Urban Research Monitor

Cities increasingly are creating incentives to attract businesses to their area. In this competitive environment, cities are committing valuable resources to these efforts. But city officials do not know for certain what causes a business to move to one city or another.

Three new reports address various aspects of the business location decisionmaking process. In the first, Business Location Decision-Making and the Cities: Bringing Companies Back, Natalie Cohen at the Brookings Institution draws on data directly from business decisionmakers to determine why businesses choose to locate in one place rather than another. A second new report, Cautionary Notes for Competitive Cities, assembles findings from a number of sources to look at the effectiveness of four strategies cities currently use to attract businesses and fuel economic growth. In this paper, Amy Ellen Schwartz and Ingrid Gould Ellen of New York University’s Wagner School warn cities thinking about investing in infrastructure, lowering taxes, stimulating high-tech enclaves, or promoting tourism to consider the drawbacks as well as the advantages.

In the final report, Bidding for Business: The Efficacy of Local Economic Development Incentives in a Metropolitan Area, John E. Anderson and Robert W. Wassmer of the W.E. Upjohn Institute for Employment Research use regression analysis to look closely at one tool cities frequently rely on to compete for businesses. Their findings indicate that local fiscal incentives might not give cities the edge they are seeking.

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