State Economic Policy: The Emerging Paradigm

Abstract

The conventional paradigm of state economic development policy focused on the attraction of firms from outside the state. Since the early 1970s, the states have expanded their concern to include development of the state economy as a whole. Out of the ad hoc experimentation of the past 2 decades is emerging a new paradigm of state economic development policy with three principal elements. The first is a concept of economic development as a process rooted in a market-driven private sector. The second is a new set of state responsibilities, including a wide range of public actions that affect the process of development. And the third is a set of new institutional capacities required for shaping and carrying out those new responsibilities. During the 1980s, states attempted to devise economic strategies that accounted for their new responsibilities, which had been only dimly defined. In the 1990s, states also will need institutional change strategies required to develop the capacity to more sharply define and carry out those responsibilities.