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UST 200 Introduction to Urban Studies

UST 200 Introduction to Urban Studies. Chapter 10 The City Grows (Economic Development). Economic Development. Local economic development is different than local economy ! Local Economy defined as

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UST 200 Introduction to Urban Studies

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  1. UST 200 Introduction to Urban Studies Chapter 10 The City Grows (Economic Development)

  2. Economic Development • Local economic development is different than local economy! • Local Economy defined as - Bundle of activities that pertain to the production, development and management of material wealth in a local geographic area

  3. Local Economic Development • Defined as • Public sector role in the process of local economy • “role of the public sector in facilitating and promoting the creation of jobs and wealth by the private sector, and to ensure that it does it in a way that serves the short-run and long run interests of the broad population.” • Richard Bingham

  4. Local Economic Development • Begins in Mississippi in 1937 • State issues first industrial development bond • State can borrow at cheaper rates • Borrow and then lend to developer to make the project go • Savings on interest makes project viable

  5. Local Economic Development • First era to 1960s • Primary activities • Attract industry from one state to another • Called smokestack chasing • Second era early 1960s to early 1970s • Promote equity and increase demand through redistribution • Provided subsidies to individuals and regions in poverty (all gov’t levels) • Major emphasis on education etc

  6. Local Economic Development • Third phase 1970s • Stimulate economic development by combining smokestack chasing and private sector development • Focus on service sector (industry) to provide jobs • Fourth and current phase • Generative development • Small businesses generate jobs rather than large corporations • Focus then shifts to rewarding entrepreneurship and assisting small to medium size firms • Gov’t shifts away from job creations strategies to those of creating wealth which then would create jobs

  7. Local Economic Development • Theories • Give us understanding of shape and layout of the city • Economic Base Theory • Began in 1920s • Manufacturing and Service • Basic and Non-basic industries • Multiplier effects

  8. Local Economic Development • Basic industries • Engine for regional wealth • Good produced sold outside region • Employees and company purchase goods/services within the region • Service industries (non-basic) • Provide services to the Basic industry

  9. Local Economic Development • Multiplier effect • Creation of new jobs by flow of money though the local economy • Basic seen as generating a higher number than non-basic • Printers, restaurants, car dealerships etc • Tends to be overstated when “selling” a project

  10. Local Economic Development • Companies attracted to an area due to: • Economies of scale • Access to larger scale or operation • Urbanization economies • Access to skilled labor, financial resources etc. • Location economies • Information flow and specialization

  11. Local Economic Development • Industry clusters • Business that supply one another • Backward linkages • New firms arrive to provide services to existing ones • Forward linkages • Parts produced in the area are used in another product other than the original use

  12. Local Economic Development • Location quotient • Tool to measure impact of Basic industries • Measures concentration of employment within that specific industry vs regional and national employment • When local exceeds regional/national then local is specializing in that good or (now) service)

  13. Local Economic Development • Problems with Economic Base Theory • How do we define size of city or region? • What is a “Basic” industry? • Are all service industries non-basic? • Solution – measure money flows?

  14. Local Economic Development • Comparative Advantage (Porter) • All areas will have an advantage at producing something • Advantage determines what will be produced and what will be imported to area

  15. Local Economic Development • Product Life Cycle (Markusen) • Product has set life cycle • Urban areas best for early and mid-life • Outsourcing to low labor areas occurs in the mature stage

  16. Local Economic Development • Federal Government Policies • Small Business Loans • Information sharing • Indirect activities • Funding roads and airports lowers transportation costs

  17. Local Economic Development • State Government Policies • Tax abatement • Tax incremental Financing (TIF) • Indirect activities • Funding roads

  18. Local Economic Development • Local Government Policies • County mainly but also city if large enough • Procurement of business • Site selection assistance • Indirect activities • Funding roads

  19. Local Economic Development • City policies • Growth • Entice new industries to area • Focus on more of the same • Development • Find new industry to bring to area • Use base industries to see what spin offs can be • Medical leads to biotech

  20. Local Economic Development • Special Districts policies • Can provide special services • Some can act as a loan agent • Port Authority

  21. Local Economic Development • Regionalism • Cooperation and consolidation • TEAMNEO (Cooperation example) • Quality of Place • Environment is amenable to diversity • Quality of Talent • Workforce education and ability

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