Holding Their Feet to the Fire: Explaining Variation in City Governments' Use of Controls on Economic Development Subsidies

This article focuses on four policies that a number of cities are using to make businesses more accountable for the development subsidies that they receive (cost-benefit analysis, effectiveness measurement, performance agreements, and clawback clauses). Using data from International City Management Association's 2009 Economic Development Survey supplemented with Census Bureau data, three explanations for variation in city governments' adoption of these policies are tested: economic need, governmental capacity, and political context. The results reveal very limited support for economic need-type explanations while strongly underscoring the importance of governmental capacity. Further, stark contrast with existing work on the topic, political context is shown to be important in multiple respects: The existence of lower class opportunity regimes and citizen opposition are both strongly linked with the use of at least two of these accountability policies, but this is conditioned by the city's form of government.