Local Economic Development Theories

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Local Economic Development Theories

• PAD 5805 Lecture 1

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What is ED?

• Three essential elements
• Establishes a minimum standard of living for all
  and increases the standard over time.
• Reduces inequality.
• Promotes and encourages sustainable resource use
  and production.

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Challenges and Opportunities

• The Nature of New Economy
• Manufacturing to Service/ Information
• Globalization
• Mobility of capital, labor
• Faster pace
• Outmoding of products, skills
• Disasters
• Earthquakes, hurricanes, flooding, etc.
• Human Resources
• Skills capacity

4
Challenges and Opportunities

• Suburbanization
• Inner city/ ghettoization/ gentrification
• Crime control
• Safety
• Global Warming
• Climate change at local level
• Housing Crisis
• Rising/ Falling home prices

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ED Theories

• Neoclassical Theory
• Productivity f (capital, land, labor)
• Technology constant
• Regional equilibrium
• Government as a referee (enforcing laws) and
  providing national security
• Economic base theory
• Exports from local area
• Competitive advantage
• Regional specialization

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ED Theories

• Product Cycle theory
• Products have life cycles of innovation and
  diffusion process
• Emphasis on creation of new products for ED
• Location theories
• Classical L, L, L!!!
• Minimize transport costs
• Resources and markets
• Forward/ backward linkages
• Localization vs agglomeration economies
• Growth poles forward/ backward linkages

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ED Theories

• Central place
• Specialized urban center (downtown/ Central
  Business District, CBD) Satellite developments
• Monocentric and polycenric cities
• Social theory
• Social justice
• Poverty
• Regional disequilibria
• Government as a protector, redistributor

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ED Theories

• Attraction Models
• Place matters
• Amenities matter (climate, natural attractions)
• Importance of third places
• New Markets model
• People matterconsumer base human resources
• Asset based economic development
• Local natural resources

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Question for thought

• Do the theories adequately describe local
  economic development?
• Think in terms of Jane Jacobss article