Even before the current recession hit, the competitive challenges of a global economy were putting ever more pressure on the economic development efforts mounted by state governments across the country.
States that once could dangle their low costs of doing business to lure industry from other states have suddenly faced competition from even lower-cost places such as China and Southeast Asia. Many have been scrambling to catch up with ever-growing packages of tax incentives and grants – so much so that critics have fretted about “an economic war between the states,” as the organization Good Jobs Now calls it.
But while states scramble, the ground has shifted beneath them. The economic development contest is changing.
Traditional economic development efforts have focused on leveraging money, in one guise or another. Some states had lower costs and lower taxes to brag about – money. Some emphasized helping new industry by improving roads and water and sewers – money. Some tried to make up for high costs by offering various grants and tax breaks – in other words, money.