Archives for March 2012

Imagine I was to start-up a successful game development business right here in the northern town of Darkhaven, using the phenomenal talent available in the city, courtesy of a vibrant digital community carefully nurtured by public and private cash.

I am exporting my games all over the world, employing hundreds in and around the city (as well as an army of coders over in Eastern Europe and Asia).  We are an economic success story.

The Finance Director knocks on my door and says ‘Mike, its time for us to consider a move.  If we were to relocate our business  to Brighthaven I think we could negotiate some great breaks in return for the jobs we would bring them.  They will prioritise an application for the Brighthaven Growth Fund that could pay for a purpose built HQ on their new business park, and they will give us the land for a snip.  So, unless the economic development team at Darkhaven council are really prepared to up the support they give us we should really think about moving.  And if Brighthaven don’t come up with the goods there is always Southaven or anyone of another dozen cities that would love to be our home.  And that’s before we even look at the possibilities of moving the whole operation overseas.  This is no time for home town sentimentality.  This is business.’

And so the arms race that is called ‘economic development’  or ‘inward investment’ is underway as we play Brighthaven off against Darkhaven, talking to the politicians and the economic development directors seeing just how much they are prepared to offer to sweeten the deal.  And we wrap all of this up the language of ‘industrial policy’.  But in short I will take my business to whoever will offer me the best deal, the lowest cost base, the greatest support.  My future profit taking will enjoy a healthy subsidy from the taxpayer in return for the jobs that I bring to town.

Each administration makes careful calculations about just how much it can do to win our business.  And in a sellers market where politics probably count for more than the long term economics we are always able to negotiate a good deal.

Economic development becomes essentially the process of ‘buying’ jobs.  Which of course has nothing to do with developing economies.