Abstract: Local economic development programs are primarily aimed at increasing employment and tax revenues. Data on these programs are collected through self-report surveys conducted by the International City Managers Association and others. This study evaluates predictors of accurate self-reporting. Using agency theory as a theoretical framework, the study measures the quantity of internal reporting components and the quality of financial reporting and evaluates how these are associated with accurate self-reporting. As a control, the condition of the local economy is also evaluated. The findings indicate a statistically significant relationship between the quality of financial reporting and the strength of a local economy with accurate self-reporting. Recommendations to improve research in this area are for the Government Finance Officers Association and the International City Managers Association to work together, with the former creating standards for reporting on local economic development programs and the latter aligning its survey with these standards.
I entered the Ph.D. program at VCU with an interest in studying the high-value (taxes)/low-wage industries that are favorites of politicians, city administrators and local economic development professionals (full disclosure: I was an economic development professional in a prior life). Before and during the program I focused much of my research, conference papers, blog posts, journal articles and dissertation on one such industry – the accommodation subsector. This was a comfortable place to start, as I had extensive public and private sector experience modeling that private and public benefits from the industry – including the real estate (asset) valuation component. As with retail development, the other big high-value/low-wage industry, local governments make somewhat of a Faustian bargain with tourism businesses to boost tax revenue, while allowing their residents working in the industry to fall into a tenuous safety net operated by others (Federal safety net programs and charity).
The questionable high-value/low-wage “economic development” drive by local governments led me to another area of interest – a consequence of relegating local business development to the low-value/low-wage service sectors. This relegation manufactured a false dilemma between boosting wages in the tourism and retail sectors and promoting local businesses. The supposed dilemma is that you cannot raise wages on big retail and tourism businesses, which can afford to do so, without destroying the local businesses that do not have access to the same resources. Countering this false dilemma is the primary “so-what” element of my overall research project. I address this false dilemma, including the pretext, through a Community Wealth planning model.
This is my first version of my Community Wealth planning model, hence the label “1.0.” I’m synthesizing my previous research, and current understanding of the literature, to create this initial model. Despite being a boomer I’m still a young scholar, and I recognize I have more to learn and assimilate as I pursue this research project. The purpose of this model is to situate planning and economic development decision-making in the proper context. I found in my role as a practitioner and as a Ph.D. student, that there was inaccurate or incomplete information used by planners and local government officials in four specific areas: 1) an understanding of the primary sources of community wealth, 2) how community wealth is accumulated and either retained or lost by the community, 3) how community wealth is distributed, and 4) how community wealth is measured. None of these aspects is new, but in my model, I establish the relationship between each, and in doing so, can identify solutions to addressing the false dilemma that pits small businesses against living wages for their employees.
The diagram below illustrates the current version of my model and the elements of each of the four dimensions identified above. I will detail each of these elements in future posts and will revise and update the model as my thinking evolves. I hope to keep the model in single digits. The updates will be sporadic as I shift to journal articles and conference paper deadlines.
Next post: Primary sources of Community Wealth (and probably model 2.0)