Patterns in Local Economic Development in Light of COVID-19

• Author: Brad A. M. Johnson,Darrin Wilson,Eric Stokan,Michael Overton
• DOI: http://doi.org/10.1177/0160323X221097711
• Published date: 01 June 2022
• Date: 01 June 2022
• Subject Matter: Field Notes

Patterns in Local Economic

Development in Light of

COVID-19

Brad A. M. Johnson

1

, Darrin Wilson

2

,

Eric Stokan

3

, and Michael Overton

4

Abstract

The COVID-19 pandemic pressured local governments to employ creative and untested economic

development strategies to stabilize private businesses. To explore how the uncertainty of the pan-

demic impacted the priorities and strategies of economic development off‌icials, we surveyed off‌i-

cials about their initial economic development response to the pandemic coupled with

subsequent in-depth interviews in the Cincinnati metropolitan region. Our analysis suggests that

local off‌icials did not drastically alter their use of supply-side tools during the pandemic.

However, they did start coupling supply-side with demand-side policies in unique ways compared

to past economic crises. This study also f‌inds that the pandemic affected collaboration processes,

leading off‌icials to deepen and forge relationships with other local governments. We f‌ind that

these shifts have proven durable over the past year as municipalities continue to grapple with chang-

ing economic conditions due to COVID-19. As additional waves are likely, we suggest that admin-

istrators must consider the skills required to manage evolving economic conditions as well as both

the supply and demand sides of local economic development.

Keywords

local government, economic development, COVID-19

Introduction

The economic impactof COVID-19 continues to

affect local economies across the United States

(Dua et al. 2020). Early in the pandemic,

MetLifeand the U.S. Chamber of Commerce sur-

veyed smallbusinesses and found that 58 percent

were worried about having to permanently close

due to the f‌inancial hardship of t he pandemic

(“Small Business Coronavirus Impact Poll”

2020). To respond to this unprecedented chal-

lenge, local governments across the United

States have utilized a mix of economic develop-

ment strategies that have included both conven-

tional and novel approaches borne of necessity

and desperation (Wilson et al. 2020). Numerous

scholars have emphasized the importance of

understanding how government agencies are

1

North Carolina State University, Raleigh, NC, USA

2

Northern Kentucky University, Highland Heights, KY,

USA

3

University of Maryland, Baltimore County, Baltimore, MD,

USA

4

University of Idaho, Moscow, ID, USA

Corresponding Author:

Brad A. M. Johnson, North Carolina State University, 212

Caldwell Hall, Campus Box 8102, Raleigh, NC 27695, USA.

Email: bajohn22@ncsu.edu

Field Notes

State and Local Government Review

2022, Vol. 54(2) 174-191

© The Author(s) 2022

Article reuse guidelines:

sagepub.com/journals-permissions

DOI: 10.1177/0160323X221097711

journals.sagepub.com/home/slg

responding to challenges related to COVID-19

(e.g. Afonso2021). Yet, there is littleunderstand-

ing of how municipalities have used their eco-

nomic development toolkit to address the crisis.

This article explores how local governments

used economic development strategy to address

the COVID-19crisis. Specif‌ically, we investigate

whether theseapproaches were likely to continue

post-pandemic, the evolution of collaborative

relationships withother organizations in deliver-

ing economic development policies and whether

they differed from strategies used during the

Great Recession.

This article presents a case study of local eco-

nomic development efforts in the Cincinnati met-

ropolitan statistical area (MSA), a medium-sized

metropolitan area with numerous municipalities.

We conducted a survey of those municipalities

economic development practices in the immediate

aftermath of the pandemic outbreak. One year

later, we conducted 12 semi-structured in-depth

interviews to understand the current regional eco-

nomic development landscape and determine

whether the crisis created a new normal. We f‌ind

that the pandemic necessitated new economic

development practices and partnerships that were

distinct from conventional approaches and

during the Great Recession. Further, we found

that many of these economic development prac-

tices have persisted or evolved since the onset of

the pandemic. The single case study approach

allows us to offer tentative conclusions and

suggest future avenues of research.

The pandemic economic context represents a

unique environment for local communities; trig-

gering an approach to economic development

that is (1) focused on stabilizing existing busi-

nesses by increasing demand for business prod-

ucts and services, rather than just mitigating

costs, and (2) fostering collaborative relation-

ships with other organizations. The rapid

onset of dire economic conditions and the ambi-

guity of its effect on each community has

resulted in ad hoc adjustments by communities

that defy traditional categorization methods. To

analyze this situation, we propose a simpler cat-

egorization approach, contrasting supply and

demand strategies, that clarif‌ies the policy

response to the crisis.

Local Economic Development and

COVID-19

Local economic development (LED) is a core

function of local governments whose purpose

is to improve the f‌inancial position of the com-

munity by ensuring adequate jobs are accessible

to residents, attracting and maintaining busi-

nesses, and ultimately increasing property

values and governmental revenues (Hendrick

and Crawford 2014; Overton 2017; Peterson

1981; Rubin and Rubin 1987; Reese and

Rosenfeld 2002; Wilson 2015; Wilson and

Riddell 2020). Research has considered the

factors that drive local governments to utilize

specif‌ic economic development strategies. One

approach identif‌ies four “waves”that ref‌lect

the evolution of LED practice and philosophy

(Clarke and Gaile 1992; Eisinger 1988). First

wave policies aimed to attract f‌irms and busi-

nesses primarily through f‌inancial incentives

like tax abatements and tax credits. The

second wave aimed to retain and expand exist-

ing businesses through careful engagement.

Third wave strategies sought to bolster their

entrepreneurial ecosystem through business

incubators and specialized training. Finally,

fourth wave strategies have been broadly con-

ceived as prioritizing community development,

environmental sustainability, and improving

social equity (Deslatte and Stokan 2019;

Filion, Reese and Sands 2021; Osgood, Opp

and DeMasters 2016; Stokan, Deslatte and

Hatch 2021; Wilson and Polter 2020).

Previous research has shown that governments

use a mix of strategies (Lowe and Feldman

2018), may return to prior approaches during

recessions (Warner and Zheng 2013; Zheng

and Warner 2010), and that policy layering

may better ref‌lect these transitions given contin-

ued usage of earlier strategies (Stokan, Deslatte

and Hatch 2021).

The traditional strategies of LED were not

designed to address the challenges of a crisis

like COVID-19 and our study of LED efforts

in the immediate aftermath of the onset of the

pandemic emphasized the importance of stabi-

lizing existing businesses quickly (Wilson

et al. 2020). These efforts can be analyzed

Johnson et al. 175