Peter S. Fisher

State Venture Capital Funds as an Economic Development Strategy

Abstract In recent years, several states have established venture capital funds to provide financing for new and small businesses, generally in technology-based industries, on the grounds that too few sources of venture capital exist for such firms. The experience of the oldest state venture fund, the Massachusetts Technology Development Corporation (MTDC), indicates that a state can successfully operate such a fund with an expectation of eventual profit and limited employment impact. However, state venture funds modeled after MTDC are unlikely to make a significant contribution to state economic development in broader terms, considering such issues as the structure and stability of the economy or the quality of the jobs they create.

Population forecasting and local economic planning: The limits on community control over uncertainty

Forecasting, planning, and controls are all attempts to cope with uncertainty about the future. The reasons that forecasts err are examined, and the limits of technical solutions are discussed. The beneficial planning uses of even error-prone forecasts are outlined, and it is argued that the concept of forecast accuracy is a basic contradiction of the essence of planning. The potential for local economic planning and community control over uncertainty is examined. Its major determinant is the economic context in which a community finds itself, but the enhanced mobility of firms over the last two decades has restricted the ability of communities to plan. Implications for forecasters, model builders, and local planners are discussed.

Product Development Corporations and State Economic Development

Product development corporations have been established by eight states for the purpose of promoting the development of innovative sectors of the economy by augmenting the supply of risk capital. They operate by providing a grant to a firm to finance the design, testing, and commercialization of a new product, in return for royalties on sales of the product. An evaluation of the oldest of these programs, the Connecticut Product Development Corporation (now in its twelfth year), reveals that the public corporation has yet to become self-sustaining. Simulations indicate that the rate of royalty returns will have to increase significantly if the CPDC is to turn a profit for the state. While profitability may be too narrow a criterion for evaluating product development corporations, there are grounds to be skeptical that the CPDC or similar institutions will generate true public benefits (beyond monetary returns) sufficient to justify a long-term taxpayer subsidy.

State Equalizing Aids and Metropolitan Tax Base Sharing: A Comparative Analysis

State gram programs aimed at equalizing local government fiscal capacities and metropolitan-wide programs for the sharing of property tax bases are very similar in terms of objectives as well as operation. The Twin Cities tax base sharing system, which has served as a model for numerous other proposals, has some serious deficiencies; a proposal for eliminating these defects is developed by viewing tax base sharing as a set of fiscal capacity equalizing grants. Alternative formulas are evaluated, and the merits of tax base sharing at the state rather than metropolitan level are discussed.

Introduction: public policy and the urbanization of farmland

Public debate over farmland conversion has focused on the magnitude, the social costs, and whether public land-use policies are appropriate and effective. A review of the problems of farmland protection and equity concludes that the issues are best dealt with at a local level, and that excessive urbanization of good farmland is not the primary problem. 21 references. (DCK)

Measuring the competitiveness of state and local economic development incentives

Abstract American states and cities now regularly give tax and discretionary incentives to firms. This paper describes a method to quantify, in a precise and theoretically sound manner, the impact of incentives on firm location decisions. The “hypothetical firm” technique measures the impact of incentives on a firms long-term after-tax income. The computational complexities of implementing this method in Excel 5.0, VBA and MapInfo are discussed. Finally, problems raised by the geographical targeting of incentives by states and cities (usually at poorer communities) are examined, in particular the need to integrate hypothetical firm modeling with information managed by a GIS.