1. Economic Development Overview Arthur C. Nelson, Ph.D., FAICP University of Utah Arthur C. Nelson, Ph.D., FAICP University of Utah

2. Key Economic Development Goals Create jobs Improve wages Reduce unemployment Enhance tax base Create economic resilience Advance family and social quality of life Stabilize declining/stagnating areas Improve competitiveness Establish economic linkages Create jobs Improve wages Reduce unemployment Enhance tax base Create economic resilience Advance family and social quality of life Stabilize declining/stagnating areas Improve competitiveness Establish economic linkages

3. Purposes of Government Growth Growth Economic, cultural, social, quality of life Economic, cultural, social, quality of life Stability Stability Soften down-turns, provide certainty and predictability Soften down-turns, provide certainty and predictability Distribution Distribution Elevate lesser-endowed to elevate all of society Elevate lesser-endowed to elevate all of society Allocation  A Major Planning Role Allocation  A Major Planning Role Allocate resources efficiently, such as land, natural resources, public budgets, etc. Allocate resources efficiently, such as land, natural resources, public budgets, etc. Growth Growth Economic, cultural, social, quality of life Economic, cultural, social, quality of life Stability Stability Soften down-turns, provide certainty and predictability Soften down-turns, provide certainty and predictability Distribution Distribution Elevate lesser-endowed to elevate all of society Elevate lesser-endowed to elevate all of society Allocation  A Major Planning Role Allocation  A Major Planning Role Allocate resources efficiently, such as land, natural resources, public budgets, etc. Allocate resources efficiently, such as land, natural resources, public budgets, etc.

4. Allocation and Efficiency Technical efficiency DMV; DABC Examples “Pareto” efficiency At least one person better off and no one worse off “Potential” efficiency The gains of the winners are larger than the losses of the losers Compensatory efficiency Losers get compensated from gains Technical efficiency DMV; DABC Examples “Pareto” efficiency At least one person better off and no one worse off “Potential” efficiency The gains of the winners are larger than the losses of the losers Compensatory efficiency Losers get compensated from gains

5. Allocation and Equity Horizontal equity Equal protection Vertical equity Ability to pay Equity of endowments Inherent advantages by birth, connections, etc. Equity of process Some people can get ahead of the line Equity of outcomes Jobs from Ivy League admission based on “legacy” Horizontal equity Equal protection Vertical equity Ability to pay Equity of endowments Inherent advantages by birth, connections, etc. Equity of process Some people can get ahead of the line Equity of outcomes Jobs from Ivy League admission based on “legacy”

6. Why Government Provision? Private goods Public goods Merit goods Spillovers and free-riders Monopolies Price and income sensitivity Private goods Public goods Merit goods Spillovers and free-riders Monopolies Price and income sensitivity

7. Private Goods Which of the following ought to be left to the market to determine the price? Hamburgers Cars Clothes National parks Clean air Which of the following ought to be left to the market to determine the price? Hamburgers Cars Clothes National parks Clean air

8. Public Goods Can’t exclude: No admission costs or paying bills Can’t congest: Enjoyment or quality is not reduced with more users No one worse off with more people using it Examples National defense Lighthouses Air (assuming no one pollutes – separate issue) Can’t exclude: No admission costs or paying bills Can’t congest: Enjoyment or quality is not reduced with more users No one worse off with more people using it Examples National defense Lighthouses Air (assuming no one pollutes – separate issue)

9. Merit Goods May be exclusive (have to pay to use) or “congestible” (new users erode enjoyment of existing users) but not both. Beaches, community parks, cable TV Future value to society may be more than current value in the market. Education, farmland May be exclusive (have to pay to use) or “congestible” (new users erode enjoyment of existing users) but not both. Beaches, community parks, cable TV Future value to society may be more than current value in the market. Education, farmland

10. Spillovers and Free Riders Spillovers (aka “externalities”) City approves development creating traffic congestion in the adjacent city Solution: Internalize externalities Free-rider Affordable housing in one city used to help provide the work force in another. Solution: All cities share in providing affordable either directly or through regional financing schemes. Spillovers (aka “externalities”) City approves development creating traffic congestion in the adjacent city Solution: Internalize externalities Free-rider Affordable housing in one city used to help provide the work force in another. Solution: All cities share in providing affordable either directly or through regional financing schemes.

11. What IS Economic Development? Economic development is the increase in the standard of living of the population. Is the process & policies to improve economic, political, and social well-being of people. Competing though not exclusive measures: Aggregate economic improvement  higher average wages though skewed to top end Individual economic improvement  Higher median wages (half earn more and half earn less)  lower end benefits Economic development is the increase in the standard of living of the population. Is the process & policies to improve economic, political, and social well-being of people. Competing though not exclusive measures: Aggregate economic improvement  higher average wages though skewed to top end Individual economic improvement  Higher median wages (half earn more and half earn less)  lower end benefits

12. ED Conceptually Economic development means social & and technological progress. Implies a change in the way goods and services are produced, not just an increase in production achieved using the old methods of production on a wider scale. Transitioning from manual automobile assemble to robotic assembly Economic development means social & and technological progress. Implies a change in the way goods and services are produced, not just an increase in production achieved using the old methods of production on a wider scale. Transitioning from manual automobile assemble to robotic assembly

13. Measuring ED Economic Growth usually means an increase in quantitative output; it may or may not involve development. Economic growth often measured by rate of change of gross domestic or gross regional product (percent GDP/GRP increase per year.) GDP/GRP is the aggregate value-added by the economic activity within an area. Economic Growth usually means an increase in quantitative output; it may or may not involve development. Economic growth often measured by rate of change of gross domestic or gross regional product (percent GDP/GRP increase per year.) GDP/GRP is the aggregate value-added by the economic activity within an area.

14. ED Outcomes ED usually intended to improve Literacy rates (education) Life expectancy (health) Poverty rates “New theory” of ED adds improvement to Leisure time Environmental quality Social justice ED usually intended to improve Literacy rates (education) Life expectancy (health) Poverty rates “New theory” of ED adds improvement to Leisure time Environmental quality Social justice

15. Economic Development Policy ED Policies encompass three major areas: 1 Government action to achieve price stability, high employment, and sustainable growth. Monetary policies  adjusting interest rates Fiscal policies  spending or cutting taxes Regulating financial institutions Modifying trade, and tax policies ED Policies encompass three major areas: 1 Government action to achieve price stability, high employment, and sustainable growth. Monetary policies  adjusting interest rates Fiscal policies  spending or cutting taxes Regulating financial institutions Modifying trade, and tax policies

16. Economic Development Policy 2 Programs that provide Infrastructure such as highways, schools, parks Services such housing, crime prevention Education 3 Job creation and retention through Business finance & marketing Neighborhood development Small business dev & business retention/expansion Technology transfer Real estate development. 2 Programs that provide Infrastructure such as highways, schools, parks Services such housing, crime prevention Education 3 Job creation and retention through Business finance & marketing Neighborhood development Small business dev & business retention/expansion Technology transfer Real estate development.

17. Economic Development Profession Economic development professionals: Provide leadership in policy-making Engage in business recruitment through analysis and marketing Administer policy, programs, and projects. Economic development professionals: Provide leadership in policy-making Engage in business recruitment through analysis and marketing Administer policy, programs, and projects.

18. Economic Development Profession Economic development practitioners Work in public offices at the state, regional, or local level In public-private partnerships organizations partially funded by local, regional, state, or federal tax money. Economic development organizations (EDOs) are individual entities and sometimes departments of local governments. Their role is to seek out new economic opportunities and retain their existing business wealth. Economic development practitioners Work in public offices at the state, regional, or local level In public-private partnerships organizations partially funded by local, regional, state, or federal tax money. Economic development organizations (EDOs) are individual entities and sometimes departments of local governments. Their role is to seek out new economic opportunities and retain their existing business wealth.

19. Economic Development Profession Other organizations also engage in economic development on their own or in partnership with others. Understand why. News media Foundations Utilities Schools Health care providers Faith-based organizations Colleges, universities, research institutions. Other organizations also engage in economic development on their own or in partnership with others. Understand why. News media Foundations Utilities Schools Health care providers Faith-based organizations Colleges, universities, research institutions.

20. ED Competition Intense competition between communities and states for new economic development projects. Economic incentives include: Tax incentives Help with investment capital Donated land and goods Labor force training Trick is to tailor incentives to prevent opportunity costs Intense competition between communities and states for new economic development projects. Economic incentives include: Tax incentives Help with investment capital Donated land and goods Labor force training Trick is to tailor incentives to prevent opportunity costs

21. ED Professional Technical Roles Community profiling tools and database templates to measure community assets versus other communities Job creation, economic output, and increase in taxable base most common measurement tools. ED professionals do not create jobs, but facilitate the process. Community profiling tools and database templates to measure community assets versus other communities Job creation, economic output, and increase in taxable base most common measurement tools. ED professionals do not create jobs, but facilitate the process.