first wave
State economic development policy is traced to the increase in public spending to promote economic development that started in the late 1970s in response to Nixon’s New Federalism and the end of federal revenue sharing (Eisinger, 1988; Fox, 1990) Represents an intensification of a longstanding local development logic based on zero-sum investment competition. The use of property tax abatements and other subsidies to lower the local costs of production and, therefore, lure existing jobs from higher cost locales is often characterized as “low road” development because of the downward pressure such measures exert on wages and employment stability (Luria & Rogers, 1999). Saiz (2001) defines first-wave industrial recruitment poli cies as “state efforts to reduce the cost of production factors in relation to other jurisdictions” in an effort to “attract businesses that wish to relocate, retain those tempted by other states to leave, or encourage existing businesses to expand in place” (p. 47). From this conceptual definition, Saiz (2001) derives three first-wave policy attributes: direct cost reduction, administrative passivity, and an absence of targeting. Indicators of direct cost reduction include loans, grants, and interest sub sidies that pass directly from the state to the firm. Administrative passivity means that “government investment decisions remain subordinate to those of the private sector” and are embodied by policies such as tax abatements and infrastruc ture improvements (p. 47). The absence of targeting essentially means a lack of strategic planning on the part of government, “excluding programs that target specific areas or economic sectors (except manufacturing)” and including “only nontargeted programs or programs potentially available to virtually all businesses” (p. 47). Starting in the 1980s, the “first wave” of industrial recruitment policies was replaced by or supplanted with a second wave. (Hanley, 2014)