The Politics of “Entrepreneurial” State Economic Development Policy

Abstract

“Entrepreneurial” state economic development strategies, which focus on nurturing home-grown high-technology and other high-growth businesses, lack immediate payoffs for politically powerful constituencies, a condition that would seem likely to limit their political appeal compared to the alternative “locational” strategy of attracting large investments from elsewhere. Nonetheless, many states have added programs with entrepreneurial attributes to their economic development portfolios in recent years. This paper explores how the political obstacles to such programs have been overcome, using a set of sixteen brief case studies. In a few cases, an institutional innovation in the policy-making process drew in new participants who provided ideas for and support to programs with entrepreneurial elements. More commonly, the preferences of the executive branch officials, especially governors, appear to have been critical to the enactment and implementation of such programs. The finding suggests that ED policy-making may be more technocratic than is commonly believed, and that the educational efforts of policy experts, who generally favor entrepreneurial ED strategies over locational ED strategies, have been fruitful and should be sustained.