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Local Economic Development

Local Economic Development
Analysis, Practices, and Globalization

Second Edition

July 2008 | 328 pages | SAGE Publications, Inc

Local economies are the building blocks for national ones. An updated and expansive core text, the Second Edition of Local Economic Development: Analysis, Practices, and Globalization provides a comprehensive introduction to the economics of local economic development. Delving into cutting-edge topics such as cluster analysis, creative class orientation, competitive advantage, social capital, business expansion and retention, and learning regions, this clearly written interdisciplinary text connects theories with real-life examples and offers the reader pragmatic tools for future application, including a valuable “how-to” understanding regarding important qualitative tools and their interpretation.


Importantly, this text is uniquely accessible to students who lack a background in the field of economics.

New to this Edition

  • Offers a global emphasis: Local economic development is clearly linked to national development throughout, making the text useful for adding an international component to traditional national economic development courses.
  • Features an institutionalist focus: The text describes the ways political and the social environments interact with and influence the local development process, giving instructors opportunities to localize course material. It also addresses equity issues and the importance of interregional linkages, demonstrating the importance of an interdisciplinary approach.
  • Demonstrates comparative versus competitive advantages: The author illustrates the changing perceptions of the sources of local advantages, given the dynamic global and technological environments.
  • Provides valuable information on careers in the field: Students will learn about jobs where knowledge of local economic development is a primary or useful requirement, from opportunities as development officials in local agencies to banking to community development.


Intended Audience
This is an ideal core text for undergraduate and graduate students of economics, political science, geography, public administration, and urban and regional planning. It is also a valuable resource for economic development professionals, NGOs, County Commissioner offices and others involved in the economic aspects of local economic development.


Chapter 1. Local Economic Development in a Global Market
How Economists View the World  
Models and Assumptions  
Individual Behavior and Utility Maximization  
Ideological Perspectives on Market Operations  
How Markets Work  
Supply and Demand  
Supply, Demand, and Efficiency  
Markets Are Not Always Efficient  
The Role of Profits  
Economic Development Defined  
Careers in LED  
The Nature of Regions  
Types of Regions  
Local, National, and Global Economic Development  
Chapter 2. Business Location, Expansion, and Retention
Locational Factors  
Transportation Cost Minimizing Models  
Production Costs  
National Political Climate and Stability  
Opportunity Creation  
The Decision Making Process  
Practical Limitations on the Choice Process  
Steps in the Corporate Site Selection Process  
Changing Relative Importance of Locational Factors  
Surveys of Location Factors  
Survey Findings Past to Present  
Conducting Business Retention and Expansion Programs  
3. Markets, Urban Systems, and Local Development
Demand and Market Areas  
Demand in a Spatial Setting  
Competition for Markets  
Threshold Demand and Range  
Determinants of Market Size  
The Urban Hierarchy and Urban System  
Central Places  
Goods and Services According to Urban Rank  
Changing Urban Patterns  
An Evaluation of the Central-Place Approach  
Considerations Extraneous to Central-Place Theory  
Transportation Costs  
Market Overlap, Rate Absorption, and Price Discrimination  
Product Differentiation  
Agglomeration Economies  
Institutional Factors  
Non-employment Residential Locations and Commuting  
Empirical Evidence  
Globalization and Urban (City) Systems  
How to Measure Areas of Influence  
Survey Techniques  
Reilly’s Law of Retail Gravitation  
Probabilistic Models  
Retail Spending  
An Example  
Hinterland Expansion Strategies  
4. Economic Interdependence and Local Structure
Agglomeration Economies  
Internal Agglomeration Economies  
Direct Sales Purchases Linkages  
Localization Economies  
Urbanization Economies  
Cluster Analysis  
Measures of Economic Structure  
North American Industrial Classification System (NAICS)  
Location Quotients  
Estimating Export Employment with Location Quotients  
Surveys to Determine Export Activities  
Coefficients of Specialization  
Occupational Structure  
Other Aspects of Regional Structure  
5. Regional Growth and Development
Stages of Growth  
Industrial Filtering (Life Cycle Model)  
Adding New Work to Old  
How Do Cities Move from One State to the Next?  
Circular Flow Diagram  
Elements of the Circular Flow Model  
Equilibrium and Change  
The Multiplier  
The Export Base Theory of Growth  
The Formal Income Model  
How to Operationalize the Export Base Approach  
Impact Studies and Export Base Forecasts  
Critique of the Export-Base Approach  
Primacy of Exports  
Import Substitution  
Exports Not Always Exogenous  
Small versus Large Regions  
Feedbacks among Regions  
Non-basic Activities May Not Increase  
Long-Run Instability of the Multiplier  
Excessive Aggregation  
Supply-Side Approaches  
Intermediate Inputs  
Land (Environmental Resources)  
Supply and Demand Side Approaches: A Synthesis  
6. Additional Tools for Regional Analysis
Shift and Share Analysis  
An Application  
Econometric and Simulation Models  
Econometric Models  
Importance-Strength Analysis  
Input-Output: Analysis  
The Transactions Table  
The Table of Direct Coefficients  
The Table of Direct and Indirect Coefficients  
Input-Output Applications  
7. Institutionalist Perspectives on Local Development
External Benefits from Economic Development  
Job and Income Creation  
Fiscal Improvement  
Physical Improvements  
Who Benefits From Growth?  
Characteristics of Resource Supply  
Opponents of Growth  
Subsidies, Competition and Economic Development  
Is Local Economic Development a Zero Sum Game?  
Inefficiency and Oversubsidization  
Discretionary versus Entitlement Subsidies  
Cost Minimization versus Human Capital Strategies  
Social Capital and Economic Development  
Generic Economic Problems and Social Capital  
Ambiguous Reception of Social Capital  
Social Capital and Local Development Strategies  
Using Social Capital to Mitigate Economic Development Conflicts  
Social Network Analysis: Getting the Right People to the Table  
Targeting Development Efforts  
Cluster-Based Economic Development  
8. Local Economic Development in a Flattening World
Models of Trade and Resource Flows  
Comparative Advantage  
Resource Mobility  
Economics of Migration  
Retiree-Migrant Development Strategy  
Mobility of Capital  
Innovations and Ideas  
Spatial Diffusion  
Implications for Regional Development  
Mobility and Development Policy  
Jobs-to-People versus People-to-Jobs  
Immigration and Urban Development  
9. Land Use
What Gives Land Value?  
Land Rents and Value  
The Nature of Rent, Productivity and Access  
Highest and Best Use  
The Land Development Process  
Developer Goals  
The Market Study  
Environmental Impact Statements  
Profit Feasibility  
The Development Decision  
Implications of Financial Analysis for LED  
Land-Use Patterns  
The Monocentric City Model  
The Desity Gradient  
Roads and Axial Development  
Agglomeration and the Multiple-Nuclear City  
Changing Land Use Patterns  
Evaluating Metropolitan Spread (Urban Sprawl)  
Land Use and Economic Development Tools  
Zoning and Its Critics  
Flexibility and Land Use Regulations  
The Eminent Domain Controversy  
Rights to Land and Economic Development  
10. Housing and Neighborhood Development
Fundamentals of Housing Economics  
Hedonic Pricing  
Uncertainty, Market Imperfections, and Competition  
Residential Location and Neighborhood Change  
The Filtering-Down Theory  
The Trade-Off Model  
The Cultural Agglomeration Model
The Tiebout Model  
The Aggregate Economic Fallout Model  
Initiating and Perpetuating the Change Process  
Housing Policy Issues  
Rent Control versus Market Forces  
Income Support versus Housing Assistance  
Supply versus Demand Side Assistance  
Ghetto Dispersal versus Ghetto Improvement  
Dwelling-Unit versus Neighborhood Development  
Linkage Between Local Housing and Global Financial Markets  
Retail and Commercial Neighborhoods  
The Social Economy of Neighborhoods  
Community Development Corporations  
Community Gardens  
11. Poverty and Lagging Regions
The Nature of Poverty  
Conceptual Approaches
Demographics of Poverty  
Spatial Concentrations of Urban Poverty  
Regional Linkages: The Spread and Backwash Effects  
Empirical Studies of Spatial Linkages  
Spatial Linkages and Theories of Spatial Poverty  
Policy Issues  
Strengthening Linkages  
Improving Productivity  
Addressing Wage Rigidities
Employment Guarantee Schemes in India  
Income Support  
12. Local Governance, Finance, and Regional Integration
Spatial Perspectives on Government Functions  
Distribution and the Race to the Bottom  
Local Allocation  
Public Transportation – An Example  
Size and Scope of Local Governments  
Economies and Diseconomies of Scale  
Decision-Making Costs  
Improving Government Efficiency  
Using Prices and Fees  
Local Taxation and Economic Development  
Intergovernmental Competition  
Intergovernmental Grants and Coordination  
Rearranging Functions  
Market Based Reforms in Education  
Fiscal Impact and Benefit-Cost Studies  
Fiscal Impact Studies  
Benefit-Cost Analysis  
13. Local Economic Development Planning
The Future and Local Development  
Concern with Values and Attitudes  
Technological Change  
Systems Orientation  
Importance of Timing  
Planning Perspectives on Development Policy  
The Planning Process  
Limits of Planning  
Planning and Future Studies Tools  
Delphi Forecasting  
Environmental Scanning  
About the Author

The book contains a very clear and interesting structure. Can be used as a textbook for courses on regional policy.

Mr Andrzej Klimczuk
Social Science , Warsaw School of Economics
August 14, 2015

Used as a suggested text

Dr Anthony Koyzis
Educational Studies , University of Nicosia
January 6, 2015

I adopted this for last year's class. It is very good and just right for the audience. I can't use it this year, though. It is too out of date. I am trying to rush order the Blakely book!

Professor Becky Smith
Agricultural Economics Dept, Mississippi State University
May 23, 2014

The 13 chapters of the book cover essential critical themes around LED from various perspectives and well addressed to various target groups: students, academicians, researchers and practitioners. This book is well recommended for those who would like to explore LED from various lenses/ perspectives as applicable to multidisciplinary areas of development, governance and administration.

Mr Aurobindo Ogra
Department of Town and Regional Planning, University of Johannesburg
April 9, 2014

What I appreciated most about this book, was its accessibility for students with a weak economics background, yet who still have an interest in development planning and practice. The second edition offers a global perspective on local economic development and incorporates a more practical approach to LED which is especially beneficial to students preparing for the working world.

Dr Samantha Leonard
Department of Development Studies, Nelson Mandela Metropolitan University
September 23, 2013

thank your for your great service!

Mr Wolfgang Gruber
Department of Development Studies, University of Vienna
June 14, 2013

Dense book; well researched and analysed but not apt for the 'principles of Sociology' course that I had hoped it would supplement.

Miss Christine Hatcher
Sports, Business and Care, City of Bath College
May 8, 2013

Excellent for urban economic studies. Offers good academic content. Texts rich in theory and praxis. Readable for students.

Dr Artur Ochojski
Strategic and Regional Studies, University of Economics in Katowice
March 12, 2012

Easily understood by students, concise yet thorough

Dr Phyllis Behrens
Clg Of Hlth Science Human Svcs, Midwestern State University
February 14, 2012

This book is helpful for the course and its been used in my class at another university. Lazarski University warsaw.
very useful for development studies. Thank you.

Mr Emmy Irobi
International Studies , Collegium Civitas
November 9, 2011
Key features

This book provides a comprehensive introduction to the economics of local economic development. The approach is people centered and recognizes contributions from other social sciences.

Feature #1: Global Emphasis NEW. The link between local economic development and national development will be clear. Local economic development will be linked to traditional national economic development courses. Instructors will be tasked with setting ideas into unique localities. This feature will also help "internationalize" college curricula.

Feature #2: Institutionalist Focus NEW. Describes how confects of interest as well as political and the social environments interact and influence in the local development process. This feature will provide instructors with opportunities to "localize" the way they teach the course and the opportunity to show that economic theory must be supplemented by observations from other social sciences.  

Feature #3: Equity Issues and Lagging Regions NEW. Shows the importance of local economic development to equity concerns and the importance of interregional linkages. (This point blends with feature #2). This orientation also provides the study of local development with a sense of purpose.

Feature #4: Presentational of qualitative tools and their limitations. Provides readers with a "how to" understanding regarding the important techniques and their interpretation. The ability to use these tools will provide students with a sense of accomplishment.

Feature #5: Comparative versus competitive advantage--New. Shows students how perceptions of the sources of local advantages are changing in the emerging global and technological environment. It enhances the relevance of local economic development to "new economy" ideas.

Feature #6: Careers in LED --New. Students will learn about jobs where knowledge of local economic development the primary requirement (such as a development official local agency or a Chamber of Commerce) and many career fields where local economic development is complementary (such as banking, real estate or community development). This section will help students see direct relevance to their career prospects.

Careers in LED --New. Students will learn about jobs where knowledge of local economic development the primary requirement (such as a development official local agency or a Chamber of Commerce) and many career fields where local economic development is complementary (such as banking, real estate or community development). This section will help students see direct relevance to their career prospects.

For instructors

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