The Benefits of Scarcity: An Analysis of the Windfall Gains From Limited Recipients in Competitive Grant Programs

Author: Marc A. Wallace

Dissertation School: American University

Pages: 294

Publication Date: January 1999

Availability:
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Access Number: 10081

Abstract:

For more than 30 years, the plight of urban residents has deteriorated, partly because companies have moved jobs and tax revenues to the suburbs. Some individuals and families were fortunate enough to make the exodus to the suburbs, while others were left behind to live in an environment that became increasingly hostile and economically frustrating.

In an effort to mitigate the problems in urban areas, including social unrest, state and federal governments have instituted a number of policies. The policy that is being analyzed is the Empowerment Zones and Enterprise Communities Act of 1993 (EZ/EC). This policy seeks to breathe economic life into cities by offering incentives such as tax credits, loans, and limited government regulation. Through its competitive process for a limited number of awards, the Act also seeks to create an economic windfall gain. For communities pursuing EZ/EC designation, the backbone of their application is a 10 year strategic plan or a road map for solving its economic, public safety, and environmental concerns. The Federal government is anticipating that communities applying for designation will utilize their strategic plans regardless of the outcome. With projected investment of $3.5 billion over five years, the federal government is looking to receive a larger return over the 10 year designation.

In order to locate a windfall gain from the EZ/EC program, a three prong methodological approach will be used. In the first stage, content analysis of the designated community applications will be conducted in order to determine if there was a given number of successful models. These models will be compared to the non-designated community applications for purposes of univariate analysis (charts, graphs, and tables) and elite interviewing. In addition, objective information will be extracted from the applications, e.g., the number of banks and the amount of loans proposed. Because of the proprietary nature of the information, a witch hunt will not be conducted in order to castigate a particular organization if its commitment was reduced after the decision was made. Mail and telephone surveys of the community's EZ/EC contact person constitutes the second methodological stage. This will be done to ascertain whether the strategic plan has been implemented. If so, how long has the plan been implemented and what initial returns have been achieved in the areas of job creation and crime reduction for instance. Finally, based upon the information derived from the initial two approaches, bivariate analysis using contingency tables will be conducted to test the relationship between a coalition member's financial or service commitment before and after the designations were announced.

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