A Quasi-market Framework for Development Competition

This article describes a quasi-market framework to integrate the diverse perspectives on local government development competition found in the economic development literatures. Within this framework local governments seek to obtain positive externalities associated with economic growth through the provision of services and inducements to private firms in exchange for commitments of employment and investment. Efficient pursuit of economic development is impeded by market and governmentfailures. Better understanding of how the quasi-market for economic development works promises to enhance our understanding of the relationships betiveen economic and political demands and local development with important implications for evaluation of local growth policy and development competition. The field of economic development has been subject to controversy and acrimonious debate. The local economic development literature rnight easily be characterized as a hodgepodge of conflicting perspectives that do not speak to or with each other (Cheshire & Gordon, 1998). Nowhere is this more evident than with efforts to evaluate government competition to attract growth. While some welfare economists contend competition among local governments creates economic benefits (Kotler, Haider, & Rein, 1993), critics reject efficiency arguments and offer multiple altemative conceptual frameworks and languages to evaluate development competition. Some scholars contend incentive competition is irrational and destructive because it spurs zero-sum or negative sum competition; they characterize development subsidies as corporate welfare (Howard, 1994). Other commentators depict development policy as driven by, and principally benefitting, a small set of land or property-based interests (Logan & Molotch, 1987; Molotch, 1976), or a goveming coalition or regime that supports growth interests (Stone, 1989; Stone & Saunders, 1987). The planning and growth management literature also condemns development competition because development imposes substantial and often uncounted costs on communities and their residents (Tumer, 1990). Relying on a different conceptual framework, public choice work is also critical of development competition. While this approach embraces govemment competition in the provision *Direct correspondence to: Richard C. Feiock, Askew School of Public Administration and Policy, Florida State University, Tallahassee, FL 32306. E-mail: [email protected] JOURNAL OF URBAN AFFAIRS, Volume 24, Number 2, pages 123-142. Copyright C) 2002 Urban Affairs Association All rights of reproduction in any form reserved.