Cities and Economic Development: Does the City Limits Story Still Apply?

Abstract

The dominant explanation for city policy choices over the past two decades has been the city limits story. This scenario represents the application of public choice theory to local policy making. Theorists argue that rational self-interest by cities compels local elected officials to favor developmental policies and compete with other jurisdictions. Inefficient economic development outcomes and evolving trends in the practice of economic development prompt a reevaluation of the city limits story as the primary explanation for economic development policies. This research investigates the influence of intercity competition and other factors on the support for economic development by cities. Results from regression analyses using data from a sample survey of U.S. local economic development professionals reveal virtually no support for the city limits story. However, the population needs within cities, the support of elected officials, and the existence of formal economic development planning did influence support for economic development.