Competition and Cooperation in Economic Development: A Study of the Twin Cities Metropolitan Area

Abstract

The competition between local governments for economic development is generally regarded as producing both inefficiencies and inequities. Competition forces governments to increase subsidies and incentives offered to private firms, favors new firms over existing businesses, and often results in merely the relocation of investment rather than in increased levels of private sector activity. Economic development policies in the Twin Cities metropolitan area are examined to determine the extent and patterns of competition as well as the potential for cooperative development between neighboring governments. The findings reveal that competition and cooperation are not opposites, and in fact exist side by side. Although prospects for cooperative approaches seem good, competition is also likely to continue.