10 Principles in Economic Development - Measurement and Evaluation
- Have you identified and do you measure desired
economic outcomes for your area?
- How do you measure the success of your economic
development efforts?
- How do you evaluate your economic development
efforts and ensure accountability?
- Do you regularly assess the performance of
your efforts against the goals you set?
A high performance organization collects information
about its performance in order to assess the impact of its work
and evaluate the strengths and weaknesses of its services. Measurement
is also a prerequisite for accountability.
State and local economic development organizations,
however, have not done a good job of measuring and evaluating
the impacts of their programs. One of the reasons is that it is
very difficult and costly to conduct a statistically valid evaluation.
Another reason is that there is no incentive or reward for development
agencies to invest in such measurement and evaluation.
In the past few years, at the urging of governors
and legislatures in several states, there has been some progress,
though slight, toward accountability for economic development
programs through measurement and evaluation. At this time, there
are only a few models to use as examples. These examples illustrate
different approaches toward measurement.
Characteristics of an effective state
strategy
- FOCUSING ON SPECIFIC POLICY OUTCOMES
- INVESTING IN KEY ECONOMIC FOUNDATIONS, SUCH
AS HUMAN RESOURCES AND PHYSICAL INFRASTRUCTURE
- PREVENTING PROBLEMS FROM ARISING WHICH LATER
WILL COST EVEN MORE TO REMEDY
- ACHIEVING APPROPRIATE SCALE IN ACTION TO
PRODUCE REAL IMPACT
- DECENTRALIZING RESPONSIBILITY TO THOSE CLOSEST
TO THE ACTION
- LEVERAGING MINIMUM PUBLIC RESOURCES TO PROMOTE
PRIVATE INVESTMENT
- USING MARKET MECHANISMS WHERE APPROPRIATE
TO ENHANCE PERFORMANCE
- ASSESSING PERFORMANCE AND INSISTING ON ACCOUNTABILITY
*R. Scott Fosler, "The Emerging Economic Paradigm:
States Ride the 'Third Wave'." Paper presented at the National
Conference of State Legislatures Annual Meeting, August 11-15,
1991, Orlando, Fla.
Measuring state performance
The state of Oregon has developed a set of benchmarks
that measure the state's performance in achieving statewide goals
related to people, quality of life, and the state economy. The
most recent report contains 259 benchmarks that are used to compare
Oregon's performance with other states and countries. The Oregon
Progress Board, created to serve as the "caretaker"
of the state's strategic plan, oversees the selection and updating
of benchmarks and the collection, analysis, and reporting of benchmark
data. The benchmarks have been widely endorsed throughout the
state and have been used extensively for planning and evaluation
purposes. Benchmarks have been incorporated into state program
and budget priorities, applied to state strategic planning efforts,
used by legislators to hold agencies accountable for performance,
and adopted by local governments and nonprofits in setting their
own priorities. While other states have adopted the Oregon approach
to measuring state performance, none have implemented as complete
a system as Oregon, nor integrated this information as thoroughly
into the legislative and policy-making process.
Monitoring program performance
Another approach to measurement is to assess performance
at the program level. The Minnesota Department of Trade and Economic
Development (DTED) uses a performance monitoring system to survey
business and community customers to determine how well economic
development programs are serving them and what impacts the programs
have on jobs, sales, or other performance measures. These surveys
are conducted periodically to allow comparison over time and to
determine whether program improvements or changes in service delivery
are making a difference. Program managers use the data to assess
progress and make improvements in their programs, and the department
uses the data in assessing the impact of its program. In 1994,
all Minnesota state departments were required to prepare extensive
performance reports as part of the budgeting process. DTED used
the data from its ongoing performance monitoring system to prepare
its comprehensive report.
Evaluating programs
Program evaluation, for the most part, is the missing
link in economic development programs. Timothy Bartik, an economist
with the Upjohn Institute, has written periodically about the
need for evaluation of economic development programs and why it
doesn't occur. Bartik suggests that two types of improved evaluation
methods are needed (1993, pp. 29-30). The first type is an evaluation
methodology that is relatively inexpensive and can be used now
and on an ongoing basis to improve performance of state and local
economic development programs. Surveys of business clients, such
as that used by Minnesota's DTED, seem to be the most feasible
inexpensive evaluation approach. Bartik suggests standards for
how survey questions should be asked and how surveys should be
administered to ensure reasonably objective information. The Urban
Institute, which assisted Minnesota in its pilot project, has
begun to address some of these issues.
A second type of evaluation is also needed, according
to Bartik. He argues that we need a long-term effort to develop
rigorous evaluation methodologies that would accurately estimate
the impact of economic development programs on a firm's performance.
Such rigorous evaluations would compare assisted and unassisted
firms and should be designed to control for statistical selection
bias. Bartik suggests that such evaluation approaches should be
developed cooperatively by federal agencies and state and local
economic development officials. Federal agencies that should be
involved are the Department of Housing and Urban Development,
the Economic Development Administration, the Small Business Administration,
the National Institute for Science and Technology, and the Department
of Labor.
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