economic growth

Exploring the Tradeoffs Local Governments Make in the Pursuit of Economic Growth and Equity

July 1, 2021 // 0 Comments

By Eric Stokan (University of Maryland, Baltimore County), Aaron Deslatte (Indiana University Bloomington), and Megan E. Hatch (Cleveland State University)| Local governments play a central role in promoting the economic health and vitality of their community.  Ensuring adequate jobs and bolstering revenues falls squarely within the purview  of municipal governments, and they have the capacity to use a range of policy tools to this end (tax abatements, tax increment financing, business incubators, etc.).  Research has noted a shift in the type of policies that have been used over time, referencing distinct economic development “waves” where local governments in the United States have shifted focus from business attraction to retention to entrepreneurship and more recently to promoting equity and sustainability.  This is reflected in the type of policies they use, from traditional financial tax incentives like property tax abatements to retention surveys to business incubators and finally to community development loans and provisions to ensure affordability of housing and the formation of community development corporations.  Researchers have long been curious about the factors that drive the decision to use certain types of policies and why local governments would place greater weight on goals related to economic growth than on equity or sustainability. Read More