Economic Development Quarterly

As the decade of the 1970s drew to a close, Pennsylvania was in serious economic trouble. The most serious of its problems was its overcommittment to traditional "smokestack" industries, without any strategy for diversification or modernization. The Governor's Office of Policy Development, along with the State Planning Board, developed an economic strategy based on new economic priorities. With this strategy as a starting point, steps were taken to improve the economy and turn Pennsylvania around. The author concludes that the ability to look to the long run is critical for other states that are addressing their own economic problems.

Even if Japan took steps to end its neo-mercantifist barriers to free trade, Japanese domestic demand would remain low for structural reasons. If Japanese domestic demand is to be enlarged, structural reforms are needed that will stimulate private spending and investment. The report of the Maekawa Commission of 1986 to the Japanese prime minister is a blueprint for the structural enlargement of demand. Japan must do three things: end excessive savings, enhance household income, and reorient its economy from one based on exports to one devoted to meeting domestic needs.

The concept of the dependency rate (DR), introduced in this article, is used to analyze aggregate economic dependence in the states, using annual data for 1985. The DR is a measure of the portion of a state population that is supported, directly or indirectly, by its working population. The DR is related to the unemployment rate (UR), but the measures are conceptually and statistically distinct. The DR is first used to rank order the states, and that rank order is compared to one based on the UR. Significant differences are demonstrated in the two sets of rank orders, with implications for intergovernmental transfers that are designed to ameliorate aggregate economic distress. A regression model of the DR in the 50 states is constructed. The results from the model are used to inform economic and labor market policies in the states. The states are divided into five types of labor markets: depressed, distressed, slack, tight, and full, based on their URs and the results from the statistical model.

Economic development practitioners face an uncertain environment in which their ability to bring about economic development is dependent upon factors over which they have little, if any, control. Using extended excerpts from open-ended interviews, the author explores how the economic development practitioners attempt to cope with uncertainty. The interviews illustrate both the frustrations practitioners feel about their work and the accommodations they make in doing their work. The author presents a speculative model, based upon Stone's work on system bias, of how the perspective toward developmental work held by the practitioner might increasingly tilt public sector actions toward the business community.

A declining manufacturing base in many regions, fueled by plant closures and work force reductions, has hurt many small companies that historically have operated as suppliers to the larger companies. This article examines the experience of smaller manufacturing companies in adjusting to new market circumstances. Many of these companies, job shops in particular, are experiencing difficulties because they do not have the marketing and product development expertise required to recapture most markets or to identify new ones. For many, outside assistance may be necessary to help them with the transition, and programs to provide this help should become part of a region's overall approach to economic development.

Should local governments subsidize the construction and operation of sports stadiums? This is being debated in cities throughout North America, and several factors have conspired to elevate this issue to headline status. Local government officials, burdened by the deteriorating financial health of their cities, have sought ways to mollify critics. Since some political strategists have argued that the presence of professional sports imparts economic prosperity, some local political leaders have hitched their wagons to the sports star. But is professional sports a panacea for sagging urban economic fortunes? Many are skeptical that subsidizing sports stadiums is worth the costs. We examine published and unpublished literature as well as our own research to chronicle, analyze, and critique the use of publicly financed sports stadiums as a vehicle for economic progress. We provide information for both the academic and the practitioner on the types of questions that should be posed when making decisions about stadiums. In the first section we detail and analyze the recent history and future plans for city financial involvement in sports stadium projects. We discuss the costs and benefits of stadium-based development rationale in the second section, and the next section analyzes its validity. Factors that may prove decisive in determining the economic successfulness of an individual stadium project are observed in the fourth section, and the last section concludes the article.

Expert groups such as the President's Commission on Industrial Competitiveness see innovation in manufacturing processes as vital to strengthening mature American manufacturing. At the same time, management experts largely ignore such innovation as a way to improve a firm's competitiveness in a declining manufacturing industry. Economists' research offers insights into the effects of technological innovation and suggests that management experts underestimate the importance of new technology. The research suggests that early innovators in a declining industry can profit from innovations in manufacturing processes, although later innovators may only reduce their losses. The profits are a function of time required for the innovation to diffuse through the industry, size of the firm's market, and initial reduction in costs. Many factors, in turn, influence an innovation's diffusion rate. Process innovations can also make declining industries more competitive in international markets as an innovation becomes widespread. An American industry's position in international markets generally depends on innovation, but innovation cannot make all mature industries competitive.