National Urban Economic Development Policy

ABSTRACT:

National development policy must address uneven economic performance, disparities in unemployment rates, and income inequities between city and suburban residents and between minority groups and whites. The goals of such a policy are improved economic performance and the reduction of intrametrpolitan disparities in the economic well-being of residents. Four policy approaches are identified: productivity enhancing policies, cost reduction subsidies, demand-side policies, and institutional policy. The authors argue that the most effective policy solutions will be drawn from productivity enhancing and institutional policies, especially improving the education and training of the labor force. They suggest that productivity enhancing education and human resource policies are more important to urban economic development than traditional cost reduction subsidies such as tax concessions or enterprise zones. They recommend a variety of institutional policies to provide a more level playing field and reduce nonproductive competition among state and local governments, to improve labor market efficiency, particularly within metropolitan areas, and to reduce metropolitan political fragmentation as a means of reducing disparities within metropolitan areas.