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Business Climate Studies: A Critical Evaluation

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  • Rodney A. Erickson

    (Pennsylvania State University)

Abstract

Studies of business climate comparing states and communities have attracted considerable media attention in the past few years. This article examines the major issues surrounding these studies. The roots of contemporary business climate studies in earlier comparative cost analyses are discussed, including the important role of state and local taxation studies of the 1950s and 1960s. The most prominent contemporary business climate studies are identified and the methodological problems, especially those associated with the definition of business climate and with rankings, are criticized. Research on the relationship between business climate and state economic development is reviewed, and factors underlying the complexity of the relationship are discussed. The article concludes by noting some of the benefits to states that can result from methodologically rigorous and thoughtful comparisons of business climate factors when used in an appropriate context.

Suggested Citation

  • Rodney A. Erickson, 1987. "Business Climate Studies: A Critical Evaluation," Economic Development Quarterly, , vol. 1(1), pages 62-71, February.
    • Handle: RePEc:sae:ecdequ:v:1:y:1987:i:1:p:62-71
    DOI: 10.1177/089124248700100108
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    Cited by:

    1. David L. Barkley & Kevin T. McNamara, 1994. "Manufacturers' Location Decisions: Do Surveys Provide Helpful Insights?," International Regional Science Review, , vol. 17(1), pages 23-47, April.
    2. Georgeanne M. Artz & Kevin D. Duncan & Arthur P. Hall & Peter F. Orazem, 2016. "Do State Business Climate Indicators Explain Relative Economic Growth At State Borders?," Journal of Regional Science, Wiley Blackwell, vol. 56(3), pages 395-419, June.
    3. Yasuyuki Motoyama & Iris Hui, 2015. "How Do Business Owners Perceive the State Business Climate? Using Hierarchical Models to Examine the Business Climate Perceptions, State Rankings, and Tax Rates," Economic Development Quarterly, , vol. 29(3), pages 262-274, August.
    4. Jed Kolko & David Neumark & Marisol Cuellar Mejia, 2013. "What Do Business Climate Indexes Teach Us About State Policy And Economic Growth?," Journal of Regional Science, Wiley Blackwell, vol. 53(2), pages 220-255, May.
    5. Andrei Yakovlev & Irina Levina & Anastasia Kazun, 2015. "Attitude to the National Leader Through the Lenses of Investment Climate Assessment: The Case of Russia," HSE Working papers WP BRP 98/EC/2015, National Research University Higher School of Economics.
    6. Barkley, David L. & Henry, Mark S. & Bao, Shuming, 1998. "The Role of Local School Quality in Rural Employment and Population Growth," The Review of Regional Studies, Southern Regional Science Association, vol. 28(1), pages 81-102, Summer.
    7. Terry F. Buss, 2001. "The Effect of State Tax Incentives on Economic Growth and Firm Location Decisions: An Overview of the Literature," Economic Development Quarterly, , vol. 15(1), pages 90-105, February.
    8. Roger F. Riefler, 1995. "Comparative State Employment Growth: An Exploratory Investigation," The Review of Regional Studies, Southern Regional Science Association, vol. 25(2), pages 187-205, Fall.
    9. David L. Barkley, 1996. "Turmoil in traditional industry: prospects for nonmetropolitan manufacturing," Monograph, Federal Reserve Bank of Kansas City, number 1996titpfn, March.
    10. M.G. Coombes & D.J. Storey & R. Watson & P. Wynarczyk, 1991. "The Influence of Location upon Profitability and Employment Change in Small Companies," Urban Studies, Urban Studies Journal Limited, vol. 28(5), pages 723-734, October.

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