by Katharine L. Bradbury, Yolanda K. Kodrzycki, and Robert Tannenwald
March/April 1997

The use of state and local public policy as an instrument of economic development is more controversial than ever. Profound technological and political changes have enhanced the geographic mobility of capital and extended firms' geographic range, intensifying competition among states and localities. At the same time, demand for state and local public services continues to rise, while impending reductions in federal aid compound the states' fiscal dilemma.

Caught between conflicting long-run fiscal pressures, state and local policymakers have sought advice on which policies are most cost-effective in stimulating their jurisdictions' economies. A symposium held at the Federal Reserve Bank of Boston on November 8, 1996 brought together experts from government, academia, business and finance, and research and other organizations, to examine and critique evidence on the effectiveness of state and local tax, spending, and regulatory policies as instruments of economic development.

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