Economic Development

Chengri Ding, Yi Niu, and Gerrit-Jan Knaap

Employment Centers and Agglomeration Economies: Foundations of a Spatial Economic Development Strategy

Previous research provides evidence that jobs and firms in U.S. metropolitan areas are concentrated in economic centers, creating a polycentric urban form. Previous research also suggests that firms realize localization economies when they locate near other firms in the same industry and urbanization economies when they locate near firms in other industries. In this article, we tie these concepts together in an exploration of the spatial distribution of employment in the Baltimore-Washington metropolitan area. Our analysis suggests that the spatial distribution of employment in Maryland is characterized by the existence of concentrated employment centers that create a polycentric urban form. What is more, we find these centers provide both urbanization and localization economies as well as unspecified locational advantages.

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Elijah Knaap, Chengri Ding, Yi Niu, Sabyasachee Mishra

Polycentrism as a Sustainable Development Strategy

We present in this paper an analysis of economic centers and their role in shaping employment development patterns and travel behavior in the state of Maryland. We begin by identifying 23 economic centers in the Baltimore-Washington region. We then examine these centers first in their role as centers of economic activity then in their role as nodes in the state’s transportation system. Finally, we identify the commute sheds of each center, for multiple modes of travel and travel times, and examine jobs-housing balance within these various commute sheds. We find that Maryland’s economic centers not only promote agglomerative economies and thus facilitate economic growth; they also generate a disproportionate number of trips and promote transit ridership. These results provide empirical support for policies that promote polycentric urban development, and especially policies that promote polycentric employment development. Further, they suggest that polycentrism as a sustainable development strategy requires careful coordination of regional transportation systems designed to balance jobs and housing within a center’s transit commute shed. Based on these findings we recommend that the Maryland state development plan and regional sustainable communities’ plans across the nation should encourage the concentration of employment within economic centers and encourage housing development within the transit commute sheds of those centers.

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Jason Sartori, Terry Moore, and Gerrit Knaap (2011)

Indicators of Smart Growth in Maryland

Maryland is often referred to as the birthplace of smart growth, a movement in land use planning that contributed to what is now referred to as sustainability planning, sustainable development, and sustainable communities. Maryland adopted a Smart Growth Program in 1997 with the primary purposes being to use incentives to (1) direct growth into areas already developed and having public facilities, and (2) reduce the conversion of farm, forest, and resource land to urban uses.

The National Center for Smart Growth Research and Education at the University of Maryland was established in 2000 in large part because of Maryland’s leadership in the field of smart growth. Its mission is to provide research and leadership training on smart growth and related land use issues in Maryland and in metropolitan regions around the nation. Thus, a key focus of the Center’s research is Maryland’s Smart Growth Program: where is it effective, and how can it be improved?

This report provides some indicators (also called performance measures) that suggest answers to those questions. The term “suggest” is important: (1) there are many limitations of any assessment based on indicators, no matter how well developed, and (2) the indicator assessment reported here is only in its preliminary stages. Understanding the limitations of indicators is critical to interpreting their significance. Thus, Section 2 and Appendix B of this report discuss in some detail data, methods, and limitations.

Researchers and policymakers acknowledge those limitations, but that acknowledgement does not slack their desire for indicators that say something concrete about whether desired outcomes are being achieved, and at what cost in direct expenditures and spillover effects; and about directions for policy that would increase the desired outcomes, reduce the costs, or both. Sections 3 and 4 address those issues.

Section 3 reports indicators for six categories of issues. Population and employment growth drive development. That development is the immediate concern of the two thrusts of the Maryland Smart Growth Program: it puts pressure on the natural areas that the Program wants to protect, and it can occur in development patterns that not only eliminate and vitiate those natural areas, but also are inefficient from the perspective of providing transportation and other infrastructure and, ultimately housing (and other buildings). Some of the key findings:

  • Population. The population growth rate in Maryland approximately equals the national average. The indicators give no direct, rigorous, or even casual evidence that the Smart Growth Program either increased or decreased the amount or composition of population growth statewide.
  • Employment. Employment and other measures of economic activity have consistently grown over the last two decades in Maryland and all its regions. From 2000 to 2009, Maryland had the 13th highest annualized rate of job growth (1.0%) among the 50 states. Indicator data allow the conclusion that the Smart Growth Program did not stop economic growth, but they do not allow a conclusion about whether the Program increased or decreased that growth from what it would have been in the absence of the Program.
  • Transportation. For most measures of transportation performance that are standardized, Maryland looks like other states: VMT, congestion, and car ownership have risen consistently over time. Maryland has higher transit ridership than most states, some of which may be attributable to the Smart Growth Program but most of which is attributable to Maryland’s proximity to Washington, D.C. and its own historical investments in transit (especially in Baltimore and in suburban Maryland) that pre-date the Program.
  • Development patterns. Urban development continued in Maryland at densities lower than several comparison states from 1990 to 2000. Most of that growth has not been infill of urban areas: the predominant form of urban development in Maryland remains suburban. Three-fourths of the new single-family acres were developed outside PFAs since 1997. Indicators of Smart Growth in Maryland NCSGRE January 2011 Page 3 While this indicator has shown some improvement in recent years, the share of parcels developed outside PFAs continues to demonstrate an increase over time. Despite increases in density for the state as a whole (which is inevitable if there is any population growth), a substantial amount of Maryland’s new growth has been occurring in the exurban areas of the state. The share of population that lives within a half-mile of rail transit stations, however, has generally risen over time.
  • Housing. Although the single-family share of new housing construction has fallen recently, the single-family share of housing in Maryland is high for a highly urbanized state. Housing prices have inflated faster in Maryland than most other states the last few decades, clearly raising questions of affordability, which varies across the state.
  • Natural areas. The trends for acres of farm and forest land have been steadily downward in Maryland and the U.S. for a long time, but data suggest that rate of decline is decreasing. Maryland and its counties have protected well over 1.3 million acres of land. There is still, however, a substantial amount and percent of critical land that is not protected. Measures of air quality are mainly stable or improving, yet measures of water quality demonstrate poor conditions in watersheds across the state.

If the indicators here are leaning in any direction, it is that Maryland has not made substantial progress toward improving its performance in many of the areas pertaining to smart growth. There are, however, reasons to qualify a direct conclusion like that one:

  • Without the kind of research design that goes well beyond the reporting of indicators into statistical controls for multiple explanatory variables, there is no solid way to rebut the hypothesis that what the Maryland Smart Growth Program did was to prevent many indicators from getting much worse than they are.
  • Things take time. Many changes in technology, social attitudes, prices, and the built environment occur slowly. Indicators of Smart Growth in Maryland NCSGRE January 2011 Page 4
  • If it is too early to expect to see much by way of results (e.g., changes to trends) then perhaps indicators of outcomes should be supplemented by indicators of inputs: of efforts made to stimulate future change (i.e., the number and strength of policies to change the patterns and effects of growth).

Related Resource

Indicators of Smart Growth in Maryland: Appendices

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Chengri Ding and Erik Lichtenburg

Land and Urban Economic Growth in China

Land to accommodate urban development in China is provided through requisitions by government officials, suggesting that land availability may be a constraint on urban economic growth.  An econometric model of urban GDP growth suggests that land has constrained economic growth in coastal areas but not elsewhere.  Elasticities calculated from the estimated coefficients indicate that land availability has a larger proportional impact on economic growth than domestic and foreign investment, labor supply, and government spending.  The estimated parameters provide evidence about arbitrage opportunities created by discrepancies between urban land value and compensation for requisitioned rural land, suggesting rural unrest associated with conversion of farmland to urban uses may have some economic roots.

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Nikhil Kaza, Gerrit Knaap, and Kelly Clifton (2009)

Economic Scenarios and Development Patterns in the Baltimore‐Washington Region

This paper illustrates the use of scenarios in land use, environmental and transportation planning in and around the State of Maryland. Different assumptions about futures result in different patterns of growth with differential impacts on particular sectors of the economy. Such different patterns require formulation of contingent plans as well as robust plans. In this paper, we illustrate the quantitative modelling methodology of loosely linked economic demographic, transportation and other impact assessment models in constructing two scenarios; one of which represented the best possible guess about the continuation of the future and other involving rapid changes to energy prices and Federal spending. We illustrate the spatial development outcomes and the transportation and environmental plans that are necessary to deal with these different outcomes. Further, we illustrate that different planned actions have different efficacies in different futures and thus multiple futures should be carefully considered. Finally, we illustrate the notions of contingent plans and robust plans.

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Erik Lichtenburg and Chengri Ding

Local Officials as Land Developers: Urban Land Expansion in China

We investigate conceptually and empirically the role of economic incentives in the primary land allocation in China in recent years.  A theoretical analysis demonstrates how recent fiscal and governance reforms give rise to land conversion decisions and long run urban spatial sizes that respond to economic incentives even though the allocation of land between urban and rural uses is determined administratively.  An econometric investigation of China’s coastal provinces finds that changes in urban area are increasing in the value of urban land and budgetary government revenues and decreasing in the value of agricultural land, results consistent with the theoretical analysis. 

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Nikhil Kaza, Gerrit Knaap, and Douglas Meade (2008)

Exploring Alternative Futures Using a Spatially Explicit Econometric Model

This paper illustrates the application of various forecasting methodologies in constructing multiple scenarios for the state of Maryland using Long term Inter Industry Forecasting Tool that tracks inter-industry outputs at a macro scale, and State Employment Model that disaggregates these outputs to the states. We then use accessibility, land availability and observed relationships of employment categories to distribute employment at a county level. In this paper, we identify the possible advantages and pitfalls of using large scale economic models to drive employment forecasts at the county level. This framework allows for simulating the implications of macroeconomic scenarios such as changes in exchange rates and unemployment levels, as well as local land use and transportation policies on local employment and demographics. In particular, we focus on two scenarios as test cases both of which involve very different ideas about how future might unfold and their effects on land use and transportation policy prescriptions. One of the scenarios involves, among others, rises in health care spending over the next few years and the other involves increases in energy prices. As will be shown, they have different spatial effects and suggest different policy actions on the part of various governments.

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John Frece, Jason Sartori, and Rebecca Lewis (2008)

Evaluating the Impacts of the Community Legacy and Neighborhood BusinessWorks Programs: A Review of Twelve Selected Communities

The Community Legacy program was established in 2001 through a bill introduced by the administration of former Maryland Governor Parris N. Glendening as part of the larger Smart Growth and Neighborhood Conservation Initiative.  The Community Legacy program and its companion effort, the Neighborhood BusinessWorks program, were specifically created to direct state resources to existing community-scale neighborhoods as part of the state’s broader effort to reverse a decades-long trend of urban disinvestment and abandonment. Considered somewhat unorthodox when they were started, these programs have since become readily accepted by local governments as mainstays of their revitalization strategies.

In this study, the National Center for Smart Growth, working with the Division of Neighborhood Revitalization at the Department of Housing and Community Development, conducted an analysis of randomly selected Community Legacy investments from the period 2002 to 2005.  The analysis provided an assessment of the impact and effectiveness of the Community Legacy program and the value of its awards to communities undergoing revitalization.

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The National Center for Smart Growth (2007)

GSA Leasing in the Greater Washington Metropolitan Region

At the request of the Prince George's County Economic Development Corporation, the National Center for Smart Growth Research and Education and the University of Maryland's Real Estate Development Program have undertaken an analysis of the federal government's leasing presence in the greater Washington metropolitan region.

The analysis finds that Prince George's County, when compared with the other jurisdictions in the region, does not receive its proportionate share of GSA real property leasing.

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Gerrit Knaap and John Frece (2007)

Smart Growth in Maryland: Looking Forward and Looking Back

Spring of 2007 will mark the 10th anniversary of the passage of Maryland’s Smart Growth and Neighborhood Conservation Initiative; an effort designed to discourage sprawl development, foster more compact communities, protect the best remaining farms and open space in the state, and save taxpayers from the growing cost of providing services and infrastructure to serve far-flung development. Almost before its various provisions took effect in 1997 and 1998, the Maryland initiative generated interest and acclaim across the country. It received numerous awards and became the principal legacy of the program’s primary architect, former Governor Parris N. Glen- dening. Governors in other states, such as New Jersey, Colorado and Massachusetts, instituted their own “smart growth” proposals, often modeled after portions of the Maryland program. Even the popularity and wide usage of the now omnipresent phrase “smart growth” can be attributed in large part to the Maryland program.

But, what has been the effect of Maryland’s Smart Growth pro- gram? Looking at it some ten years later, has it worked? Did it accomplish what it was designed to do? What have been the strengths and weaknesses of the Maryland approach, and how can lessons from the Maryland experience be used to offer a new set of policymakers in Maryland, as well as elsewhere in the nation, practical suggestions on how to make smart growth smarter?

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The National Center for Smart Growth (2007)

NCSG Policy Brief: A Review of GSA Leasing in the Greater Washington Metropolitan Region

At the request of the Prince George's County Economic Development Corporation, the National Center for Smart Growth Research and Education and the University of Maryland's Real Estate Development Program have undertaken an analysis of the federal government's leasing presence in the greater Washington metropolitan region.

The analysis finds that Prince George's County, when compared with the other jurisdictions in the region, does not receive its proportionate share of GSA real property leasing.

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Anna Alberini (2005)

Determinants and Effects on Property Values of Participation in Voluntary Cleanup Programs: The Case of Colorado

State Voluntary Cleanup Programs (VCPs) were established starting in the 1990s to encourage the environmental remediation and redevelopment of contaminated properties. These programs typically offer liability relief, subsidies and other regulatory incentives in exchange for site cleanup. This paper asks three questions: First, what type of properties are attracted to voluntary cleanup programs? Second, what is the interaction between these state programs and other incentives for remediation and economic development, such as Enterprise Zone and Brownfield Zone designations? Third, what is the effect of participation in the VCP on property values?

We use data from Colorado’s VCP to answer these questions. We find that most of the properties enrolled in this program were not previously listed on EPA’s contaminated site registries, and that most applicants seek to obtain directly a “no further action” determination without undergoing remediation. The main determinants of participation are the size of the parcel and whether the surrounding land use is primarily residential, while other incentives have little effect. Properties with confirmed contamination sell at a 47% discount relative to comparable uncontaminated parcels, and participation tends to raise the property price, but this latter effect is not statistically significant.

Taken together, these findings suggest that the participating properties are those with high development potential, and hint at the possibility that owners or developers may be seeking to obtain a clean bill of health from the State with only minimal or no cleanup efforts. Were these findings confirmed with data from other states, they would raise doubts about the effectiveness of voluntary programs in encouraging remediation and their usefulness in reversing some of the undesired effects of the Superfund legislation.

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Alberto Longo and Anna Alberini (2005)

What Are the Effects of Contamination Risks on Commercial and Industrial Properties? Evidence from Baltimore, Maryland

Using the hedonic pricing approach, we investigate how the information released on public registries of contaminated and potentially contaminated sites affects nearby commercial and industrial properties in Baltimore, Maryland. We find that commercial and industrial properties are virtually unaffected by proximity to a site with a history of contamination. Knowing that the site is no longer considered contaminated does not have a rebound effect on property prices either.

We also find that urban economic development policies, such as Empowerment Zones and Enterprise Zones, have little effect on property values. In sum, brownfield properties in Baltimore are not particularly attractive investments for developers, and there is little potential for self-sustaining cleanup based on appropriate fiscal incentives, such as Tax Increment Financing. It is doubtful that “one size fits all” measures to encourage the cleanup of contaminated sites can be successful in this context.

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Jungyul Sohn and Gerrit Knaap (2002)

Does Job Creation Tax Credit Program in Maryland Induce Spatial Employment Growth or Redistribution?

The Job Creation Tax Credit (JCTC) program is one of the five major Smart Growth Programs initiated by the State of Maryland in 1996 and amended in 1997.  Like other tax credit programs it is intended to create jobs, but it is also a place-based policy in the sense that eligibility is limited to jobs created in Priority Funding Areas (PFAs). This paper examines whether the JCTC program has furthered the goals of smart growth by concentrating job growth within well defined regions of the state. Towards this end, both the number and the relative share of employment inside and outside of the PFAs are compared using three econometric models. The empirical analysis examines employment in five economic sectors ((1) primary, (2) manufacturing, (3) transportation, communication and utilities (T.C.U.), (4) finance, insurance and real estate (F.I.R.E.) and (5) services) over the years (1994 to 1998) using ZIP Code data. The result shows that jobs in the T.C.U. and services industries have responded to the state incentive program while three other sectors have not; the distribution of jobs in the primary sector have grown counter to the state incentive policy and jobs in manufacturing and F.I.R.E. have been unaffected by the program.

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Jungyul Sohn (2002)

Information Technology in the 1990s: More Footloose or More Location-bound?

This paper examines if information technology has worked towards dispersion or concentration of economic activities in two steps of analysis. The first analysis using locational Gini coefficient and Moran’s I focuses on distribution of the urban area as a whole and finds that dispersion was prominent over the years. The second analysis using Gi* statistic as the dependent variable in the regression model, however, shows that the technology has induced more concentration rather than dispersion at an intrametropolitan scale, reflecting that there is a discrepancy in the results of the two analyses depending on the spatial scale of the analysis.

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Marie Howland (2002)

The Legacy of Contamination and the Redevelopment of Inner-City Industrial Districts

This study examines the role that land contamination plays in hindering central city redevelopment. We tracked all sales, the selling price, existence of contamination, location, and length of time on the market in one industrial area of approximately 5,580 acres in Southwest Baltimore. The results indicate that after the mid 1990s, contaminated parcels are selling and the market has adjusted to contamination by lowering sales prices. Over the decade 45 parcels with either confirmed or historical reasons to suspect contamination sold. Interviews with owners and brokers of the parcels on the market for two years or more indicate that outdated parcel sizes, inadequate roads for modern truck access, outdated and aging infrastructure, incompatible land uses, and high asking prices are the most significant barriers to the redevelopment of industrial central city districts.

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Marie Howland (2002)

What Makes for a Successful Brownfield Redevelopment?

This study tracks the remediation history and redevelopment on three brownfield sites in Baltimore, Maryland. The sites are Camden Crossing, Highland Marine Terminal, and Crown, Cork, and Seal. The first project, Camden Crossing, promises to turn previously industrial property into a town house development. Highland Marine Terminal and Crown, Cork, and Seal were industrial sites transformed into warehouse space. The proposed residential, Camden Crossing, project has met with continuous impediments and delays, and is now running more than eight years behind schedule. The two industry to warehouse sites can be characterized as successful, with profitable enterprises now operating on both. The factors that appear to compress risk and contribute to successful brownfield redevelopments are continuous industrial use, a strong market for the final use, and quick movement through the Phase I and Phase II testing, Maryland Department of the Environment approvals, and reuse. The continuous industrial use means that cleanup standards are not as stringent as for residential use, thereby speeding cleanup and lowering remdiation costs. Moreover, an uncertain market for the final product increases risk. For example, the warehouse market in Baltimore is much stronger than the residential market. The weak residential market in combination with stringent cleanup standards undermines the profitability of Camden Crossing. Finally, the delays in Camden Crossing have both resulted in and been further aggravated by changes in the Maryland Department of the Environment staff. Over the eight years the project has been under discussion, the Maryland Department of the Environment has revised and made cleanup standards more strict.

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Gerrit Knaap (2002)

Talking Smart in the United States

As in many countries around the world, concerns about contemporary urban development patterns and their effects on the natural and social environment are high and rising in the United States. Though these concerns are not new, the recent period of sustained economic growth has led to both rapid urban expansion and falling relative concerns about other problems like crime, unemployment, and government deficits. Urban sprawl is now a major public policy issue (U.S. Office of Technology Assessment 1995, U.S. General Accounting Office (GAO) 1999, GAO 2000).

How to address -- even define -- the problem, however, remains unresolved and contentious. Some view urban sprawl as a major threat to environmental quality, fiscal stability, and human health. Those with this point of view support policy reforms sometimes called smart growth, new urbanism, and sustainable development (Ewing 1997, Smart Growth Network 2002). To others, sprawl is simply the result of increases in population, rising real incomes, and the expression of consumer demands (Brueckner 1999). To those with this point of view, there is little evidence that urban sprawl has adverse social or environmental consequences or warrants a policy response (Gordon and Richardson 1997, Urban Futures 2002). In a nation rich in land resources and steeped in traditions of private property rights, this view is not easily dismissed.

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