The Self-Defeating Strategies of
Quantitative expansion of the economy is usually presented as a cure-all for almost any problem the community might have: poverty, unemployment, tax burdens, the out-migration of young people, the cost of public services, and so on. Often no analysis is assumed to be necessary in order to link general quantitative expansion in the local economy and local economic well-being. The connection is assumed to be obvious. Where some justification is felt necessary, it usually takes the form of broad generalizations such as "A rising tide lifts all ships" or "It will increase our tax base."
This chapter examines the factual basis for many of the more popular and "intuitive" prescriptions offered by local "boosterists." The conclusion that will follow from this review of the empirical literature is that there is no reliable connection between mere quantitative expansion of the local economy and local economic well-being. Although in particular circumstances and with particular objectives in mind, economic growth may be productive for the local community, good economic development policy has to focus away from mere quantitative expansion.
One of the more widely accepted local economic-development objectives is to attract more high-paying jobs. This, it is assumed, will raise total earnings per person and boost per capita income, leaving the population, on average, better off. As intuitively attractive as this strategy may appear, there is no reason to believe it will succeed in the context of the national economy with its highly mobile labor force.
The economic-base model itself points out the problem with this approach to boosting per capita income. The model assumes that people migrate to where