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Chapter 9: Industrial Recruitment Economic theories cluster theory Political context perspectives on growth When business and government bargains… A Review of Various Economic TheoriesLevel of FocusEconomic Theories that Address the Focus Global Classical economics Neo-classical economic (supply side) Marxist economics Country Mercantile economics Neo-mercantile economics (state corporatism) Demand-side economics (Keynesian) Dependency theory economics Regional Cluster (location) economics Municipal entrepreneurism Cluster Theory Clusters are geographic concentrations of interconnected companies, specialized suppliers, firms in related industries, and associated institutions in a particular field that compete but also cooperate. They draw more customers to the area. Because of proximity in clusters, new ideas are quickly transferred (copied) and refined or reinvented, leading to further innovation. Because of the reputation and vitality of clusters, they tend to draw in not only more customers, but also new businesses. Wine Region Example 1. Wine tastings 2. Wine specialization 3. Improved critical mass Leads to Higher wages Economic dynamism Government’s role remove obstacles, relax constraints; support resources such as necessary infrastructure; support human capital development such as education and training programs; assist export promotion; encourage local R & D efforts; sponsor forums to bring cluster participants together; encourage industrial parks; sponsor independent testing or certification if it is useful. Political Context of Local Economic Development There is not a single perspective on growth. Local preferences can vary significantly, and range from ‘any-growth-at-any-cost,’ all the way to ‘fighting-all growth-at-any-cost.’ We look at three perspectives. Pro-Growth Model A pro-growth model is a coalition interested in the development and re-development of land. is interested in raising the aggregate value of land by increasing the overall development of land or the intensification of its use. Land intensification means converting farm and open space to residential and commercial, or lower class housing to high rises or “high-class” commercial. Economic growth may be focused on blight; when it is, it is called redevelopment. Blight is A concentration of buildings that are in serious decay or unsafe and that often have serious building code violations, Poor real estate values, high vacancy rates, and numerous abandoned buildings and lots. Land use patterns that reduce incentives for renovations or new development because of an excess of bars, liquor stores, or other businesses that cater exclusively to adults, and that tend to encourage public safety problems, Absence of neighborhood grocery stores and businesses that support residents, High crime rates, and/or Residential overcrowding. Role of government is generally especially important when blight is the t ...
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