Chapter 9 Industrial Recruitment * In previous classes, we have introduced some US government facts as well as some historical and theoretical background of business-government relations. Starting from this week, we are going to focus on business-government relations in economic development, especially in local context. Today we will cover chapter 9 = industrial recruitment. We will look a various economic theories, cluster theory, political context of local economic development, and industrial recrtuiment. Economic growth contributes to an increase in consumption which benefits all sectors of the economic community. Despite the dynamic in the growth loop, economic growth can not be indefinite (e.g., land is limited). * An economy will reach a natural equilibrium if capital can flow without restrictionCapital mobility: capital will flow from high cost areas to low cost areasEquilibrium: overall market and all areas will reach a state of equal statusNo government intervention: opposing government regulations on the movement of firms attracting capital with community’s resources (e.g., land, labor, infrastructure, financial incentives, etc.) * Location theoryFactors affecting a firm’s location choiceGovernment should enhance the location with government performance, policies, and resourcesEconomic base theoryLocal demands vs. external demands Government should recruit businesses that have a market beyond the local area and encourage export-oriented industries. Location theory, on the other hand, seeks to explain an area’s competitiveness in terms of firms’ locational orientation—what factors of an area contribute to a firm’s location choice. Location theorists assume that firms, in order to maximize their profits, choose locations that minimize the cost of transporting goods to the market place. Unlike the neoclassical school, location theorists generally assert that government should play a critical role in enhancing the location. A capable, cooperative, and responsive government can potentially better meet business’ needs for land, infrastructure such as transportation and roads, education, and other public services. Economic base theory analyzes growth from the demand side rather than the supply side. It differentiates the economic activities of an area into two components—those which meet the local demands and those which satisfy the demands outside the community. The former is non-basic, which does not lead to growth, while the latter is basic, which will generate local wealth and jobs. * Growth pole theoryA dynamic industry with a competitiveness edge in capital, technology and political influence is a pole of growth.Government should help expand the core industry.Central place theoryCritical role of urban centersGovernment should direct resources to the development of a central place Growth pole theory rejects neoclassical theorists’ claim that growth “should” flow to less costly regions and argues that in.

1. Chapter 9
Industrial Recruitment
*
In previous classes, we have introduced some US government
facts as well as some historical and theoretical background of
business-government relations. Starting from this week, we are
going to focus on business-government relations in economic
development, especially in local context.
Today we will cover chapter 9 = industrial recruitment. We
will look a various economic theories, cluster theory, political
context of local economic development, and industrial
recrtuiment.
Economic growth contributes to an increase in consumption
which benefits all sectors of the economic community.
Despite the dynamic in the growth loop, economic growth can
not be indefinite (e.g., land is limited).
*
An economy will reach a natural equilibrium if capital can flow

2. without restrictionCapital mobility: capital will flow from high
cost areas to low cost areasEquilibrium: overall market and all
areas will reach a state of equal statusNo government
intervention:
opposing government regulations on the movement of firms
attracting capital with community’s resources (e.g., land, labor,
infrastructure, financial incentives, etc.)
*
Location theoryFactors affecting a firm’s location
choiceGovernment should enhance the location with government
performance, policies, and resourcesEconomic base theoryLocal
demands vs. external demands Government should recruit
businesses that have a market beyond the local area and
encourage export-oriented industries.
Location theory, on the other hand, seeks to explain an area’s
competitiveness in terms of firms’ locational orientation—what
factors of an area contribute to a firm’s location choice.
Location theorists assume that firms, in order to maximize their
profits, choose locations that minimize the cost of transporting
goods to the market place. Unlike the neoclassical school,
location theorists generally assert that government should play a
critical role in enhancing the location. A capable, cooperative,
and responsive government can potentially better meet business’
needs for land, infrastructure such as transportation and roads,
education, and other public services.
Economic base theory analyzes growth from the demand side
rather than the supply side. It differentiates the economic
activities of an area into two components—those which meet the

3. local demands and those which satisfy the demands outside the
community. The former is non-basic, which does not lead to
growth, while the latter is basic, which will generate local
wealth and jobs.
*
Growth pole theoryA dynamic industry with a competitiveness
edge in capital, technology and political influence is a pole of
growth.Government should help expand the core
industry.Central place theoryCritical role of urban
centersGovernment should direct resources to the development
of a central place
Growth pole theory rejects neoclassical theorists’ claim that
growth “should” flow to less costly regions and argues that
indeed the opposite happens unless there is a dynamic industry
with a competiveness edge in capital, technology, and political
influence (Perroux 1983). Such industries are propelled by poles
of growth. A pole or hub is characterized by core industries
around which linked industries develop because of the core
industries’ demand (from suppliers), as well as its provision of
goods and services (to customers). The expansion of a core
industry leads to the expansion of investment, output,
employment, and new technologies, as well as the emergence of
secondary growth poles.
Central place theory focuses on the critical role of urban centers
in regional economic development. According to this theory,
urban centers contain specialized industries (especially retail
stores) that serve a broad area. They are surrounded and
supported by a number of small jurisdictions that provide
resources and markets for the urban centers. Residents of a
small jurisdiction have to go to these central, urban areas for
specialized products and services which are not provided in

4. their own communities. Therefore, economic development
efforts should direct resources to the development of a
designated central place which will improve the economic well-
being of the whole region (Bradshaw and Blakely 1979).
*
Michael PorterHarvard Business School Professor Dr. Porter
first introduced the idea of cluster in 1990His theory led to a
large body of research on cluster-based economic development
along with hundreds of public-private cluster initiatives
throughout the world.
*
*
*
Clusters are geographic concentrations of interconnected
companies, specialized suppliers, firms in related industries,
and associated institutions (e.g., government, universities, and
trade associations) in a particular field that compete but also
cooperate.
geographic concentrations=physical proximityinterconnected=
there is an important synergy among themcompete but also
cooperate=both factors make them better!
What is a cluster?
*

5. Clusters affect competition in three broad waysBy increasing
the productivity of companies based in the area,By driving the
direction and pace of innovation, which underpins future
productivity growth,By stimulating the formation of new
business, which expands and strengthens the cluster itself.
Productivity. Being part of a cluster allows companies to
operate more productively in sourcing inputs; accessing
information, technology, and needed institutions; coordinating
with related companies; and measuring and motivating
improvement.
Innovation. In addition to enhancing productivity, clusters
facilitate knowledge sharing among companies, provide the
capacity and flexibility to act rapidly (source what it need to
implement innovation quickly), experiment at lower cost
(because suppliers are close).
New business formation. New suppliers proliferate within a
cluster because a concentrated customer base lowers risks and
makes it easier to spot market opportunities. The formation of
new businesses is part of a positive feedback loop. An expanded
cluster amplifies all the benefits and increases the collective
pool of competitive resources.
*
Automobiles, Michigan
Watches, Switzerland
Chocolate, Belgium

6. Wine, France
*
Theme park entertainment, Orlando
Disney in 1971;
Today also Universal, Cirque de Soleil, and Seaworld
Silicon Valley
Standford leased land to high tech companies in 1971;
Intel-Santa Clara, Apple-Cupertino;
Today over 4,000 IT related companies from SF to San Jose
along Highway 101
Cirque du Soleil (French for "Circus of the Sun", in English
pronounced /sɜrk duː soʊˈleɪ/) is an entertainment empire based
in Montreal, Quebec, Canada and founded in Baie-Saint-Paul in
1984 by two former street performers, Guy Laliberté and Daniel
Gauthier.
SeaWorld is a chain of marine mammal parks in the United
States, with operations in Orlando, Florida, San Diego,
California, San Antonio, Texas, and previously Aurora, Ohio.
*
*

7. http://www.clustermapping.us/
*
Bring together a pool of resources—workers, suppliers, related
services—that provides depth, security, and choices/diversity
for a cluster.
Locality enhances cooperation, since most cluster participants
are not direct competitors but rather serve different segments of
industries.
Provide local competition that gives fast feedback on
innovations, trends, price and quality.
Ironically, entry into a cluster is initially easier because of
great demand for new workers and new ideas.
Clusters facilitate niche specialization that cannot normally be
sustained outside of clusters.
Bring together sophisticated local customers who know the state
of the art and give tough feedback.
*
1.
2.
3. If you are in a cluster, you can’t sit back on your heels. You
improve both your operational effectiveness as well as your
strategy effectiveness. Easy to be at productivity frontier.
4. Long-term success dependent on hard work, great ideas and
strategy, and luck.
5.
Porter: Companies in cluster can
productivityBetter access to employees and suppliersAccess a

8. deep and specialized supplier baseAccess to specialized
informationComplementarities: a. products complement one
another in meeting customers’ needs; b. enhancing the
reputation of a location’ buying from a cluster more
attractiveAccess to institutions and public goodsBetter
motivation (local rivals share general circumstances and
perform similar activities) and compare performances
InnovationBetter window on the marketMore visible
opportunities for innovationLower cost to experiment
New Business FormationMore easily perceive gapsNeeded
assets, skills, inputs, and staff often availableLocal financial
institutions and investors may require a lower risk premium on
capitalSignificant local markets
Question: What could be the benefits of cluster to local
economy?
*Stimulate economy with natural diversification. Clusters are
not a single company or industry but a group of organizations
that have a synergy and a related set of products.
Provide renown. Clusters are very good at what they do and get
reputations.
Provide local wealth. With local ownership, more money stays
in the community.
Generally provide more high paying jobs. Because they are the
productivity frontier and doing large volume, clusters generally
can afford to pay for the best.
*
What are the old and emerging clusters in the Inland Empire?

9. *
*
Housing
Commercial (Victoria Gardens)
Transportation/logistic [State Bros] (Ontario, Norton Airforce
Base)
Wine (Temecula)
Dairy (Chino Hills)
Tourism (Palm Spring >100 golf courts)
*Facilitating cluster development and upgrading,Reinforcing
and building on established and emerging clusters Helping all
firms, not individual firms, Promoting competition and invite
distant/foreign partnersGovernment can: remove obstacles,
relax constraints; support resources such as necessary
infrastructure; support human capital development such as
education and training programs; assist export promotion;
encourage local R & D efforts; sponsor forums to bring cluster
participants together;encourage industrial parks; sponsor
independent testing or certification if it is useful.
*
A major role of government is cluster development (according
to Porter), “facilitating cluster development and upgrading,”
because of the increases in productivity and salary
“Governments should reinforce and build on established and
emerging clusters rather than attempt to create entirely new
ones.”

10. Government should help all firms generally.
Government must not attempt to set policies that help individual
firms, distorting market
Government should promote competition and invite
distant/foreign partners
Government can:
remove obstacles, relax constraints;
support resources such as necessary infrastructure;
support human capital development such as education and
training programs;
assist export promotion;
encourage local R & D efforts;
sponsor forums to bring cluster participants together;
encourage industrial parks;
sponsor independent testing or certification if it is useful.
*PopulationHuman capital productivity (e.g.,
education)Innovation (e.g., process improvements or
inventions)Land intensification (low yield agricultural to high
yield, or plentiful agricultural to in-demand housing)Resource
availability (e.g., minerals, specialized workforce, or natural
resources such as forests)Transportation (access to roads, rivers,
canals, airports)Climate (suitable climate and suitable
conditions)Culture and amenities (e.g., desirability of location,
products from a location)Synergy among factors (e.g., cluster
theory)
(more)
Land intensification measures the degree that population,
affluence, and technology interacts with land.

11. A business cluster is a geographic concentration of
interconnected businesses, suppliers, and associated institutions
in a particular field. Clusters are considered to increase the
productivity with which companies can compete, nationally and
globally.
clusters have the potential to affect competition in three
ways:by increasing the productivity of the companies in the
cluster, by driving innovation in the field by stimulating new
businesses in the field
*
*General government policies (non-business policies affecting
peace and stability, public safety, quality of life,
welfare)Government policies specifically related to business
Regulatory
macro: fiscal and monetary policy, trade policy;
micro: planning, zoning, and inspection for environmental,
safety, and quality of life factorsPromotional policies (e.g.,
corporate subsidies, infrastructure enhancements, risk
protection [insurance], seed money and incubation funds,
etc.)Government contracting
*
A coalition of peopleinterested in the development and re-
development of land, such that unused land is developed for
highest present value
By increasing the overall development or
By intensification of land usegenerally brought together with
government power and financial subsidies.

12. *
Intensification means converting farm and open space to
residential and commercial, or lower class housing to “high-
class” commercial.
Land intensification: degree of $, people, & technology
interacts with land.
Composition: land developers financiers local governments
interested in greater property and sales taxes residents
interested in increased land values or public flagship
projectsPhilosophical underpinnings: commercial capitalism
(mercantilism, Hamiltonian democracy)
Government is a major economic “player”
Community benefits from increased wealth
Hamiltonian Democracy: strong government
Government plays an active role, a major economic “players”
should drive the economy and the future. Hamilton, on the other
hand, advocated strong, central institutions of government at the
federal level. Only through effective government and the rule of
law, he said, could freedom of the individual be assured.
Commercial capitalism is another word for mercantilism.
Mercantilism suggests that the ruling government should
advance its goals by playing a protectionist role in the economy
and encouraging exports and discouraging imports, notably
through the use of subsidies and tariffs respectively. The
assumption was that trade is a zero sum game.
Jefferson democracy: strong citizenry
was portrayed as an idealist for the small state, where

13. government takes a low profile in the interests of strong,
confident citizenry.
*
A powerful consensus among key groups who collectively
promote economic growth. A true growth machine includes:
large public entrepreneurs connected to the community, a
generally supportive public, and a strong support base in
government (especially the city council or board of supervisors)
*
A related concept to pro-growth
For example, in a city, the GM is a coalition of local business
and local government. Those players come together to pursue an
agenda of urban growth and intensification of land use.
The GM often dominates city politics because it is able to
establish and maintain a political consensus that growth is good
for all.
A coalition interested in slowing or stopping various types of
development because the effects of fast growth are considered
too negative: Sprawl, Traffic congestion, Environmental
degradationInsufficient infrastructure, Excessive cost shifting to
current tax payers for development projects, Degradation of
existing communities by downgrading current use, and Other
special interests
*Sprawl, Traffic congestion, Environmental degradation
(especially creation of brownfields) Insufficient infrastructure
(e.g., parks, drainage systems), excessive cost shifting to

14. current tax payers for development projects (i.e. SB stadium,
multiplex theater, enterprise zones), degradation of existing
communities (residential or commercial) by downgrading
current use. Other special interests: historical preservation,
zoning protections (urban growth boundaries and
encouragement of in-fill, appropriate mix of uses, etc.)
Sprawl is “the process in which the spread of development
across the landscape far outpaces population growth” (Ewing
2002)“poorly planned, low-density, auto-oriented development
that spreads out from the center communities” (the National
Trust for Historic Preservation)
Sprawl: the process in which the spread of development across
the landscape far outpaces population growth.
*
Creates sprawl and its negative effects [Ewing, et al.]More
carsLess public transitMore traffic fatalitiesPoor air
qualityAesthetic ugliness of sameness, and strip
mallsDuplication of infrastructure which leads to lack of
sustainability [Wiewal et al.]Decline and abandonment of the
central city, as well as inner suburbsEnvironmental degradation
and creation of brownfieldsCost shifting of development to
current taxpayers
*
Start: So let’s look more at the quality of economic
development
Three urban density functions with Ewing views of compact
development and of sprawl. The first, G & R's compact pattern,

15. is European in its very high central densities, high average
densities, and abrupt urban-rural boundary. This is a straw man
par excellence, since it is as yet unseen in the United States.
The second pattern, my version of sprawl, has few significant
centers, low average density, and wide gaps in the urban fabric
due to leapfrogging. This is no straw man. It is a common urban
form, and many planners and policy makers object to it. The
third ---a clear indication of how much our concepts of sprawl
differ. This pattern is multicentered, has moderate average
densities, and is continuous except for permanent open spaces,
or vacant lands to be developed within the standard planning
time frame.
Higher rates of driving and vehicle ownership
Increased levels of ozone pollution
Greater risk of fatal crashes
Depressed rates of walking and alternative transport use
No significant differences in congestion delays
Residential density: A population that is widely dispersed in
low density developmentNeighborhood mix of homes, jobs, and
services:Rigidly separated homes, shops, and
workplacesStrength of activity centers and downtown
(centeredness): A lack of well-defined, thriving activity
centersAccessibility of the street network: A network of roads
marked by huge blocks and poor access
*
Residential density: most recognized; amount of land used per
person
Mix: segregation of land uses which requires more car travel,
especially home vs. job
Centeredness: is the degree to which residential development is
located close to the central business district of the area (also,
supports multi-purpose trips for shopping and services)

16. Accessibility of street network: disconnected network; few
extremely busy arterials must carry all traffic; few alternate
routes
Similar but not identical to Wolman et al. who have five
dimensions:
Density—average # of residential unit/square mile of
developable land in an area
Concentration—degree to which housing units are located
disproportionately in a relatively few square miles of an area
Centrality—degree to which residential development is located
close to the central business district of an area
Nuclearity—the extent to which the built environment of an
area is characterized by a single, highly dense node pattern of
development
Proximity—degree to which across area observations of a
particular land use or pair of land uses are close to each other,
relative to the distribution of all land comprising the study area.
Riverside:
few areas serve as town center—66% pop lives over ten miles
from a central business district
Little neighborhood mixing of home with other uses: only 28%
residents live within ½ block of any business or institution
Residential density is low: less than 1% pop lives in
communities with enough density to be served by transit
Street network is poorly connected: 70% of its blocks are larger
than traditional urban size. (SR91, Bedroom community)
Impact feesCharges imposed on developersGrowth
managementConstraints on the intensity of developmentDesign
and capacity standards for lots and buildingsRequirement of
adequate public facilities or imposition of impact
feesReductions in the supply of land open for development
Regional governance (e.g., SANBAG, SCAG, CVAG)Reducing

17. regional disparity by joining them in one governmental body
Redevelopment of older areas
shifting to other taxpayers (to cover cost of roads, utilities,
sidewalks, wastewater, public cemeteries, solid waste facilities,
new public buildings such as police precinct stations and fire
comprehensive plans; even better is regional zoning but very
hard to accomplish in American model
Ewing:
Reinvest in neglected communities and provide more housing
opportunities
Rehabilitate abandoned properties
Encouraged new development or redevelopment in already built
up areas
Create and nurture thriving, mixed-use centers of activity
Support growth management strategies
Craft transportation policies that complement smarter growth
http://www.sanbag.ca.gov/about/index.html San Bernardino
http://www.scag.ca.gov/index.htm Regional COG: Southern
CA
http://www.wrcog.cog.ca.us/ Western Riverside COG
http://www.cvag.org/ Coachella Valley Association of
Governments
Composition:Residents, who fear that their area will be
neglected, degraded, or are offended by the “ugliness factor,”
excessive arterial strip commercial development; Commercial
interest groups, who feel that the new growth will unfairly
compete with local businessesEnvironmentalists, who fear the
loss of farmland, open spaces, wildlife preserves, natural
ecosystems, and land-air-water degradation by profligate
useTaxpayers, who feel that excessive or inefficient subsidies

18. are being used to support development, or that public entities
will bear excessive costs over timeLocal governments, whose
land is all largely in use and whose values are relatively high
*
Composition: residents who fear that their area will be
neglected (siphoning off of resources), degraded (e.g., inner
city neighborhoods with a nearby flagship project or wealthy
communities by apartments), or are offended by the “ugliness
factor,” excessive arterial strip commercial development;
commercial interests who feel that the new growth will unfairly
compete with local businesses (e.g., WalMart, a new mall, etc.);
environmentalists who fear the loss of farmland, open spaces,
wildlife preserves, natural ecosystems, and land-air-water
degradation by profligate use (e.g., low-density residential
development); taxpayers who feel that excessive or inefficient
subsidies are being used to support development, or that public
entities will bear excessive costs over time; local governments
whose land is all largely in use and whose values are relatively
high
No Growth: Emphasizes that an area has reached saturation and
only gentrification should occur; Has extremely strong
preservation emphasis
*
An urban advocate represents a poor neighborhood that needs
jobs and wants to encourage businesses to relocate downtown.
(pro-growth) The advocate learns of a stadium project that

19. would demolish part of the neighborhood, sporadically increase
congestion, and bring few jobs. He becomes vehemently slow-
growth.
A wealthy developer spends an enormous amount of money and
time getting land rezoned from open space to residential, and
getting zoning variances to allow high rises and commercial
exemptions downtown. When a high-rise condominium complex
is proposed in extremely affluent residential community, the
developer becomes outraged and personally appears at the
planning board meeting to oppose the measure.
*
Question: based on your city’s current economic status and your
own interest, are you in favor of pro-growth, or slow growth,
why?
*
LA and Southern CA founded on pro-growthLast unrestrained
push (of business/government collaboration): under Bradley
(mayor) from 1974-85Declining after Bradley Administration
*
Mark Purcell: The Decline of the Political Consensus for Urban
Growth: Evidence from Los Angeles
Thesis: Growth interests in LA have been lacking the political
coordination to effectively accomplish their projects in recent
decades. The reason is not that growth machine has collapsed,

20. just that it has ceased to be a juggernaut or unstoppable force
that it was during its heyday.
Possible factors leading to deterioration: The fall of the
Bradley regime: 1. Prop 13; 2. federal grant cut; 3. development
spread outward to other areas of the citybroad ethnic alliance
with federal subsidies with pro-growth to “pay” for benefits to
many groups; as funding became tighter (prop 13 and fewer fed
$), the coalition faltered Globalization: assertion that most
growth machines need strong local economic interests because
otherwise global interests may be seen as profiting from local
good; fewer local benefitsBranch operations: businesses in a
given locality are branch operations of large firms rather than
entirely indigenous firms. They have fewer multiplier effects:
employment is often recruited outside the local area, raw
materials are more often purchased in other places, and
employees are more likely to be replaced by technological
advances that large firms can afford. They bring fewer real
economic benefits to the place in which they locate.Resistance
to growth: residential and environmental interests; profit not
the only or even primary reason for growthGeographical
fragmentation of local growth elite: regional interests serve as
an umbrella under which a wide array of smaller groups
operateareas within the city compete with one another (San
Fernando Valley with other areas similar to squabbles among
citiesCity government as a failing partner in the growth
machine: 1. secession 2. legitimacy crisis (low voter turnout) 3.
fiscal crisis (Prop 13) 4. council of strong ward structure (15
wards)ascension of slow-growth council people; reemergence of
strong ward system with strong local interests and
competitiveness; allows for sniping (short fire from concealed
place)
Local concern for open space, residential amenities, and
planned growth; underlying preference to keep Redlands the
same

21. Friends of Redlands (1978)The Redlands Association (1986)a
grass-roots group advocating for slow-growth
http://www.ci.redlands.ca.us/community/plan.html
Best Old Town to Walk and Shop
*
Passed a series of very strong slow-growth
ordinances:Proposition R (1978):
Redlands' first growth management initiative
intended to limit the pace of residential growth to 450 new
housing units per yearMeasure N (1987):
limited 400 new dwellings a year
each permit highly scrutinized,
very high development feesMeasure H (1995):
would have further limited development; narrowly
defeatedMeasure U (1997):
establishing principles of managed development;
encouraged low density housing and maintenance of citrus
The Redlands: Slow-growth case
Proposition R (initially successful until about 1983 when
planning board was granting too many exceptions); prop N
tightened up a lot!!Proposition N (1987): limited 400 new
dwellings a year, nearly impossible to convert agricultural land,
each permit highly scrutinized, very high development
fees1995: Measure H would have further limited development;
narrowly defeated1997: Measure U passed; establishing
principles of managed development; encouraged low density
housing and maintenance of citrus
*

22. Definition: “an urban planning and transportation theory that
concentrates growth in the center of a city to avoid urban
sprawl; and advocates compact, transit-oriented, walkable,
bicycle-friendly land use, including mixed-use development
with a range of housing choices.”Goals of Smart Growth:To
focus on long-range, regional considerations of
sustainability;To achieve a unique sense of community and
place; To expand the range of transportation, employment, and
housing choices;To equitably distribute the costs and benefits of
development; To preserve and enhance natural and cultural
resources; and To promote public health.
Source: Wikipedia
Mixed-use: mix use of jobs, homes, and stores (working,
residential, commercial)
*
Overarching principles: balance public/private interests and
ensure sustainability
Recommended practices: high density, mixed land use,strong
use of planning with clustered development and protection of
agricultural and open space,integration of affordable housing
and social equity concerns, traffic grids allowing for alternate
routes, more emphasis on non-automotive means including
pedestrian walkways and bike paths, narrower streets, full
costing and implementation of infrastructure at beginning of
construction
*
Private: profit
Public: amenities, aesthetics, affordability, equity, safety,
community (social capital)

23. Private&Public--sustainability
*
We have now looked at the strengths of economic growth and
the successes of economic development, but we have also
looked at the challenges and problems too!
Question: so what do you think could be the groups of people
for and against growth?
Now let’s look at the politics and ideology of growth and
economic development, especially the ideological disparities
between the pro-growth and the slow or no-growth.
*
In previous class, we covered the four intellectual models of
government business relations, government’s role in economic
development, and how government funds economic
development. Today we will cover how government interact
with business.
Industrial recruitmentGovernments subsidize businesses to lure
more investment in their jurisdictions.Entrepreneurial
strategyGovernments adopt policies that promise to increase

24. public revenue, focusing on new firm and technology
development. Privatization (especially
deregulation)Governments delegate businesses its public duties.
Last week we introduced the concept of economic growth. We
define ED as a government activity to “encourage private
investment in a particular jurisdiction for the purpose of
generating or retaining jobs, expanding the tax base, and
increasing the general level of economic well-being.”
We also talked about the methods government used to finance
ED. Government may subsidize firms through grants, loans, and
various forms of interest subsidy. Government may also give
business tax breaks, provide infrastructure, offer information or
technical assistance. In addition, government also involve
business in PPP to induce ED.
Today we are going to study what are the strategies government
used to induce economic growth.
*
A locational approach by which governments subsidize
businesses to lure more investment into their jurisdictions or to
prevent indigenous firms from leaving.Lowering private firm’s
production factor costsExpecting growth to offset the
expendituresA case-by-case approachGovernment negotiating
with individual firms about the incentive programs
*
*It is often understood as a product of competitive federalism,

25. which assumes that the diversity of services offered by state and
local governments creates a market for public goods.
*
“Concerned with the potential exit of firms and desiring to
create more economic activity, governments subsidize
businesses in the hope that new jobs will stimulate related
enterprise.”
It is characterized by government policies attempt to reduce
costs to business but in a nontargeted and passive manner.
Government often offers incentives to lure business from other
jurisdictions or to prevent indigenous firms from leaving. It
always result in competition among state and local government.
*Pros“democratic” open to public scrutinyCapitalistic principle:
competitionGovernments can be selective
ConsErodes the tax baseCan lead to economic powerhouses
manipulating governmentExacerbates inequities among
jurisdictions (winners and losers)
*
Fedex in Memphis, the city built a road in front of the head
quarter complex
*

26. "Economic development projects are negotiations between
companies or organizations looking for the best place to set up
shop and the communities in which they are looking. As with
any business negotiation, certain information is shared between
the two parties so that each can better understand the options
and determine the best scenario for both parties.“
- Cullen Larson, executive director, Georgia Economic
Developers Association, November 2005
Peddle, 2008
*
Government reasonstax dollars, jobs, high paying jobspublic
relations. [also, jobs for blighted areas, sometimes specialty
companies to complement existing businesses, and to redevelop
areas.]
Business reasonstax breaks, zoning variances, land assembly
assistance, infrastructure improvements, and Cash outlays (e.g.,
grant, loan guarantees, subsidies)
*
*
Public Interest
Corporate Interest
Market Conditions
Political Conditions
Planning System

27. *
*Issue: what are the factors that affect bargaining between
business and local government?Three major factors affect
bargaining relationship
market conditions
circumstances or forces that make cities more or less appealing
to private investors
political conditions
the political process through which public sector decisions can
affect economic development
Planning system
relationships and methods used by government to regulate the
marketplace
*
Historical hotel built in 1903. After original owner Frank
Miller’s death, it was declining, and sold by the family. Great
depression The city purchased in 1976 (student housing).1985
worked with a developer but failed.Finally sold to Duane
Roberts in 1990s, who had a passion for saving the landmark
that he revered from his childhood.1992 reopen to public, great

28. success. (weak market condition: competition from Las Vegas
and Palm Springs(planning system: the city could make
whatever variances the business owner needed, even historical
landmark waivers)
Major effort to redevelop the property starting 1985Developer 1
with city: $30 million was not enough!Developer 2 and 3:
failed attemptsDeveloper 4: Duane Roberts and success;
reopened in 1992
Mission Inn in Riverside, CAA win-win bargaining
*
These are just a few of the ways in which economic
development helps communities:
Increased Tax Base...the additional revenue provided by
economic development supports, maintains, and improves local
infrastructure, such as roads, parks, libraries, and emergency
medical services.
Job Development...economic development provides better
wages, benefits, and opportunities for advancement.
Business Retention...businesses feel appreciated by the
community and, in turn, are more likely to stay in town,
contributing to the economy.
Economic Diversification...a diversified economic base helps
expand the local economy and reduces a community's

29. vulnerability to a single business sector.
Self-sufficiency...a stronger economic base means public
services are less dependent on intergovernmental influences and
alliances, which can change with each election.
Productive Use of Property...property used for its "highest and
best use" maximizes the value of that property.
Quality of Life...more local tax dollars and jobs raise the
economic tide for the entire community, including the overall
standard of living of the residents.
Recognition of Local Products...successful economic
development often occurs when locally produced goods are
consumed in the local market to a greater degree
Running Head: EMERGING THREATS AND
COUNTERMEASEASURES IN IT 1
EMERGING THREATS AND COUNTERMEASEASURES IN
IT 3
Emerging Threats and Countermeasures in IT
Student Name: Sandesh Adiyal
Professor: Dr Jan Felton
University of the Cumberlands

30. Cybersecurity Breaches
The IT industry is on a high alert due to the emerging and
evolving cybersecurity threats. A data breach is occurring every
day, causing incredible worry for security globally. The
emerging threats are a concern to not only our social ideals but
also our social ideals such as democracy and privacy.
Corporations, Government, and individual data and assets are at
a constant risk from cyber-attacks, which involves malware,
phishing, SQL injection attack, and artificial intelligence
(Traoré, 2017). The presence of malware, which is malicious
code in a system or computer, cannot be known by a victim.
Examples of malware are worms, viruses, and Trojan. Malicious
advertisement injects this malware on the website. Phishing
occurs when a digital message is sent to an individual from a
phisher acting as a trustworthy business or person to steal
personal and financial information like credit card information.
SQL language is used to retrieve and manipulate data in the
Database. SQL injection is an attack command written to
damage a Database.
For the present IT industry, it is essential to shield IT systems
and data. Organizations must comprehend the IT and data
related threats they face and build adequately reliable security
systems. Optimizing IT and Information Security is a program
proposed to give practical security to an organization data and
the advancement used to store and process it must address
various essential components (Ge & Heiser, 2018). For instance,
Confidentiality which guarantees that the data is available just
to the individuals. Accessibility which ensures data and services

31. are accessible when required. Additionally, people should
tighten their passwords and username to guarantee that they do
not fall causality to cybersecurity. This ensures safety of
essential records in an organization as well as an individual
data.
References
Ge, Q., Yarom, Y., Cock, D., & Heiser, G. (2018). A survey of
microarchitectural timing attacks and countermeasures on
contemporary hardware. Journal of Cryptographic
Engineering, 8(1), 1-27. Retrieved from;
https://link.springer.com/article/10.1007/s13389-016-0141-6
Traoré, I., Awad, A., & Woungang, I. (2017). Introduction:
Emerging Threats Call for New Security Paradigms.
In Information Security Practices (pp. 1-6). Springer, Cham.
Retrieved from;
https://onlinelibrary.wiley.com/doi/full/10.1111/brv.12480
Government business relations
PA 315
Chapter 10
Agenda
Privatization
Entrepreneurial strategy
Public entrepreneur
Examples
Negative: redevelopment projects in San Bernardino
Positive: Victoria Gardens
Privatization

32. Simply stated, privatization involves reliance on the private
sector, to one degree or another, in providing goods and
services to citizens that otherwise might be provided directly by
governments.
In California, focus on privatization due to several factors:
Budgetary problems - many governments have focused on
exploring ways to provide public services more efficiently,
thereby reducing their costs to taxpayers and freeing up
available public funds for other needs
Maintain and improve the quality of services
Drivers of privatization
Ideology – government should be limited –
“That government is best which governs least” ~ Henry David
Thoreau.
Also, Senator Rand Paul stated, “We don’t need bigger
government. We need to shrink the size of government.”
Greed and Corruption – Humanity at its worst.
Temptation to transfer lucrative government services to a
private business to ensure votes, personal gain, campaign
contributions, etc.
Economic – officials seek to offload their responsibilities to
private business who have the ability to efficiently reduce costs
by lowering wages, reducing service levels, and raise revenues
without public scrutiny.
History – Public utilities such as gas, water, electricity, and
sanitation serves are provided to citizens nationally through a
combination of public, private, and quasi-public entities.
Communication services such as telephone, television, and
transportation were developed by private organizations with
some government assistance but they remain heavily regulated
to ensure services are available to all citizens.
Effectiveness – the idea that running services as a business
ensures effectiveness (Charter Schools)
Reduction in liability – The usage of private contractors can

33. reduce the government’s liability for certain duties. Example –
in 2012, there were 113,491 employees of defense contractors in
Afghanistan compared to about 90,000 American soldiers.
2011 – more contractors died than soliders
Examples of government privatization
Adoption services
Animal control/shelters
Campgrounds
Daycare centers
Fire services
Garbage and waste management
Janitorial services
Medical insurance
Municipal water supply
Schools
Prisons and jails
Road maintenance
Toll roads/bridges
Utilities
Personnel management
Nursing homes
Museums
Employment training
Renewals of drivers license
Street cleaning
Telephone services
Landfills
Liability insurance
Privatization methods

34. Competitive bidding – government entity decides which
services to transfer and oversees a process where private
companies bid to provide the service.
Vouchers – citizens, which government assistance, choose
between public and private providers. Examples: education,
insurance (Medicare/Medical), daycare services
Asset sales – governments at all levels sell property and assets
to commercial entities such local police departments auctioning
off recovered and unclaimed property, to office buildings and
lands no longer needed by government
Advantages
Lower Taxes. Wexford County, Michigan privatized its
emergency medical service in 1994, resulting in an
improvement in service, reduction in administrative services,
and lower costs, saving county taxpayers more than $300,000 in
the first year alone.
Increased Efficiency. North of Boston, a privately owned and
operated incinerator, turns garbage into energy for 20 towns
with a combined population of more than a half-million
residents. The towns now pay only $22 per ton to have their
garbage taken away, compared to $100 per ton that is charged
by the government-operated landfill.
Improved Effectiveness. Wexford County, Michigan privatized
the operation of its animal shelter, following a State of
Michigan inspection where cages were found to be
unsatisfactory and in need of immediate replacement.
Lack of Political Influence. According to U.S. District Attorney
for the Northern District of Illinois Patrick Fitzgerald, “Illinois
roads were made more dangerous when state employees issued
drivers’ licenses to truck drivers in exchange for bribes,
intended to finance campaign contributions to former Governor
George Ryan’s political warchest.” Transferring responsibility
to a private entity with adequate supervision eliminates the
likelihood that officials will meddle in the provision of

35. services.
Proponents for privatization presume that government entities
are always less efficient than for-profit organizations – a
presumption that is simply not true. For example, Medicare’s
cost of administration as a percentage of claim dollars paid is
considerably less than any private insurer – less than 2%
historically, according to the Congressional Budget Office.
While there is much truth to the many claims of the abuse of
privatization and the problems that often accompany it,
opponents fail to recognize that governments cannot provide all
things to all people. Citizens have an insatiable desire for
services, especially if someone else is picking up the tab. At the
same time, taxpayers are increasingly reluctant to raise taxes to
support even critical services. As a consequence, government
officials ranging from local municipalities to the Federal
Government are forced to find other sources of revenue, cut
costs, and ration services.
7
Disadvantages
Higher Costs for the Public. Privatization often raises costs for
the public and governments.
In reviewing the proposed privatization of the Milwaukee Water
Works, the nonprofit consumer group Food & Water Watch
reports that the private water service would cost 59% more than
public water service.
Declines in Service Quality. What steps can be taken to make
sure that the desired quality of privatized services is provided
and maintained?
Atlanta, Georgia canceled a 20-year contract to run its drinking
water system due to tainted water and poor service.

36. City of Chicago sold its parking meters operation to a private
firm in 2008, parking rates have jumped to $6.50 per hour with
additional increases built-in for the next five years, causing a
drop in downtown small business sales due to visitors refusing
to pay the high rates. Mayor Rahm Emmanuel ordered an
independent audit of the contract after receiving unsubstantiated
charges of almost $30 million from the private contractor.
Limited Flexibility. Privatization can bind the hands of
policyholders for years.
The Chicago parking meter contract sold to a Morgan Stanley
group is for 75 years
Chicago Skyway Toll Bridge System was leased to a private
company for 99 years.
Indianapolis also sold its parking meter operation for 50 years
The State of Indiana sold control of a toll road for 75 years.
Corruption and Fraud. Privatization opens the doors to
unscrupulous behavior by politicians and businessmen.
The Washington Post reported the finding of the Inspector
General that $450,000 in payments made to former Republican
congresswoman Heather Wilson by four government contractors
did “not meet even minimum standards” for federal payments,
including an absence of any details about actual services
provided. The contractor reimbursed the Energy Department for
the payments.
Opponents of privatization point out that commercial entities
have a primary purpose to make a profit, often targeting a goal
in excess of 10% pretax. According to them, it is illogical that
profits can be reached in every case of privatization by
eliminating waste; it is far more likely that service levels will
be reduced or costs cut by lowering manpower or salary levels.
While there are reasons to justify privatization of some
government services, they claim returning savings to taxpayers
by privatization is unlikely.

37. Opponents of privatization claim that privatization is simply a
scheme to divert taxpayer dollars to create long-term revenue
streams and profits for corporations. The Public Interest, a
resource center dedicated to “ensuring that public contracts with
private entities are transparent, fair, well-managed, and
effectively monitored,” as well as meeting the needs of the
community, lists a number of potential drawbacks to
privatization:
8
The process by which governments remove, reduce, or simplify
restrictions on business and individuals in order to (in theory)
encourage the efficient operation of markets.
Positive example
Deregulation of the airline industry in the 1970s
Negative example
California energy crisis
https://www.pbs.org/wgbh/pages/frontline/shows/blackout/calif
ornia/timeline.html
Forms of Privatization: Deregulation
One form of privatization is deregulation, which refers to the
process by which governments remove, reduce, or simplify
restrictions on business and individuals in order to (in theory)
encourage the efficient operation of markets. Deregulation has
been often pursued by government as an economic development
strategy. The impact of deregulation is often mixed. There are

38. positive examples, such as the deregulation of the airline
industry in the 1970s. However there are also negative
examples, such as the California energy crisis in the 1990s.
Detailed descriptions of the examples can be found in your
assigned reading for this class.
Privatization goes beyond economic development purpose.
There are many forms of privatization not aiming at economic
development, but they provide opportunities for firms to do
business with government.
9
California energy crisis 2001
The hiring of private-sector firms or nonprofit organizations to
provide goods or services for the government.
e.g., Defense contracts
Contracting out is the predominant form of privatization in the
US.
Forms of Privatization: Contracting out
The most popular form of privatization in the United States is
contracting out, the hiring of private-sector firms or nonprofit
organizations to provide goods or services for the government.
For example, defense contracts from government have largely
encouraged the development of the arms industry in the nation.
In addition to military products and service, government also
contracts out many services, such as waste collection, human
service, social services, and so on.

39. 11
(sometimes referred to as a joint venture) a contractual
arrangement formed between public- and private-sector partners
that can include a variety of activities that involve the private
sector in the development, financing, ownership, and operation
of a public facility or service.
Public-Private PartnershipS
Public-private partnerships (PPP or P3) are contractual
arrangements between public and private-sector entities. They
typically involve a government agency contracting with a
business or non-profit entity to renovate, construct, operate,
maintain, and/or manage a facility or system, in whole or in
part, that provides a public service. Such joint ownership often
enables larger projects, public land assembly powers, and/or
public backing. Government pays part of the expenses for its
portion of large projects through a variety of the above
mechanisms.
12
Public Private partnerships - Pros
Better infrastructure solutions
Each participant does what it does best
Faster project completions and reduced delay
Use of time-to-completion as a measure of performance and
therefore of profit
Public-private partnership's return on investment
Innovative design and financing approaches become available
when the two entities work together
Risks are fully appraised early on to determine project
feasibility

40. The private partner can serve as a check against unrealistic
government promises or expectations
Operational and project execution risks are transferred from the
government to the private participant
Private has more experience in cost containment
May include early completion bonuses that further increase
efficiency
Increasing the efficiency of the government's investment
Allows government funds to be redirected to other important
socioeconomic areas
P3s reduces government budgets and budget deficits
High-quality standards are better obtained and maintained
throughout the life cycle of the project
Public-private partnerships that reduce costs potentially can
lead to lower taxes.
https://www.thebalancesmb.com/public-private-partnership-
pros-and-cons-844713
Public private partnerships - cons
Every public-private partnership involves risks for the private
participant, who reasonably expects to be compensated for
accepting those risks. This can increase government costs.
When there are only a limited number of private entities that
have the capability to complete a project, such as with the
development of a jet fighter, the limited number of private
participants that are big enough to take these tasks on might
limit the competitiveness required for cost-effective partnering.
Profits of the projects can vary depending on the assumed risk,
the level of competition, and the complexity and scope of the
project.
If the expertise in the partnership lies heavily on the private
side, the government is at an inherent disadvantage. For
example, it might be unable to accurately assess the proposed
costs.
https://www.thebalancesmb.com/public-private-partnership-

41. pros-and-cons-844713
Privatization of Prisons PROS
1. Privatized prisons tend to be able to be run at lower costs.
There is a greater emphasis on cost management in a private
organization than there is through public service. Public
servants also tend to make more money in salary in the
corrections field than private workers do. Through cost-cutting
and a 50% reduction in wages that a private institution can
provide, it becomes easier to house the amount of inmates that
need to be contained.
2. Privatized prisons tend to be run more efficiently.
Profitability is certainly an issue, but so is the overall
efficiency of the prison. Better medical care and prisoner
management through rehabilitation can occur because the entire
process of the prison has been streamlined. When there isn’t as
much red tape that must be cut through in order to get
something done, everyone benefits.
3. Privatized prisons can lead to a better overall recidivism
performance.
With financial incentives in place, privatized prisons have a
reason to make sure that prisoners get the help that they need.
This tends to lead to safer conditions, better living conditions,
and more effective rehabilitation programs. Whenever financial
rewards are tied to recidivism rates in a community, the
privatized prison will lower the rates of crime.
CONS
1. There can be a lack of transparency.
Public institutions are required by the laws of most jurisdictions
to be completely transparent in their activities. Privatized
institutions, on the other hand, don’t necessarily have that same
provision. When it comes to the management of prisoners,

42. transparency is extremely important. There is no other way to
determine if prisoners are being treated fairly then through a
transparent system of policies.
2. There is a risk of dependency.
If just one or two companies are relied upon to provide prison
needs, then those companies can begin to dictate the terms and
conditions of their contracted agreements to their advantage.
The public institution will have no choice but to pay those costs
because they have stepped away from their role in the prison
system and the result might be higher costs.
3. Money becomes a priority.
If the prison starts losing money, what is going to happen to the
prisoners? There’s a good chance that the quality of food for the
living conditions will be reduced in order for profitability to be
achieved once again.
Prison privatization
https://www.youtube.com/watch?v=QWqs_igPIBI&feature=yout
u.be
Question
Should all government services be privatized? Should any? If
so, which ones?
What are the potential advantages and disadvantages of
privatizing correction services (prisons)?
What are the social implications of privatizing correction
services.
18
Entrepreneurial Strategy

43. 19
Economic Development Strategies
Entrepreneurial strategies:
Adoption of policies that promise to increase public revenue,
focusing on new firm and technology development – creative
and innovate ways to increase revenue
A “demand-side” approach – advocates use of government
spending and growth in the money supply to stimulate the
demand for goods and services
Typical tools:
business and innovation assistance centers,
technology and business parks,
venture financing companies,
one-stop business information centers,
technology transfer programs,
workforce development programs,
export promotion programs, etc.
20
20
ES seeks to improve the capacity of local firms and/or
specifically targets entrepreneurs and growth-producing
economic sectors.
Offer to all firms alike
Demand Side - economic theory that advocates use of
government spending and growth in the money supply to

44. stimulate the demand for goods and services and therefore
expand economic activity
What are the key characteristics of a public entrepreneur?
21
21
• Collaborating and networking. Collaboration is fundamental to
the public entrepreneur – they seek to build partnerships for
change across government, business, and society.
Working across systems – public entrepreneurs see themselves
as part of a system rather than just an organization or public
department.
Building narratives for change – Entrepreneurs persuade,
influence, and sell. They influence behavior, social innovation
and persuade colleagues – administrators, politicians, and
citizens. Even though public servants are risk averse they are
willing to take chances.
Leveraging new resources – finding new ways of financing
public service and development. Example – pooling budgets,
looking for public-private partnerships
Focusing on Outcomes – Public entrepreneurship is about doing
whatever it takes to get the right outcome, even if it means
abandoning traditional public servant mindsets
Adapting and learning – What do most entrepreneurs have in
common? They are all willing to take risks. A motto for
entrepreneurs – Fail quickly, Fail Fast, and Fail Cheaply!

45. Public entrepreneurs are not dealing with their own money
though – So, they must take into consideration not only the
human factor but the financial cost as well.
Disadvantages related to public entrepreneurship.
Entrepreneurial economic development projects entail high
risk; a project failure would lead to huge financial public loss
City of San Bernardino joined the private sector via a baseball
team and real estate development firm to build a stadium. Idea
was to generate activity in the city.
Public-private partnerships in economic development blur the
lines between public and private goals.
Partnerships do not always bring together the best of both the
public and private sectors – can lead to confusing roles
Public sector selects projects based on profitability and is not
always concerned with social worthy but unprofitable projects
Socially beneficial such as affordable housing, community
center, libraries, and public parks
Entrepreneurial City
Features of Entrepreneurial City
React to globalization
Cities pursue innovative strategies to maintain or enhance the
city’s economic competitiveness in global economy
Operationalize entrepreneurialism
Cities use explicit formulated, real and reflexive strategies to
pursue active entrepreneurialism
Establish an entrepreneurial business climate
Cities market themselves as entrepreneurial and adopt
entrepreneurial discourse
Partner with private sector
actively partnering with the private sector in launching
“homegrown” economic development projects

46. Entrepreneurial city:
Acting like private co.
Undertake high risk project
Using innovative financing mechanisms (TIF, facility naming
rights, lottery games, special license plates)
23
Critique of Economic Development Implementation: San
Bernardino
Baseball Stadium
Background
The need of a new stadium
Fierce competition among jurisdictions for sports team
Previous loss of a team to a new stadium in Rancho Cucamonga
Chamber of Commerce aggressively promoting a new stadium
The project:
$18m funded by tax allocation bonds
Lease agreement: profit to team owner and expense to public
None of the original predicted economic impacts materialized
Vacant lots
High maintenance cost
The problems:
Original expenses were manipulated so little profit was
available to the city – 18 million funded through tax allocation
bonds and was much higher than the projected 13 million
None of the original predicted economic impacts materialized.
Surrounding vacant lots
Spillover effects never materialized
High maintenance cost; the facility cost the city over $30,000 a
year
Eventually signed over to private sector owners at a large loss;

47. today, moderately successful as an island of activity.
Turned over to Arrowhead (Arrowhead Credit Union Park);
turned over to San Manuel Tribe and renamed San Manuel
Stadium in 2012
24
--We will use SB for our examples: tough row to hoe because it
has not had natural dynamics leading to redevelopment (as we
saw in coastal cities)
stadium: poor deal but at least functioning, discuss how much
spillover there has been (little); originally expenses were
manipulated so that there was little profit to share; renegotiated
in 2002 with the renaming but still financially weak:
--Chamber member: expectation: annual attendance of over
200,000; spillover effect (restaurant, downtown)
--$18m funded by tax allocation bonds (1996), higher than
projection $13m
Lease agreement: profit to team owner and expense to public,
Initial 10 year lease gave team owners parking fees, 2/3 of net
profits from all concessions including non-sporting events, City
received certain percentage of net profits from ticket sales,
stadium cost controlled by team owners who charge very high
--None of the original predicted economic impacts materialized
Surrounded by Vacant lots
High maintenance cost: simply maintaining the facility costs the
EDA $30,000 per year.
--Turned over to Arrowhead (Arrowhead Credit Union Park)

48. 25
Spillover effects?
26
Positive Examples in San Bernardino
Norton Air Force Base
The former Norton Air Force Base, now known as San
Bernardino International Airport, has been transformed into a
flourishing business complex where huge modern buildings
have replaced military structures. Selected to close in 1988 and
finally closed in 1995
In 1990, a joint powers authority called the Inland Valley
Development Agency (IVDA) was formed to oversee
redevelopment of the non-aviation portion of the former Norton
Air Force Base.
10,700 full time jobs restored in the region as a result of the
economic development efforts at the former Norton Air Force
Base
An additional 5,000 indirect jobs culminating in nearly $1.9

49. billion of economic output
After years of revitalization and infrastructure improvements in
and around the former base, it has now surpassed the direct jobs
lost by the base’s closure in 1994
The base reuse area includes the San Bernardino International
Airport and the adjacent land designated as Alliance California,
which is home to Fortune 100 and 500 firms, as well as
international and local businesses that have invested and
continued to invest in growing their operations.
SBIA is a Foreign Trade Zone - offering federal tax incentives
to businesses locating there and allows for California tax credits
to qualifying businesses operating there.
Major projects
Stater Bros’ distribution center
Pep Boys’ facility
Mattel
Kohl’s
Amazon
Commercial airport – to Mexico
US Customs and Border Protection
US Forest Service
Foreign-Trade Zones (FTZ) are secure areas under U.S.
Customs and Border Protection (CBP) supervision that are
generally considered outside CBP territory upon activation.
Located in or near CBP ports of entry, they are the United
States' version of what are known internationally as free-trade
zones.
27

50. City of Rancho Cucamonga
Incorp. Nov. 1977
38.3 square miles
Population is
approximately 176,000
Top 10 fastest growing cities with a population of 100,000 or
more in the U.S.
29
RC home to Empire Lakes golf course that annually hosts the
PGA Nationwide Golf Tour. In addition, the city also has a
6,500 seat stadium, home to the Quakes, the Class “A” baseball
team affiliate of the Calif. Angels. Other
shopping/entertainment venues nearby include the Calif.
Speedway and the Ont. Mills Mall. Low crime rate, excellent
schools. Median House Price – 415,000
Rancho Cucamonga Family
Median Income - $79,973
Median Age – 32.2 years
Education – High School graduate or higher 91.1% –B.A. or
graduate degrees 33.2 %.

51. Over 45% of new residents have worked in management or the
professions.
30
Last bullet point – since 1990, over 45% of the city’s new
residents have worked in management or the professions.
(Source Census: 1990 & 2000)
Victoria Gardens
A Rancho Cucamonga Success Story
210 Fwy.
15 Fwy.
Day Creek Blvd.
Victoria Gardens
Base Line Rd.
Foothill Blvd.
32
Reasons Why Area Lacked Development
Lack of Infrastructure – streets, storm drains, utilities - $45
million estimated cost

52. Multiple property owners – no one could afford to develop
ahead of others
Market demand was low
Lack of interest from high end retailers
33
Victoria Gardens
The 175-acre project - shops, restaurants, a movie theater,
office space, and a variety of civic uses on a street grid
Idea was to transform the city’s civic identity and create a new
focal point in Rancho Cucamonga
It was to appear as if the project had evolved over time from a
small grouping of agricultural buildings to a lively, small town
main street – mix of buildings
Public and Private Investment
Public/private partnership among Forest City Commercial
Development, the Lewis Group of Companies, and the Rancho
Cucamonga Redevelopment Agency
Agency owned land valued at $27 million
Agency built parking structures - $12 million
Contributed $2 million for public street to serve Cultural Center
Agency wanted a “placemaking” development
Total development cost was approximately $234 million,
including $188 million direct private costs,
Developer participated in public financing for infrastructure –
130 million construction loan

53. Placemaking is a multi-faceted approach to planning, designing,
and managing public spaces. Rancho wanted to not only focus
on economic development programs and attract and retain
businesses but they wanted to create a sense of community.
They were looking to attrazct talented residents by offering a
center of innovation and creativity.
35
Return on Public Investment
Promissory Note from Developer to Agency for $13 million
Participation in profits in 4th year
Estimated rate of return on the Agency’s investment exceeds
16.5% = $167 million in revenues over a 30 year period.
Sales tax annually at $3 million and growing
Property tax annually at $2.5 million and growing
Public Safety facility on site at no cost to City
Additional Benefits
Upscale shopping & restaurant choices
for two-county region
Over 3,000 new full and part time jobs were created with a
payroll exceeding $50 million a year
PLACEMAKING– first pedestrian friendly, open air mixed use
design configuration in the Inland Empire
Catalyst for additional
development: 1,350 new homes; 800,000 square feet of
additional retail and additional sales tax

54. Catalyst For Retail Development
Victoria Gardens
Foothill Blvd.
Base Line Rd.
Arrow Rt.
Rochester Blvd.
I-15
I-210
Victoria Gateway Center 113,000 s.f.
Foothill Crossing 300,000 s.f.
Day Creek Blvd.
Bass Pro Shops
Tourist Destination
First Store in CA.
2-3 Million Visits Annually

55. Foothill Crossing
Sears Grand 180,000 s.f.
Foothill Blvd.
Arrow Rt.
I-15 Fwy.
Day Creek Blvd.
Victoria Gateway Center By Regency Development
Foothill Blvd.
Base Line Rd.
Rochester Blvd.
I-15
Day Creek Blvd.
REI 23,500 s.f.
Circuit City 34,000 s.f.
Look at Me Now
Experience Gained
From the city’s perspective, the project has been very
successful, generating in excess of $5 million in sales and
property taxes annually. The estimated internal rate of return on
the Rancho Cucamonga Redevelopment Agency’s
Furthermore, the project has spurred the development of
500,000 square feet of other retail space on adjacent parcels.
The town center approach as well as the tenant mix required for
Victoria Gardens’ success was risky given the retail forms that

56. persisted in the Inland Empire. In the end, the novelty of the
project’s configuration translated into a competitive advantage.
Leasing was initially challenging, but after a critical mass of
tenants was obtained, leasing additional tenants became much
easier.
The vast majority of Victoria Gardens’ retail space is single
story; in retrospect, Forest City might have considered
incorporating residential units over the retail uses.
Only time will tell how the project’s seemingly incremental
design ages. One major benefit is that the site consists of many
individual buildings, which means that they may be replaced
one by one, allowing the project to look more like a historic
downtown that has evolved over time.
The Victoria Gardens
Weekly Writing Assignment Question:
Based on your own experience of the Victoria Gardens, what do
you think this project has done right or wrong? What are the
benefits or costs to the local community? What aspects of the
project do you think is “entrepreneurial”?
Can other cities follow the example of Rancho Cucamonga?
What will be the potentials or problems of other cities in
developing similar project?
44
copyright stan gorman 2001, all rights reserved

57. copyright stan gorman 2001, all rights reserved
Government Business Relations
PA 315
Chapter 8
1
Agenda
Economic growth
Economic development
Government methods for economic development
Financial methods
Non-financial methods
2

58. Government Methods for Economic Development
3
3
4
Definitions of Economic Growth
Common sense definition:
Economic growth is concerned with wealth enhancement, that is
increases in financial value (or loss).
Classical definition
Economic growth is the increase in the value of goods and
services produced by an economy.
It is conventionally measured as the percent rate of increase in
real gross domestic product, or GDP.
4
Economic Growth & Quality of Life

59. Economic growth is a very important factor relate to quality of
life in society, but it is not the sole important factor.
Other important factors:
Democracy equality
Equality under the law
Equal opportunity (e.g., for education, employment, etc.)
The environment,
Quality of public spaces, and so on.
5
Economic Development
Economic development refers to the concerted efforts of
government, business, and communities to promote economic
growth, as well as the overall economic and social well-being of
people in a specific area.
6
Government and Economic Development
Government policies and actions of economic development
Overall policy framework to enhance market stability and
sustainable growth (e.g., tax policies)
Economic policies and practices to enhance employment,
increase the tax base, and improve people’s level of living (e.g.,
business retention practices)

60. Programs and projects that provide critical infrastructure and
services (e.g., affordable housing programs)
7
How Does Government Help Pay for Economic Development?
8

61. Tax reduction (aka tax break):
Financing Methods
Abatement
A partial reduction of the property tax liability of a given piece
of real estate for a specified number of years
For new or rehabilitated industrial or commercial property,
blighted property
Exemption
Freedom from the obligation to pay a particular tax
For purchases, investments, and activities other than real estate
development, e.g. raw materials, machinery, equipment
Manufacturing and R&D Partial Sales and Use Tax Exemption –
partial exemption from state3 sales (3.9%):
Engaged in research and development All manufacturers and
businesses – physical, engineering, and life sciences
Still subject to local sales tax
California caps exemption to $200 million
Credit

62. A reduction in the tax bill
For job creation or research and development expenses
9
9
Financing Methods
Public borrowing (based on future income from the potential
property tax)
IRB (industrial revenue bond): sponsored by a state or local
government entity but the proceeds are directed to a private for
profit business.
Bonds are issues on behalf of a private sector business and not
government.
For specific projects - finance business’ expansion, construction
or acquisition of manufacturing facilities and equipment.
Federal tax exempt status on the bonds, which provides a lower
interest rate.
Most of the time, a property tax exemption on the collateral
Max $10m
10
10

63. Hesperia and Riverside
http://www.cityofhesperia.us/261/State-of-California-Industrial-
Developme
https://www.rivcoeda.org/Economic-Development/Business-
Services/Industrial-Development-Bonds
11
Municipal Bonds
What is a municipal bond?
12
12
Financing Methods
Public borrowing (based on future income from property tax) –
TIF (tax increment financing):using municipal bond issued
based on the expected increase in property taxes that are
collected by an economic development agency.
Project will be paid with potential future property taxes from
the project in question

64. History of TIF – California 1950’s – federal government was
offering substantial urban renewal grants to communities that
could come up with matching funds. The assist cities in
redeveloping their blighted areas.
Principle behind TIF – if money is infused into a specific area,
this will cause assessed property values to increase more rapidly
through development and property sales, which triggers a
reassessment of their value and generates more money.
13
13
Financing Methods
Special taxes (earmarked for development), e.g.,
Hotel tax (Transient Occupancy Tax or Hotel Occupancy Tax) –
California 7%-14%
Sin tax - is a tax levied to correct the negative externalities of a
market activity –
Ex. Tax on producers who pollute to reduce pollution
Special sales tax – not common in California. Texas allows for
up to 2% for local economic development
14
14

65. Financing Methods
General fund (other than tax breaks which are reductions from
the general fund)
especially as the ultimate guarantor of investments
e.g., getting better rates through municipal bonds, less risk
providing insurance programs
e.g., flood insurance in coastal areas
improvements/services that promote development
e.g., new roads and other infrastructure, special programs to
assist business such as training and education, etc.
seed money (one-time grants)
e.g., development revolving funds, loan of property for
charitable purpose
15
15
Financing Methods
Public-private partnerships (joint ownership which enables
larger projects, public land assembly powers, and/or public
backing)
public pays part of the expenses for its portion of large projects
through a variety of the above mechanisms
16
16
Why public private partnerships in California?

66. Need to move people and goods efficiently and safely
85% of the interstate freeways are congested
overdue repairs to our transportation system
Roads, bridges and trains are strained as 40% of the nation’s
imports move through California to final destinations.
Cannot finance, manage and build transportation projects
Need for flexibility and entrepreneurial ideas in light of new
accountability and oversight rules the Legislature has imposed
to protect taxpayer funding
One approach with a track record of success in California is
through public-private partnerships.
17
Rialto, California
The private partner on that project closed its debt and equity
financing for $176 million in late-November 2012.
Aging water and wastewater systems and treatment facilities
Under the P3 agreement for Rialto’s water and wastewater
systems and treatment facilities, the Public Utility Authority’s
existing debt of $27.4 million was extinguished and Rialto
received an upfront payment of $30 million from the private
partner.
The private partner is paid by Rialto through a combination of
monthly capital charges and operating payments. Rialto finances
these payments through water and wastewater user fees and
various non-rate revenues.

67. 18
Financing Methods
Federal sources (programs funded by federal taxpayers), e.g.,
Community Development Block Grant (CDBG)
Housing rehabilitation, public works, and planning
Community Development Financial Institution
Helps distressed communities by providing federal $$
Technology Innovation Program (TIP)
Encourages government and business partners to cost share the
early stages of innovation
Manufacturing Extension Partnership (MEP)
Assists in the creation of jobs, enhances productivity, and
encourages competiveness through improvements and
innovation
Compassion Capital Fund (CCF)
Supports local charities – job training, counseling, economic
development
Job Opportunities for Low –Income Individuals (JOLI)
Supports local charities – low income individuals and families
through the creation of business development and employment
opportunities
19

68. 19
Non-financial Methods to encourage economic development
20
Planning
The management process of thinking about and organizing the
resources and activities in order achieve a desired outcome.
involve the critical stakeholders of the local community to
establish the vision for development,
engage in public discussions,
reach consensus on goals to be achieved as well as plans in
general.
21
Planning
For example:
The city of Pasadena
City of Los Angeles Consolidated Planning Community Meeting

69. 22
Zoning
The system of land-use regulation, which involves the practice
of designating permitted use of land based on mapped zones
separating one set of land uses from another.
Zoning regulations: e.g., acceptable activities, densities (low
for single family housing and high for high rise apartments),
building height, parking, etc.
Zoning for industrial or commercial use
Government also can allow for flexible zones and rules
Example – Redlands housing
23
24
Zoning for the city of Redlands

70. 25
Marketing
Government promoting their jurisdictions as prime locations for
business
Websites
Special events (e.g., Los Angeles County Fair, Riverside County
Fair, San Bernardino County Fair)
Corporate executive visits
Trade shows (e.g., Expo 2015)
National advertisements
Letters to companies
Economic Development Directors – Cruz Esparza
26
Ombudsman Service
Service that assist firms to navigate the various government
regulations, programs, and services
Resolving problems and complaints
Investigating commercial opportunities
Helping to identify and evaluate options
Recommending changes in policies or procedures
27

71. Eminent Domain
The inherent power of government to seize a private property or
an individual’s rights to property with due monetary
compensation, but without the owner's consent
28
What types of property are most vulnerable to eminent domain?
Almost any property can be taken for public projects – parks,
schools, flood control channels, courthouses, bicycle paths, etc.
Most common are projects that include construction of new, and
expansion of existing highways, major thoroughfares and light
rail lines; erection of high voltage power line towers, or
installation of interstate pipelines across wide swaths of rural
land; expansion of city limits and related infrastructure;
airports; and in some cases, public projects placed in blighted
areas.
29
Who has the power of eminent domain?
States, counties, cities, transportation authorities, railroads,
electric utilities; gas companies, water, school districts, housing
authorities, certain non profit hospitals, and cemetery
authorities

72. How does the process work?
First contact by letter by the condemning agency indicating
their interest in your property
Pre-condemnation testing - conduct tests and studies to
determine suitability for project
A written offer of just compensation along with an appraisal or
summary of the value of the property. The offer cannot be
lower than the amount of the appraisal and is based on fair
market value of your property
Resolution of necessity establishes the public use and necessity
of the project and how your property is needed
If you oppose or are not satisfied, a lawsuit can be filed
Pre judgment possession would allow at least 120 for the
property to be taken
Final offers and demands are considered before the case goes to
trial – settlement
Trial
Ellen Disparte vs. Redlands Unified School District
2005 – 83 year old Ellen Disparte was living on her 100 year
old farm with roughly 200 animals
Redlands Unified School District wanted to build their 3rd high
school in Redlands
Disparte’s farm sits in the middle of the planned campus
RUSD purchased all the surrounding properties
She refused to sell and fought back with the support of the
community in Redlands
Offered 2.07 million through eminent domain
RUSD PR problem - Proposed location of future Citrus Valley
High School would push Ellen Disparte off her century-old farm

73. in Redlands.
Solution
: Relocate Citrus Valley High School to nearby east Highland
area
a.) Decreases current transportation dangers for Highland
students
b.) Preserves quality of life for Mrs. Disparte
c.) Maintains Redlands? quality reputation
Ellen Disparte
She was given an opportunity to take her case to trial July 2006
October 2006 – Ellen and RUSD reached a settlement regarding
the property
Agreement “effectively satisfies the needs and interests of both
the Redlands Unified School District and Mrs. Ellen Disparte”
(Heiss, 2006, p. 1).
She was allowed to remain in her home a the surrounding two

74. acres and RUSD acquired the rest.
Superintendent stated, “We may be the only comprehensive high
school in California with a feisty grandma living on a farm in
the parking lot.” (Heiss, 2006, p. 1)
“Character, not circumstances, makes the man.”
~ Booker T. Washington
34
PA 315
Government Business

75. Relations
Chapter 11
What’s left…
• Globalization
• Neoliberalism and Protectionism
• North American trade agreements (examples of regional trade
agreements) –NAFTA – North American Free Trade Agreement
• Free Trade vs. Fair Trade –
• European Union (regional economy and political integration)
–
• IFO: International Finance Institutions –
What is
globalizatio

76. n?
• When you think of globalization,
do you think of it in positive
terms or negative terms?
Globalization
• Globalization is an umbrella term
• It is the free movement of goods, services, and people across
the world in
a seamless and integrated manner
• Things to consider…
• Most regions are self sufficient – locally produced foods, fuels
and raw materials
are generally processed for local consumption.
• Even though trade has been around for centuries (silk traders),
trade between
regions was limited.

77. • Today, economies of most countries are interconnected
creating a single,
interdependent global economy.
• The term globalization includes change through the spread of
ideas, information and
perceptions which lead to cultural and social changes.
Types of Globalization
• Economic – Countries that trade with many others and have
few trade barriers
are economically globalized.
• Political – The amount of political co-operation there is
between countries.
• Social - A measure of how easily information and ideas pass
between people in
their own country and between different countries (includes
access to the
internet and social media networks).

78. • Cultural – transmission of ideas, meanings and values around
the world.
Economic Globalization
Advantages and Disadvantages
Advantages –
Increase in productivity
Economic growth
International peace
Increased standard of living
Access to new markets
Introduction to newer technologies

79. Disadvantages
Depletion of local resources
Violation of human rights
Widening disparity in income
Lack of fair trade
Examples
Parts of automobiles
being assembled in the
United States while
originating in Japan
Avocados being sold all
year long in the United
States – seasonal at one
time
Asian restaurants in the
United States

80. Fashion trends in Europe
end up in Brazil
Political
Globalizatio
n
• Political globalization refers to
the growth of the worldwide
political system that includes
national governments, their
governmental and
intergovernmental organizations.
Examples
• The European Union (EU) –
• The European Union is a unified trade and monetary body of
28 member countries. Its purpose is to be more

81. competitive in the global marketplace. At the same time, it must
balance the needs of its independent fiscal and
political members.
• Intergovernmental agencies like the:
• International Monetary Fund (IMF)- is an organization of 189
countries, working to foster global monetary
cooperation, secure financial stability, facilitate international
trade, promote high employment and sustainable
economic growth, and reduce poverty around the world
• World Trade Organization (WTO)- deals with rules of trade
between nations. Goal is to ensure that trade flows as
smoothly, predictably and freely as possible.
• United Nations (UN)- established to confront issues such as
peace, security, climate change, sustainable
development, human rights, terrorism, humanitarian and health
emergencies, gender equality, food production, etc.
• World Health Organization (WHO)- primary goal is to direct
and coordinate international health

82. Pros of Political Globalization
Access to international aid
and support
World peace
Smaller countries can work
together and gain more
influence internationally
International organizations
are often committed to
spread values like freedom
and to fight abuses within
countries
Governments can learn
from one another
Cons of Political Globalization

83. State dominance is reduced
The functioning of
international organizations
is not always democratic in
nature
Larger countries can
dominate decisions within
organizations
Smaller countries are not as
represented
Social Globalization
Pertains to human interaction within countries
Defined as the intensification of
worldwide social relations
Links distant localities in a way that local
happenings are shaped by events occurring

84. many miles away
The use of communication technologies, and the Internet in
particular,
has been widely credited as contributor to the mobilization of
protests
Social Networking
• Facebook – has more than 900 million active users allowing
for a real world
social connection
• Communication can be delivered in the form of text, audio, or
video
• Global exchange of views, opinions, and ideas
• Encompasses topics –
• Family –
• Religion –
• Education –

85. Family – transfer of family
values and concepts of people
of different societies around
the world
Role of women in society
Perception of a perfect life can have a
negative affect
Religion – ideas and beliefs of
different religions are
portrayed to people around
the world
Allows for greater religious tolerance
and understanding
Can also portray negative images of
religion
Education – ideas, values and
knowledge, changing the roles
of students and teachers

86. Increase access to the world
Introduction of technology changing
the nature of delivering education
Western ideas are creeping into
societies that want to appear more
modern
Cultural Globalization
• Refers to the transmission of ideas, meanings and values
around the world in
such a way as to extend and intensify social relations.
• Comes through internet, popular culture media, and
international travel.
Examples

87. Food Fashion
Festivals
Westernized consumer culture
– McDonalds and Coca Cola are
examples of dominance of
American products in foreign
countries
Positive
Influences
• Acceptance of other cultures
• Communication
• People of different cultures
• People of one culture can adopt
other cultures
• Cooking, music, and fashion

88. Negative
Influences
• Local cultures are ignored as
people want to become more
westernized
• Song
• Dance
• Food
• Exploitation of workers and
markets
• Influence of societal values
• Cultures are diminished
Neoliberali
sm

89. • Globalization has been accelerated by the
adoption of free market principles
• Neoliberalism – advocates for transferring
control of the economy from the public to
the private sector
• Belief that it will lead to improved
economic health
• Create a more efficient government
• Society should be shaped by the free
market
• Smaller government and more robust
role for the market
• Basically, what works in the private
sector will work also in the public
sector.
Neoliberalism

90. • Policies Advanced by Neoliberalism (John Williamson's
"Washington
Consensus“) :
• Free trade: removal of trade barriers, like tariffs, subsidies,
and
regulatory trade barriers
• Privatization: transfer of previously-public-owned enterprises,
goods,
and services to the private sector
• Fiscal restraint: governments would cut expenditures and/or
raise
taxes to maintain a budget surplus
• Competitive exchange rates: governments would accept
market-
determined exchange rates, as opposed to implemented
government-
fixed exchange rates
• Undistorted market prices: governments would refrain from
policies

91. that would alter market prices
• Limited intervention: (exception for promoting exports,
education or
infrastructural development)
Source: Wikipedia
Neoliberalism policy
implications…
• enticement of foreign investment;
• reduction of inflation;
• reduction of public spending;
• privatization of public services;
• deregulation of industry and finance;
• reduction and flattening of taxes;

92. • restriction of union organization; and, finally,
• enforcement of property and land ownership.
Politicians don’t necessarily have to profess faith in all of these
norms to be considered neoliberal. Rather, they have
to buy into neoliberalism’s general market-based logic and its
attendant promise of opportunity..
Free Trade
Free Trade
• Pro-Free Trade Arguments
• A wider variety of goods to
choose (choice)
• Specialization in production
of goods and services with
advantages (efficiency)

93. • Maximize consumer
welfare (welfare)
Theories of
Trade
• David Ricardo
• Absolute advantage
• When a nation can produce a good
or service more efficiently than
another nation, the latter should buy
from the former
• Comparative advantage
• If a nation has an advantage over
another nation in production of
several goods, it should produce the
good in which it has the greatest
comparative advantage and buy the
good in which it has the least

94. advantage from the other nation.
Absolute Advantage, Comparative
Advantage, and Opportunity Cost
• Absolute Advantage = produced at lowest cost
• Comparative Advantage = produced at lowest opportunity cost
• Opportunity Cost = a benefit that a person could have
received, but
gave up, to take another course of action
https://www.youtube.com/watch?v=RpfV0Oerfr8
https://www.youtube.com/watch?v=RpfV0Oerfr8
Advantages of
Free Trade
1. Increased economic
growth

95. 2. More dynamic business
climate
3. Lower government
spending
4. Foreign direct investment
5. Expertise
6. Technology transfer.
Disadvantages of Free Trade
1. Increased job
outsourcing
2. Theft of
intellectual
property
3. Crowd out
domestic

96. industries
4. Poor working
conditions
5. Degradation of
natural resources
6. Destruction of
native cultures
7. Reduced tax
revenue
Free
Trade vs.
Fair
Trade
Free Trade vs. Fair Trade

97. Free Trade or Protectionism
• Autarky is the quality of being self-sufficient. Usually the
term is
applied to political states or their economic systems.
• Autarky exists whenever an entity can survive or continue its
activities
without external assistance or international trade.
https://www.youtube.com/watch?v=5ITyd1Pzek0
https://www.youtube.com/watch?v=5ITyd1Pzek0
Protectionism
Protectionism
• Protectionism refers to economic policies that restrain trade

98. between
nations, through methods such as
• tariffs on imported goods,
• restrictive quotas,
• a variety of restrictive government regulations designed to
discourage imports,
• anti-dumping laws in an attempt to protect domestic industries
in a particular
nation from foreign take-over or competition.
Source: Wikipedia
Forms of
protectionism
• Subsidies:
• Tax credits, direct subsidies (loans)
• Infrastructure subsidies or free
resources such as water or use of
public lands at little cost

99. • Exchange controls:
• currency values can be controlled and
that affects the trading relationship.
• Currencies with low valuation can
encourage low imports and high
exports by keeping value of money
low against other currencies.
• e.g., China today
• Dumping: selling a product in another
country at a cost lower than its
production cost
*These three forms “unfairly” promote
domestic goods in foreign markets.
Slide 1What’s left…What is globalization?GlobalizationTypes
of GlobalizationEconomic GlobalizationAdvantages and
DisadvantagesExamplesPolitical GlobalizationExamplesPros of
Political GlobalizationCons of Political GlobalizationSocial
GlobalizationSocial NetworkingSlide 15Cultural
GlobalizationExamplesPositive InfluencesNegative

100. InfluencesNeoliberalismNeoliberalismNeoliberalism policy
implications…Slide 23Free TradeTheories of TradeAbsolute
Advantage, Comparative Advantage, and Opportunity
CostAdvantages of Free TradeDisadvantages of Free TradeSlide
29Free Trade vs. Fair TradeFree Trade or ProtectionismSlide
32ProtectionismForms of protectionism
PA 315 Government Business Relations
Chapter 7 Lobbying
Professor Sharon Pierce
Relationship between government and business
Government as a regulator of business
The government regulates the activities of businesses in five
core areas:
advertising, labor, environmental impact, privacy and health
and safety
Business imposes its will on government
Business can influence government through:
campaign funding, lobbying, and regulatory agencies

101. Participation Questions:
What is lobbying?
What role does it play in the relationship between government
and business?
What is lobbying?
According to Ni (2016), “lobbying can be defined as the process
by which representatives of certain groups are attempting to
influence – directly or indirectly – public officials in favor of or
against a particular cause.” (p. 202)
The term “lobbyist” harkens back to the days when people hung
around in lobbies waiting to get a word in with legislators
heading to vote.
https://represent.us/action/is-lobbying-good-or-bad/
Lobbyist
Represent a professional group that specializes in legislative or
administrative advocacy

102. Services purchased (like lawyers or contractors) by any
individual, organized interest, organization, or government
Lobbyist can effect legislative actions
Promoting candidates
Raising money
Engaging in strategic advertising
Building advocacy coalitions
Polling
Developing get-out-and-vote strategies
Recruiting volunteer
Provide critical information/data used by legislators to reach
informed and educated decisions
Different types of lobbying
Direct lobbying
refers to attempts to influence a legislative body through
communication with a member or employee of a legislative
body, or with a government official who participates in
formulating legislation. (IRS.GOV, 2019)
Grass root lobbying
refers to attempts to influence legislation by attempting to
affect the opinion of the public with respect to the legislation
and encouraging the audience to take action with respect to the
legislation. (IRS.GOV, 2019)

103. Lobbying in the United States
Since 1876, Congress has required all professional lobbyist to
register with the Office of the Clerk of the House of
Representatives
First Amendment of the US Constitution
“right of the people…to petition the government for a redress of
of grievances.”
U.S. Supreme Court (1967): [The] rights to assemble peaceably
and to petition for a redress of grievances are among the most
precious of the liberties safeguarded by the Bill of Rights.
These rights, moreover, are intimately connected, both in origin
and in purpose, with the other First Amendment rights of free
speech and free press.
What must a lobbyist do…
Disclose the amount of money they are paid
File quarterly reports identifying contacts made with elected
officials
File semi-annual reports listing contributions made to political
campaigns or elected officials
Not allowed to give money or gifts directly to members of

104. Congress
What is lobbying and can it be good?
Lobbying: Local, National, and International
Local level
Limited in scope and more specific in terms of outcomes
Targets procurement practices and ordinances (directly and
indirectly)
Scope of influence includes: council members, city
administrators, public opinion
National level
More professionalized
Cultivates personal relationships over a period of time
Scope of influence includes: all three branches and in the
federal bureaucracy
International level
Difficult and expensive
Long term oriented
Scope of influence includes: non-governmental organizations

105. (NGOs), foreign governments
Business engaging in lobbying
Determine what kind of lobbying strategy is preferred
Active
Anticipatory
Passive
Decide what issues to lobby and desired outcomes
Entity engaged in the lobbying activity
Total lobbying spending in the US from 1998-2017 (in billion
US dollars)
https://www.statista.com/statistics/257337/total-lobbying-
spending-in-the-us/
Number of registered active lobbyist in the US from 2000-2017
https://www.statista.com/statistics/257340/number-of-lobbyists-

106. in-the-us/
Ranking of the top lobbying firms in the United States in 2017,
by expenses (in million U.S. dollars)
https://www.statista.com/statistics/257372/top-lobbying-firms-
in-the-us-by-expenses/
Top lobbying industries in the United States in 2017, by total
lobbying spending (in million U.S. dollars)
https://www.statista.com/statistics/257364/top-lobbying-
industries-in-the-us/
Lobbyists tend to get a bad rap — is lobbying bad?

107. Hiring former officials from and into businesses:
The “revolving door”
The practice of hiring former officials into and from businesses
is known as the “revolving door.” (Ni, 2016).
It is a legal and accepted practice for a number of governments
around the world.
https://represent.us/action/is-lobbying-good-or-bad/
Return on Investment for lobbying.
In 2017 alone, private interests spent $3.37 billion on lobbying
— and they did it because they get an unbeatable return on their
investment (ROI).

108. There’s actually a correlation between how much a company
spends on lobbyists and how much they get from the federal
government. This has been dubbed the “Return On Investment
For Lobbying” (ROIFL)
https://represent.us/action/is-lobbying-good-or-bad/
Lobbyists Raise Millions for Congressmembers’ Campaign
Funds.
On average, a candidate has to raise more than $14,000 a day, 7
days a week to win a Senate seat. A candidate needs upwards of
$1.6 million to win a seat in the House.
https://represent.us/action/is-lobbying-good-or-bad/

109. Lobbying in an ethical manner
Fairness
Rewarding those with more money
Revolving door – easier access to lawmakers, colleagues, access
codes to office, facilities, and friendships
Transparency
State and Federal requirements to register and file reports
Access to appointment books at a local level
Earmarks –requiring names of sponsors be published at least 24
hours before a bill is to be voted on
Provisions benefiting particular industries or organizations that
lawmakers insert into appropriation bills …” (Nadler &
Schulman, 2019, p. 1)
Common Good
Advocates
Promoting an agenda ethically…
“Trust lies at the foundation of the smooth and effective
operation of any country, its business, and its government.”
(Ni, 2016, p. 219)