re: Regardless How They’re Counted, Incentives Do Nothing for Economic Development – Jobs & Economy

Hey Adam, Zach, Kim, & Michael!

Just ran across this post, and it made me curious to hear your quick thoughts:

Last Friday, I wrote here on the “uselessness of economic development.” Using The New York Times’s new database on state and local economic development incentives, I found no association between these incentives and key measures of economic performance and found virtually no association for the fifty states.

/via Richard Florida

Obviously, ‘correlation does not mean causation’, and this is state level data which does not take into account local community incentives, *and* quite a bit of what we are trying to do downtown doesn’t really count as ‘incentives’… but, I wonder if there aren’t a few things we can learn from this meta-patern.

Incentives

/via KTRK

Specifically, how can we best incentivize and accelerate the growth of the downtown community, without building a culture that expects hand outs.

Curious, TK.

  • http://thomasknoll.info/ thomasknoll

    Would love to hear from anyone else who has thoughts as well, I just thought of these four folks specifically. =)

  • Downtowner

    In my opinion the incentives, though small and largely insignificant, signal businesspersons that there will be support from the local gov’t….that the gov’t cares and will assist them because this is something THEY want. Most of the time, in my experience, the feeling is that the bureaucrats can’t wait to stand in your way and make life difficult. Lots of time we need to convince the gov’t that it was even THEIR idea..so as to make the process bearable. We must give them more reasons to pat each other on the back. They even talk about the incentive money as “theirs” even though it’s taxpayer (our) money that usually gets paid back through various forms of taxes on the new business.

    • http://thomasknoll.info/ thomasknoll

      Thank you! Interesting how there is a perceived sense of ownership by the govt of those funds… I wonder if we change the common language by being intentional in the way we talk to reporters about utilization of these funds?

  • http://twitter.com/VegasKramer Adam Kramer

    Its funny that I’m reading this after spending an entire day reading reports about state incentives and how awesome they are. Ha! Disclaimer: I don’t claim to be an expert on incentives and their correlation with economic development. I do know that many incentives don’t produce the results their designed too or if they do it is hard to properly measure them. I would not be quick to use any blanket statement as to their efficacy however I don’t believe they are a driver of new business development as much as a resource for business relocation to a certain state or for specific business improvements like energy efficiency.

    However, what I have been reading and seeing from other communities is that a combination of grassroot efforts (entrepreneur lead) in combination with established community organizations (universities, chambers, NGO’s) that work with entrepreneurs can produce measurable change and growth within a startup ecosystem. I believe that this is the most effective way to grow and build a sustainable ecosystem which is why I focus so much of my efforts in this space.

    As an FYI, the word ‘sustainable’ has become part of my vocabulary when talking about startup ecosystems thanks to you TK.

    • http://thomasknoll.info/ thomasknoll

      Well, I’m glad it sounds like it works well for business relocation, since we’d love to help a lot of businesses move into the area to lay some thicker roots in our valley.

      And, I love the idea of combining grassroots efforts with established entities. I wonder if we can create a sustainable framework that would make Nevada an anomaly (or, at least and outlier) in Richard Florida’s research.

      • http://twitter.com/VegasKramer Adam Kramer

        I think we can. Richard Florida was the keynote speaker at the Chamber’s Preview event last year and I was fortunate enough to steal him for a few minutes to talk about building our framework here and wether he thought we had some of the key elements that we needed. Keeping in mind January 2012 is a light year ago compared to where we are now, he was very optimistic about where we were going. The day before he took a tour of downtown with Tony and Ed Glasser and they spoke about what was happening. While I think back then, it was more a frenetic energy that was driving the ecosystem (not sustainable) I think what has grown from it are the seeds of true programs that can create sustainability. The next step (I apologize for the plant analogy) is to water those seeds knowing some will grow, some will die and we’ll need to replant.

        I hope that we can get to this point.

  • http://www.zgware.com/ Zach Ware

    My two cents. I don’t think economic development is a traceable cause and effect endeavor. If I invest $100k in A it’s often hard to trace its positive impact five or six steps down the line. So it’s understandable (not necessarily ok) that agencies tied to government are less likely to invest in things that don’t show results immediately at step A. The general public won’t accept that.

    The other gray area is in the metrics. What *is* success? Most people think it’s simply jobs. I think it’s more complicated than that and I know a bunch of people in government economic development roles who agree. Success is about creating zones of growth potential, places where people can grow themselves and their companies. But if the metric they are judged by is jobs alone, then the agencies are hamstrung into only investing in quantity rather than having the flexibility to invest in quality.

    I think the agencies do great work with the resources and mandates they have. The challenge is convincing leaders, legislators and ultimately the general public that investing in quantity alone doesn’t create the same long-term value as investing in quality first and quantity second. If we can change the perception of success then I think we’ll see a different result in the data.

    • http://thomasknoll.info/ thomasknoll

      *this* =)