Attributes of Development Tools: Success and Failure in Local Economic Development

Abstract

This article examines the attributes of local economic development policy instruments and asks whether these attributes can predict (1) project success as defined in archival data and in interviews of city officials, and (2) revenue generation as defined in conventional return on investment terms. Based on our analyses of quantitative and qualitative data from 40 city-supported development projects nationwide, the lesson for development projects designed or supported because of their revenue-generating potential appears to be that the city's economic condition is an important predictor of the revenue-generating success of a project. Further, the less complicated and the more routine or standard the bundle of incentives offered (especially by economically healthy cities), the greater the probability of revenue-generating success. Project success, however, is related to other factors. The more controversial the project, the more likely that down the road, the city will have an unsuccessful development project on its hands. Knowing the political risk of a project aids in predicting the success of the project.