Inter-Jurisdictional Economic Development: A Political Institution Explanation for Policy Choice

Abstract

This study examines the role of formal institutions and rules of government in the formation of joint venture agreements for economic development. Research suggests local governing arrangements play an influential role in the policy area of local economic development. This study presents an argument that form of government provides incentives that influence the decision to establish a developmental, redistributive, or regional interjurisdictional agreement. The results of a multinomial logit model using survey data collected from 12 metropolitan areas provides evidence to support the hypotheses that unreformed governing institutions, compared to cities with an appointed professional manager, are more likely to form joint venture agreements that are developmental in nature.

Keywords:

• local government cooperation
• governing institutions

Notes

¹The analysis focuses on12 metropolitan areas: Boston-Cambridge-Quincy MA, Buffalo-Niagara Falls NY, Columbus OH, Cleveland-Elyria-Mentor OH, Milwaukee-Waukesha-West Allis WI, Salt Lake City UT, Riverside-San Bernardino CA, Denver-Aurora CO, San Francisco-Oakland-Fremont CA, Miami-Ft. Lauderdale-Miami Beach FL, Houston TX, Tampa-St. Petersburg-Clearwater FL.

²To select the cities, the 56 MSAs with a 2000 population of at least 1 million and less than approximately 5 million were first identified. Metro areas of this size make them large enough to be nationally competitive business sites. MSAs that have growth forces associated with very large central cities were eliminated from the selection process (e.g., Los Angeles with 3.6 million and New York City with 8 million). These MSAs were then grouped into the four census regions (Northeast, Midwest, South, and West). This is to account for differences in regional population changes and economic transition between the Northeast/Midwest and the South/West that has had an effect on local policies (Pack, 2005). In each of the four census regions, at least one MSA was selected that had an unemployment rate above and below the census region average in both 1995 and 1999.

³Mean t-tests were conducted between survey responders and non-responders for seven variables: percent non-white, percent in poverty, population, per-capita income, percent age 65 years and older, median household income, and population change between 1990 and 2000. The results indicate that there is a non-response bias toward larger cities (p < .01). Thus, the findings of the empirical analysis are suggestive but not necessarily generalizable to the population of all cities in the MSAs selected for this study (e.g., smaller cities, particularly those under 10,000 in population).

⁴A joint venture for economic development was defined for the survey respondent as a formal or informal agreements established between local governments (for example, between two cities or comparable government units). The response categories were yes and no.

⁵Some studies have created groupings of economic development policies. For example, Feiock and Clingermayer (1992) categorized policies based on the distribution of costs and benefits and the degree to which the policy is visible of government intervention. With a few exceptions, such as Pelissero and Fasenfest's (1989) study that classifies the development policy as being aggressive, regulatory, cooperative, retentive, or reactive, research has not created or included in categories of joint ventures for economic development purposes.