Report Calls for More Economic Development Dollars for Pennsylvania Companies

As reported in the Pittsburgh Business Times on Tuesday, March 16, 2010

Pennsylvania would do better to invest its economic development dollars, about $1 billion per year, in growing local companies instead of handing out subsidies to attract outside firms.

So says a new report released Tuesday by the Harrisburg-based Keystone Research Center.

In the study, which examined 10 years of Pennsylvania’s economic development spending, Executive Director Stephen Herzenberg argued that the state should be spending less on direct subsidies to individual companies, especially to incentivize out of state companies to relocate to the commonwealth, and more on industry programs and opportunities focused on growing Pennsylvania’s own businesses.

Herzenberg singled out the Ben Franklin Technology Partnership, which funds Pittsburgh-based Innovation Works, and the Industrial Resource Center program, which funds Catalyst Connection, as two “grow-our-own” initiatives that have been shown to produce a sizable return on investment. Yet, these two programs have been cut disproportionately, he said.

The state also should do a better job monitoring how the money is spent, the report said.

“The existing accountability with these programs, on the back end, is inadequate,” Herzenberg said Tuesday during a conference call. “You can’t always tell where the money goes. You typically don’t know what the jobs pay, how many jobs were actually created.”

To that end, the report coincided with the introduction of two bills in the Pennsylvania Legislature asking for better disclosures and accountability for dollars spent on economic development subsidies.