------- Forwarded Message Follows -------
Date: Mon, 25 Nov 1996 14:32:58 -0500
To: John Holden <jholden@agvax2.ag.ohio-state.edu>,
cenet@agvax2.ag.ohio-state.edu
From: johnsont@vt.edu (Tom Johnson)
Reply-to: johnsont@vt.edu (Tom Johnson)
Subject: Re: Abatements, Princ #1, The Game
John Holden wrote:
>It seems to me that the local economic developer is really put into a game
>that they must play. That is, they are expected to compete in this "market"
>for incentives trying to attract new (big) employers. At the same time,
>however, much of what we know about *community* and economic development
>would encourage the developer to spend more time on improving the existing
>conditions (education, training, attractiveness, etc.). The payoffs for job
>performance, particularly political, however favor the tougher tasks of the
>incentive-attraction game.
>
>Question: How often do we HEAR about incentives being used on existing
>businesses? Is it because it is not as much as a news getter when a
>developer helps to bring in an incentive for a business expansion as opposed
>to bringing in a new firm? Or is it because many of the states incentive
>packages are designed for attraction efforts?
I don't know how wide-spread the practice of providing incentives to
existing industries is, but I know that here in Montgomery County Virginia,
we have a formula that treats new and expanding firms equally. One of our
major achievements (I am chair of the economic development commission) was
to an award an existing industry modest support to expand its operation
rather than move to an alternative location. In addition, neighboring
communities have supported two existing industries in a similar fashion.
These projects generate little attention in the media, but have had
important impacts on the economy and on the business environment.
The greatest risk involved in supporting existing industries is in setting a
precedent which encourages others to extort financial support from their
local government. So far we have not been deluged by requests for support
from existing industries. Many firms simply expand or start-up on their
own. Others, despite our efforts, close their doors and relocate.
tom
Thomas G. Johnson
Professor of Agricultural and Applied Economics 0401
Virginia Tech
Blacksburg, VA 24061
Office: 540-231-6461 Fax: 540-231-7417
Home: 540-382-5327 Home Fax: 540-382-2005
johnsont@vt.edu
Associate Professor
Dept. of Ag. Economics & Rural Soc.
University of Idaho
Moscow, ID 83843
http://www.uidaho.edu/~scooke/onepercent
208-885-7170 (phone)
208-885-5759 (fax)