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Olga Estrada dedicated her life to raising her children. She was born in Nicaragua and joined her family in California more than 20 years ago to build a better life. Working in a data entry position, Olga didn’t have a lot of money but she always made ends meet.

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Healthy Economies: Beyond Incentives

Government officials at all levels are concerned, justifiably, with how their local economies are doing. While the public sector plays only one part in economic performance, state and local governments can influence the pace of economic development. Indeed, there is much they can do to increase competitiveness – ensuring good schools, investing in physical and human capital, making sure that economic benefits are shared widely across communities.

Unfortunately, state and local economic development efforts today focus almost exclusively on a single tool: tax incentives to influence the site selections and investments of private companies. Certain incentives, when properly structured with sufficient transparencies and safeguards, may provide some real benefit to communities. However, often they represent zero-sum strategies that divert public dollars to private companies without creating net new jobs and without demonstrating effective return on investment. State and local governments rely on incentives because the benefits are visible while the costs are hidden; they lead to good headlines ("State lures new manufacturing plant..."); and because other, more positive-sum strategies are long-term, difficult and don't easily translate into headlines, bumper stickers or re-election slogans.

2006 DRC Honor Roll

The Development Report Card (DRC) compares how states perform relative to each other, rather than to an absolute standard. The honor roll recognizes those states that earn all As and Bs in the report card's three graded indexes: performance, business vitality, and development capacity.