The logic and pathologies of local and regional economic development strategies

State and local economic development programs are often loaded with tax incentive and promises of deregulation designed to attract new businesses, encourage expansions, and cultivate new firms. There is little evidence that tax relief and deregulation are effective tools for economic development, however. This article examines the logic of public sector participation in economic development, questions the effectives of typical development policies, and suggests alternatives, including tax-base sharing, greater regional cooperation, and human capital development.