “big middle” dominated, this study identifies instructive exceptions. A significant number of “extreme” cases in terms of policy adoption was identified, and they broke into largely two disparate sub-groups – one betting big on financial incentives to individual firms, and the other placing heavy emphasis on public investments largely to the exclusion of incentives. Here, a known relationship between policy choice and incomes did appear, with “incentive specialists” having much lower-than-average incomes, and “investment specialists” having somewhat higher-than average incomes. Within these groups, and especially the investment specialists, there was a diversity of locality sizes, regions, and economic structures, suggesting that these options are not solely available to a limited set of places.
Methodological Innovation for Complex Comparisons
This research makes methodological contributions by employing a relatively nascent approach (“Large-N Qualitative Analysis”) to compare diverse policy commitments across highly varied contexts. This allows us to preserve the richness of detailed, often narrative- and process-focused documents while allowing large and small localities to be compared on the basis of how they choose to make commitments to a given “mix” of LED policies.
Implications beyond Economic Development
This research speaks to fundamental questions in urban governance and policy-making.
For political scientists, it adds to our understanding of how local governments balance competing pressures from business interests and citizens’ needs, as well as short-term versus long-term considerations. The dominance of mixed strategies suggests a political logic of trying to satisfy multiple constituencies and needs.
For public administration scholars, the prevalence of organizationally simple policies over complex partnerships poses questions regarding how local politicians and elites understand their own institutions and resources, as well as how they understand the interests and needs of audiences such as employers and investors.
For urban planners, the tension between place-specific needs and isomorphic pressures highlights ongoing challenges in developing contextually tailored strategies in an era of shifting inter-urban competition.
For policy scholars, the findings offer a higher degree of empirical precision and comprehensiveness into local policy priorities.
Looking ahead
As cities worldwide grapple with post-pandemic recovery, inequality, and climate challenges alongside shifting patterns of where people live, work, and spend leisure time, understanding how localities approach economic development is highly relevant. This study suggests that despite decades of debate and criticism emphasizing how local officials fall into myopic, short-term giveaways to businesses, practitioners tend to pursue middle-ground approaches aimed to speak to a variety of audiences and needs.
The Amazon HQ2 competition may be over, but the proposals it generated provide lasting insights into the policy commitments of North American localities. By thoroughly examining the data these proposals contain, this research opens new avenues for understanding how cities navigate the perpetual challenge of fostering economic prosperity while serving diverse community needs.
Seth Pipkin is an associate professor in the Department of Urban Planning and Public Policy at the University of California, Irvine. His research focuses on the political economy of regional economic development, industrial upgrading, and growth coalitions in Latin America and the United States.