Economic Development Quarterly

A new economic era is being spawned by three interacting forces of immense significance: (a) the globalization of business transactions, (b) a shift to just-in-time manufacturing and inventory control methods, and (c) the growing need of firms to dispatch smaller, more frequent shipments quickly to distant markets. The ability of any state or locality in the coming decades to maximize indigenous commercial growth, expand exports, and attract major investment from around the nation and the world will require understanding the new economy and harnessing the forces creating it. In North Carolina, an examination of how these forces might be leveraged to the state's competitive advantage has led to the formulation of a global air cargo-industrial complex This proposed complex would integrate (both spatially and operationally) just-in-time manufacturing systems with airfreight systems such that the two systems function as a synergistic unit. Although some of the preliminary analysis that supports the proposed complex is specific to North Carolina, the underlying concepts may prove attractive to other states interested in exploiting major changes in production processes, transportation, and global trade to generate new economic growth.

The export potential of services has been assessed without regard to forward and backward linkages. Yet regional service sector growth is often associated with three factors: the displacement of manufacturing functions into service establishments, the marketing role of manufacturing-displacing imports, and locational shifts toward customer sites. Many services remain locationally linked to suppliers and buyers, with no net gain to the regional economy. In addition service gains may be temporary, associated with cyclical or abnormal business conditions. In the case of steel service centers, which grew rapidly in the early 1980s to account for 25% of all steel sales, employment gains were largely attributable to the spin-off of steel manufacturing functions and to opportunities for marketing imported steel. Eventually, the growth trend tailed off as macroeconomic factors (recovery from recession and the fall of the dollar) restored the relative profitability of the steel industry and enabled it to "learn" flexibility from service center pioneers. Economic development planners should assess service sector potential in light of such linkages and dynamics.

State policymakers strive to improve their business climates, and social scientists are interested in exploring both the causes and consequences of this action. However, the notion of a "business climate" is poorly conceptualized and crudely measured, and this has hindered progress in this area. We propose a multidimensional measure derived from a weakly confirmatory factor analysis, and show how this measure illuminates substantive differences among economic development policies—differences that are obscured by conventional measures of policy activity. We illustrate the validity of our measure by tracking its movement in relation to the evolution of development strategy in Indiana, a state known for its aggressive efforts to stimulate growth. We then demonstrate the utility of our measure in quantitative analyses of the determinants of development policies, and their impact on state economies.

This article uses zipcode-level data to examine the residential and economic correlates of three types of corporate offices (national and regional headquarters and administrative offices) within the Los Angeles metropolitan area. Our findings reveal positive locational associations between the presence of national headquarters and law firms, management consultants, and high-income residential areas. Administrative offices, on the other hand, exhibited negative locational associations with law firms and management consultants, but positive locational associations with banks, advertising firms, and residential areas with a high proportion of married people. The racial composition of the residential zipcodes in our sample was not significantly related to the presence of corporate offices. Theoretical issues and policy implications are discussed.

Considerable controversy has surrounded the early findings of David Birch that small businesses create at least a majority of all new jobs in the United States. Compounding the controversy has been Birch himself who has disavowed his earlier conclusion. This article reexamines the issue of contribution of various size business establishments to job growth using a better dataset, a modified definition of a "small business, " and an ability to track the job-generating contributions of various size establishments across segments of the business cycle, across industry sectors and specific industries, and across differing geographic locations. In addition the article examines the role of using gross versus net job generation as the measure of job generation contribution. The article concludes that the role of establishment size varies by definition, time period, industry, and location.

The predominant use of shift-share analysis has been to analyze regional changes in employment over a given time period. This article focuses on how shift-share should, rather than should not, be used. In particular, the focus is the analysis and economic interpretation of shift-share results at the industry level. We attempt to codify some of the more recent shift-share modifications and mesh them with the earlier suggestions of Dunn. There is a brief review of the popular conventional shift-share model, noting it does not provide meaningful industry-level results due to the assumption of proportionality. A shift-share model whose industry- and region-level interpretations are consistent is illustrated. The modified version also resolves, somewhat at least the structural weighting dilemma of the conventional model. Furthermore, we believe this model, in conjunction with the Barif-Knight dynamic approach, provides more robust shift-share results by enriching the economic interpretation of industry results. Finally, given our pedagogical thrust, we provide the shift-share formulae for the two models in a Lotus spreadsheet format.

The authors review six recent books on managing local economic development, focusing on how they join scholarship to practice. They note that the books provide sufficient information on tools and techniques of economic development practice but fail to describe or account for conflict so characteristic of the development process. Although the books emphasize the importance of creating partnerships in development, they ignore demands for inclusion by minorities, unions, and other groups historically not included in the partnerships that ultimately determine development strategy. Likewise, strategy formulation is treated as a logical outcome of economic analysis and the influence new participants might have in defining problems and developing alternative strategies remains unanswered. The authors suggest that these weaknesses can be overcome by developing generative metaphors integrating scholarship and practice. New insights might emerge from a methodology not guided exclusively by technical rationality, one more narrative and subjective in focus.