Professor Turner December 2006

State and Local Economic Development
Final Exam
GO 331

Answer question #1 and any ONE other essay question for 2 total questions. You may use the readings and notes. You may not consult with your classmates. You answers are due in my mailbox at 3 pm on Friday, December 22. They should be typed and no single essay answer should exceed 7 pages. Because you are able to use your notes and have unlimited time, I am expecting coherent, well reasoned, and well documented answers.

Some advice for essay questions

1. Make a coherent argument in response to each question. Make sure you answer each sub-question and relate it back to the larger argument.
2. Use the readings and authors names in your answer. (e.g. Eisinger argues that cities must ….)
3. Use specific examples to support your arguments. The ID terms are a good place to start.
4. Make sure to define the concepts you use in your answers. Export base is . . . .

You essay answers will be evaluated based upon
1. the clarity of your argument
2. the use of the readings and lectures
3. the creative use of examples from lectures and readings to make your arguments
4. the clarity of concept definitions.

You must answer #1.
1. Nowhere is economic development more necessary and crucial than to America’s inner cities. Write an essay in which you assess:

a. Why are cities in such poor shape? What are the specific economic development challenge facing inner cities?
b. Evaluate the following four economic development policies cities are pursuing. Please detail how the policy works in theory and practice and how effective they are from an economic and political perspective.
i. Place based versus people based strategies
ii. Michael Porter’s market based strategies
iii. Entertainment/Tourism strategies
iv. Creative Class strategies
c. Which strategy or combination of strategies would you recommend and why?

Answer 2, 3, or 4

2. You are sitting next to your governor or mayor on your flight home for the holidays. After she finds out you have taken a class on state and local economic development strategies, she asks you – what works and what doesn’t? Specifically, she wants to know what you think are the best 2 or 3 ideas for what works and the worst 2 or 3 ideas of what doesn’t. She also wants to know what evidence there is that these policies work or don’t.

3. One of the common criticisms of economic development policies is that they are well intentioned, but poorly executed. The key to improving such policies is better implementation and evaluation of such policies.

a. How can we improve the implementation of economic development policies, that is ensure they create good jobs at good wages? How successful have states been in implementing clawbacks, job quality standards, and other ideas to their economic development policies? What are the limitations of these approaches? Why might such recommendations seem better in theory than in practice?
b. How well do states evaluate their economic development policies? What are some of the difficulties in evaluating economic development policies? (Good Jobs First) What does the evaluation of Honda in Ohio tell us about both how a good evaluation should be done as well as the what the limits of even a good evaluation are? (Marvel and Shkurti, Reese and Fasenfest)
c. What would scholars of the politics of economic development policy say about the prospects of improving the implementation and evaluation of such programs?

4. Critics of supply side or industrial recruitment economic development policies have derided such policies as “a fancy term for corporate welfare,” “a new war between the states,” and “un-American.”
a. Does it ever make sense to offer incentives to firms (Bartik, Fisher and Peters)
b. Why are incentives a bad tool for promoting economic development (Eisinger 1988, Burstein and Rolnick, Good Jobs New York)?
c. Are they as “bad” as critics claim, and if they are so bad, why do mayors and governors continue to offer them (Lindblom, Peterson, Rubin, Eisinger 1995, NC case study)?
d. Are such policies as prevalent as critics claim (Hanson)?



State and Local Economic Development

Final Exam Study Sheet

I will email you the final exam on Friday afternoon, December 15. I will give you a choice of THREE of the 4 essay questions.  You will have until 3 pm on Friday, December 22 (the Winter Solstice) to hand in your final exams. They should be typed and no single essay answer should exceed 5 pages. Below is a list of important concepts and questions we have discussed from the readings and lectures to help focus your studies. You may collaborate with your classmates in discussing these concepts, sharing notes, etc until I email you the exam on friday whereupon all communication must cease.

Some advice for essay questions

1.      Make a coherent argument in response to each question.  Make sure you answer each sub-question and relate it back to the larger argument. 

2.      Use the readings and authors names in your answer.  (e.g. Eisinger argues that cities must ….) 

3.      Use specific examples to support your arguments.  The ID terms are a good place to start.

4.      Make sure to define the concepts you use in your answers.  Export base is  . . . .

You essay answers will be evaluated based upon 

1.      the clarity of your argument

2.      the use of the readings and lectures

3.      the creative use of examples from lectures and readings to make your arguments

4.      the clarity of concept definitions. 

Concepts  --These may help in answering the above questions.

Why Should State And Local Governments Do Economic Development?

Why focus economic development efforts on manufacturing

Privileged Position of Business

Functional Theory of federalism

Market failure approach to regional economic development

The Evolution of State and Local Economic Development Policy

entrepreneurial state

demand side policies

supply side policies

Framework Elements of economic development policy

Distinction between growth and development

Public Benefits Model

Private Benefits Model

Decline Distress Model


The Economic Context

What are the basic trends in New York’s economy in terms of wages and employment?

--What are the political implications?
--What are the implications for economic development policy?

Is there a single state economy?

the limits of tax cutting


September 21 Competing for Business

Location theory

Export base theory

Diconix- Kodak

Trends in Midwest states use of incentives

Types of tax incentives and subsidies

basic arguments for and against incentives

Does economic competition among the states strengthen the economy or squander national resources? Do individual states benefit or lose from the competition when all costs are taken into account?

Industrial Recruitment: The Critics

Burstein and Rolnick on Why Congress Should End the Economic War Among the States

Zero sum development

Economic competition between Wisconsin and Minnesota

Lessons learned from EU subsidy discipline, is it the answer



Improving the Process in Theory and Practice: Clawbacks, Disclosure

Otis Elevator factory in Yonkers NY

Protective ED policies


Competing for Business

EU subsidy discipline

Disclosure/right to know legislation

Job quality standards

Limits of clawback

- counting jobs, implementation, imposing penalties

limits of negotiation strategies

--Why might protective policies seem better in theory than in practice? How do power and politics undermine the best attempts at improving incentive based economic development policies?

  Tech Based Development

regional network based system and the independent firm based system

the industrial structure of firms in Route 128 versus Silicon Valley

location quotient

cluster map

wine industry in California

 “Spatial clustering alone does not create mutually beneficial interdependencies.”  P. 161

“Silicon Valley’s success is due to a few highly motivated entrepreneurs.” True or false and why

How do Clusters create Competitive Advantage

why study Springfield Massachusetts Metalworking Sector

advantages of cluster based training in the Springfield Massachusetts Metalworking Sector

Industry-based research 


Atkinson’s economic development strategies for the New Economy 

Devol’s view of high tech and economic growth

Elements of the “New Economy”

Economic status of Tech Valley


Implications of Central Florida Research Park for research parks

Networked incubator

why the Watervliet incubator has succeeded

Harrison’s view of the job creation and technological innovativeness of small firms


--You have already written about tech based development for the Tech Valley Paper, although you could bring in the tech ed stuff for one of the essay questions. If so, try to focus on the bigger question of what is the potential and limits of tech based development strategies.


Urban Development Strategies

what is the urban underclass dilemma (Kasarda)

role of New Ethnic Immigrants (Kasarda)

economic relationship between suburbs and inner city

transformation of central city economies from manufacturing to service economy

functionally accessible vs. spatially accessible employment

mobility policy

people versus place based development

How have urban economies and distribution of people changed over the past 40 years? What are the consequences for urban ED strategies?


Should urban ED strategies focus on people or place based strategies for reducing poverty? What are the moral and pragmatic arguments for and against them?

People vs. placed based poverty reduction strategies (Ladd)

which enterprise zones work best in Ohio (Turner and Cassell)


the competitive advantage of the cities according to Porter

Porter’s strategies for inner-city economic development

the Opportunity Newark Strategy-

-competitive advantages of Newark

-transportation cluster in Newark

-role of CEDs/CDCs in Newark

-public private partnerships in Newark

Mesbic Ventures (Bates)


Entertaining for Development

-Why did Cleveland and Baltimore choose the entertainment strategy? What did it entail? Who pays, Who benefits?

-How successful have they been? How do the authors measure or define success? What is the appropriate measure?

-What is the policy rationale behind these strategies?

-Is it fair from a policy or political perspective to criticize these strategies for not reducing urban poverty?

Politics of Entertaining

What is the hierarchy of interests in the new politics of bread and circuses?

What does Eisinger mean by bread and circuses? What are the political consequences of bread and circuses ED strategies?

-- What do Judd and Simpson suggest are the defining characteristics of the governing arrangements regarding tourism/sports/entertainment?

What would Eisinger or Judd and Simpson say about the entertainment projects in Baltimore or Cleveland?


-What is the central insight of Florida's creative class theory?

--Can cool or creative places be created? What would a city that wanted to apply Florida's theory do? Be very specific and drawn upon the Memphis and Huntington examples.

Creative Class

Florida’s theory of economic development – the 3 Ts

Memphis Talent Magnet Project

Rocket Valley (Huntington, AL)

Policy Implications of Florida’s Theory

Brain Drain

Measure of Creative Class Economic Success

Why economic development practitioners are systematically biased towards businesses (Rubin)

Shoot everything that flies, claim everything that falls (Rubin)

trophy chasing as an example of the politics of ED, credit claiming



What would Reese and Fasenfest say about evaluation of Honda in Ohio

Value judgments in economic development

Implication of evaluation of Honda in Ohio for other states offering incentives to car makers

Research design of Honda evaluation

Caliber of state audits of economic development