Economic Development Strategies
Upjohn Institute Staff Working Paper 95-33
Timothy J. Bartik
January 1995
Abstract
This paper provides a guide to economic development policies for local government
managers. Local economic development policies today include not only tax subsidies for
branch plants, but also job training to provide workers to businesses, advice and support
services for potential entrepreneurs, and extension services to help businesses modernize and
export. To help local government managers, this paper suggests a number of guiding
principles, including: local economic development should be pursued cooperatively across the
local labor market; economic development programs should consider the quality of jobs
created; tax subsidies are expensive per job created; development subsidies are more effective
if the subsidy is frontloaded; high unemployment areas should be more aggressive than low
unemployment areas in promoting job growth; many economic development services can be
cheaply evaluated by business surveys.
This paper was originally written in 1995 as a draft chapter for the Fourth Edition of
Management Policies in Local Government Finance. A totally new version of this paper was written
in 2003 as a draft chapter for the Fifth Edition of Management Policies in Local Government Finance,
and is entitled "Local Economic Development Policies" (Working Paper #03-91). It is available here.
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