Four decades and hundreds of billions of dollars later, a new report shows why so many place-based initiatives fail to revitalize

As my 2020 book RECONOMICS: The Path To Resilient Prosperity pointed out in great detail, few activities are more widely needed—or more poorly planned and executed—than community revitalization.

The nearly-universal factor behind the atrocious track record of revitalization initiatives is the lack of a strategic process. Every successful corporate (or military) leader knows that a good strategy is essential to success, and that the reliable production of anything requires a process.

But few community leaders can even distinguish a strategy from a plan, much less map out their regeneration process. That’s why RECONOMICS Institute’s new certification program for Revitalization & Resilience Facilitators is so important: it helps communities fill in the crucial gaps in their process.

But there are many other factors contributing to failure, of course, and the human cost is terrible.

Data from an array of sources has shown that Americans who grow up in economically distressed areas experience lower-performing schools, higher crime rates, a variety of health and environmental hazards, and less upward mobility.

The consequences of these disadvantages have been on stark display during the coronavirus pandemic as low-income neighborhoods and racial and ethnic minority communities have disproportionately borne the virus’s toll.

To address local disparities and help struggling areas thrive, governments at all levels have spent hundreds of billions of dollars over the past 40 years on a range of geographically targeted, or “place-based,” economic development programs—mostly in the form of financial incentives—designed to boost job creation and business investment, incentivize real estate development, or increase property values in specific places.

However, previous research has shown that place-based programs often fail to benefit the places and people they are intended to aid.

To better understand the reasons for this lack of effectiveness, The Pew Charitable Trusts performed a literature review of more than 100 studies from research organizations, academics, and governments, including more than 40 produced by states.

Pew staff also conducted more than 30 interviews with national experts, government officials, and researchers. The analysis focused on state governments because they play a central role in place-based development efforts, helping to administer major federal economic and community development programs, designing their own initiatives, and writing laws that dictate how local government programs may operate.

Pew’s analysis found that the criteria that states use to geographically target their programs are often ill-conceived or out-of-date, with the result that initiatives end up serving wealthy locations instead of disadvantaged ones. And even when programs do reach the intended communities, they often are not well-suited to help residents.

Pew’s research indicates that to begin solving these problems, states should:

  • Target programs using quantitative measures. To ensure that benefits accrue to communities in need, policymakers should use carefully selected objective measures of distress to determine eligible areas;
  • Systematically assess geographic targeting. States should regularly examine where businesses using programs are located in order to identify and correct instances in which wealthier areas unintentionally benefit;
  • Regularly update the set of eligible locations. Because local economic conditions change over time, policymakers should regularly review where programs are available to ensure that those places still need assistance;
  • Tailor economic development strategies to local needs. Financial incentives alone may be insufficient to encourage private investment in areas that lack trained workers or necessary infrastructure, so policymakers should address these prerequisites to growth; and
  • Create job opportunities for low-income residents. Even programs that successfully encourage investment in distressed areas may not provide benefits to the local population, so states should embrace strategies—such as prioritizing industries that offer good jobs to people without college degrees—that can help direct economic gains to community members.

Some states are demonstrating that progress is possible. For instance, in response to assessments that revealed flawed targeting, New Jersey and North Carolina changed their approaches to more effectively direct the benefits to the intended locations. Through similar reforms, policymakers in other states could ensure that place-based economic development programs help combat poverty, joblessness, and disinvestment in some of America’s poorest communities.

Photo via Pixabay.

See Pew’s full report.

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