Theories of Local Economic Development

Linking Theory to Practice

James E. Rowe, James E. Rowe

• Publisher: Routledge
• Year: 2016
• ISBN:
  9781351879675
• Edition: 1
• Topic: Politics & International Relations
• Subtopic: Local & Regional Planning Public Policy
• Index: Politics & International Relations

In economic development, theory and practice exist as two seemingly separate realities. Academics strive to develop or refine theory by drawing on abstract concepts about the way people behave and institutions work, while practitioners draw from a stock of experiences. By bringing together leading theorists and practitioners such as Blakely, Blair, McCann, Luger, Gunder, Stough and Stimson, this book provides the first comprehensive overview of local economic development theories for over fifteen years. It explores the theory behind the key concepts that every economic practitioner must understand and in doing so, ties together the various theories from across the disciplines to practice.

PART 1
Introduction

Chapter 1
The Importance of Theory: Linking Theory to Practice

James E. Rowe

The discipline of local economic development¹ is a complex mix of concepts, practices and rhetoric. In this writer’s opinion, the economic development discipline lacks a dedicated coherent body of theory. Some scholars, such as Bingham and Mier (1993, p. ix), disagree and maintain that the theoretical underpinnings of economic development are a compilation of numerous theories derived from a wide variety of disciplines². Although academic disciplines³ such as economics, geography, resource management, regional science and planning provide significant insights; understanding economic development requires a unique blending of all relevant disciplines (Shaffer et al., p. 72). As a result, Shaffer et al. argued that it is generally accepted, from a practitioner’s perspective, that the concept of economic development as an interdisciplinary field of endeavour. In support, Koo (2005, p. 100) has noted that a “basic knowledge of economic and other related theories is a necessary condition for an in-depth understanding of the [economic] development process”.

In economic development, as in many other areas of human activity, theory and practice exist as two seemingly separate realities. Academics strive to develop or refine theory and engage in the pursuit of disciplinary truths by drawing on abstract concepts about the way people behave and institutions work (Flyvbjerg, 2001, pp. 25–37; Moore, 1980, p. 19). Practitioners draw from a stock of experiences. The theorists often do not specify how theoretical frameworks relate to the real world and practitioners often do not understand or appreciate theory. The dilemma is accentuated because most theorists do not practice economic development and practitioners do not reflect on or consider the theoretical basis for their activities (Bourdieu, 1977, p. vii).

The problem has been exacerbated by an absence of a general theory of local economic development (Reese and Fasenfest, 1997, p. 196). It is generally argued that developing economic development theory has not been a priority because economic development as a profession is a relatively young and constantly changing field of endeavour and is just emerging as an academic discipline. Mier and Fitzgerald (1991, pp. 268–9) have suggested that the borrowed theories from economics, planning, geography and resource management constitute flirtations with the establishment of a new academic discipline. Despite the lack of a specific general theory of economic development, this writer asserts that economic development is an emerging academic discipline and as such, would be further advanced by developing a theoretical base of its own. It appears that scholars have largely devoted themselves to developing the practical aspects of the profession while ignoring the theory. Knudsen (1997, p. 210) has argued that ignorance of theory by practitioners and of economic development practice by theorists have resulted in piecemeal practice and unrealistic theory. The reality of this is rarely acknowledged within the field because most practitioners have no appreciation of the need for a definitive theory of economic development. Yet this is not without cost.

Most early textbooks on economic development provided an excellent overview of practice with almost no original theory (Bessire, 1970; Fernstrom, 1976; Moriarty, 1980). Blakely and Bradshaw’s (2002, pp. 53–74) iconic book Planning Local Economic Development, Theory and Practice devoted only 19 pages to theory in a book of almost 400 pages. The theoretical frameworks presented by Blakely and others are borrowed from regional science, regional economics or economic geography to explain location and business decisions (Bingham and Mier, 1993, 1997; Blair, 1995; Malizia and Feser, 1999; Stafford, 1979; Stimson, Stough, and Roberts, 2002). The framework for most of the theories is derived from the classic location studies of von Thunen and Christaller and the pioneering research of Isard and Hoover (Foust and deSouza, 1978; Hoover, 1975; Isard, 1960; McCann and Sheppard, 2003, Miller, 1977; Smith, 1971, von Thunen, 1966). In this author’s opinion, the relevant literature neither develops nor presents a robust framework or theory to explain the process and practice of economic development.

This writer argues that traditional development theory has failed when it has been applied to local economic development because of its focus on abstract macro issues and not the specific. This is important because each city or region is unique and there are no clear blueprints (generic strategies or actions) that can be applied to an area that will guarantee success (Bellamy et al., 2003, p. 16; Bowles and Gintis, 2003, p. 429). Jun Koo (2005, p.100) further articulated the problem by stating that:

Economic development professionals often lack a theoretical understanding of the regional development mechanism. As a result, many regions simply follow fashionable ideas or recent successes of other regions without paying a fair amount of attention to what role their strategies will play in the development process. Many previous failures of economic development strategies can be attributied to such ill-informed planning practices.

An example of a packaged solution would be Richard Florida’s prescriptions of attracting talent by becoming more Bohemian and tolerant to in turn attract high-tech investment. Scott (2006) challenges this prescription by asserting that being Bohemian does not necessarily translate into new high-tech business locations in the communities that have adopted Florida’s strategies.

This tendency to copy generic solutions has resulted in:

cities adopt[ing] the same economic development tool-kit…at a time of theoretical emphasis on the role of innovation in [local] economic development; what actually emerges as local economic development policy lacks any real innovative, imaginative or original thinking because the policy priorities contained in the strategy documents are effectively identical (Boland, 2007, p. 1032).

Gunder (2008, see Chapter 14) builds upon this argument by stating that:

compounding this lack of focus on site-specific uniqueness and creativity, local officials and politicians often do not actually understand the implications of their chosen policies, or the links of causality, or lack of them, underlying specific theories.

As Deleuze (1994, p. 23) cautioned, we learn nothing from those who say: “do as I do”.

In my opinion, we need a theory for understanding the practice of local economic development because as an emerging discipline, practitioners and academics equally need a theory that underpins their activities, initiatives and strategies that will enable them to approach universal and particular problems with new and innovative solutions. In support of my position, Foucault (2005) stated that a discipline needs a theory that allows it to be codified so that it can be identified as a ‘human science’. I believe that economic development does not have a general theory because traditional positivistic⁴ approaches cannot adequately theorise the complexity of the chaos of markets, global forces and multiple actors. Foucault (2005, pp. 377) would have addressed this by focusing on the differences*⁵ instead of trying to classify diverse forces.

Taking Foucault’s lead, this writer argues that a framework can be developed that is cognitive of practice by employing poststructuralist⁶ methodologies as espoused by Deleuze (who is often referred to as the Philosopher of Difference⁷). For Deleuze, “thinking differently, becoming different and the creation of difference” (Jeanes and De Cock, 2005, p. 3) are keys to understanding the philosophy of difference. This is important because with a Deleuzian poststructural methodology, the tools to address unsymbolic⁸ differences will be identified and their usefulness as metaphorical analogies will be demonstrated in the last two chapters.

What is Economic Development?

The literature indicates that there is considerable disagreement as to what constitutes local economic development (Wolman and Spitzley, 1996). However, there is little doubt that economic productivity and productivity growth are fundamental drivers of prosperity and innovation in any capitalist society. Consequently, “the focus of economic development should be on supporting innovation and increasing prosperity” (Economic Development Administration, 2004). Most practitioners would now agree that the economic development process is an endogenous effort designed to enhance a local community’s ability to create and retain employment. This observation is based on endogenous development strategies designed to encourage business start-ups, innovation, entrepreneurship and the growth of firms already existing within a region (Stough, 2003, p. 179).

Richard Florida’s (2005, 2006) popular concept of knowledge workers moving between competitive cities in a globalised world is a good example of this emerging trend of thought. This thinking replaced the previous approach that attempted to attract firms into regions via cash incentives, tax breaks, the provision of land or buildings and other benefits (Tietz, 1994, pp. 101–106). All of which are embedded in unquestioned assumptions of the hegemony of the capitalist growth mode of infinite product substitution and consumption. However, it should be noted that many practitioners still believe that states should offer tax incentives to generate new jobs (Clower et al., 2004).

This writer believes that economic development can be explained as a complex process that is created from a successful fusion of entrepreneurship, education and skills of the community, driven largely by market forces. A favourable business environment and a supportive regulatory framework are important conditions of economic growth and development. It is generally accepted that the goal of economic development is to create new jobs, investment and improve the wealth of individuals and the community, Others such as Ed Blakely (Blakely and Bradshaw, 2002, p. 375) described the practice of local economic development as being a “mixture of rational planning and salesmanship”. As a further refinement, one learned colleague suggested that economic development is really about fostering ‘entrepreneurial immanence*’(Gunder, 2005).

What do Economic Developers Actually Do?

Deleuze once questioned what a philosopher actually does by asking “What is it I have been doing all my life?” (Deleuze and Guattari, 1994, p. 1). In a similar vein, Levy (1990) responded to the question in his article entitled, What economic developers actually do: location quotients versus press releases. Despite Levy’s insightful analysis, most economic development practitioners would have a difficult time explaining what they do⁹ (Friedmann, 1996, p. 94). This leads to the more complex questions of what should economic development practitioners be doing and why do they do what they do?

The literature indicates that the fundamental objective of an economic development organisation is to maintain and create jobs and regional production, to increase wealth (Stough, 2003, p. 179) and community well being. Therefore, the daily activities of a local economic development practitioner should be in doing tasks that lead to the creation of jobs¹⁰ and wealth (or job retention). However, some cynics assert that generating job announcements is more important than creating jobs (Beer et al., 2003, p. 163). It has often become politically easier to garner support for a Foreign Direct Investment (FDI) marketing programme than to develop an entrepreneurial culture, despite the limited success of most industrial recruitment programmes (Loveridge, 1996, p. 155).

Many economic development programmes are under intense media scrutiny and as a result, many practitioners are under immense pressure to justify their positions¹¹. When the economic development agency seeks renewed or additional funding they are often asked, ‘What have you done for me lately?’ As a result, many practitioners often “shoot anything that flies; claim anything that falls” (Rubin, 1988, p. 288). This often cited reference refers to the fact that many economic development agencies claim credit for new businesses and facilities that locate in their area whether or not they actually had anything to do with the location decision making process. Rubin went on to say that, “I think a lot of people buy themselves with these retention surveys, whatever, and going to trade s...