Feiock, Richard C., Melvin Dubnick, and Jerry Mitchell, “State economic development policies and national economic growth,” PUBLIC ADMINISTRATION QUARTERLY 17 (1, Spring), 1993: 55-67.
AI-Generated Summary:
States have played a central role in U.S. economic growth through policies that influence market size, competition, and investment incentives.
Role of State Governments in Economic Policy
- State governments influence the national economy by expanding markets, manipulating competition, and reducing business risks through various policies.
- They provide financial resources like tax incentives and loans, and develop zones and programs to encourage private investment.
- Research shows state policies have significant marginal impacts on economic growth, contrary to earlier beliefs of ineffectiveness.
- State actions can affect private sector decisions, including firm location, expansion, and investment, especially when costs are considered.
Effectiveness of State Development Policies
- Early studies suggested local policies had little influence on firm location, but recent research indicates they are more impactful.
- Incentives like tax breaks and training programs influence business decisions and can stimulate manufacturing growth.
- Econometric models demonstrate positive effects of state policies on employment, investment, and economic performance.
- Incentives are especially influential in high-unemployment regions, where competition for business is intense.
Interregional and International Implications
- Development competition among states can be positive-sum, leading to overall economic gains rather than just redistribution.
- High unemployment regions benefit from incentives, attracting capital and reducing labor migration.
- Internationally, state policies can improve U.S. competitiveness by lowering costs and increasing exports.
- Regional mobility of labor and capital determines whether development outcomes are zero-sum or positive-sum.
Future of State Economic Policy-Making
- Despite predictions of decline, states actively contribute to economic growth through diverse policies.
- States are already involved in shaping national economic strategies and often implement federal programs.
- Inconsistencies between federal and state policies highlight the need for integrated approaches.
- More recognition of state roles can enhance national economic development and policy effectiveness.