Governance networks and local economic development policy during the Great Recession in the US

Research shows that US cities increased their use of business incentives during the Great Recession. Drawing from governance-based theories’ emphasis on mutual resource dependency and the resourcefulness of larger networks, the analysis presented in this study examines whether expanding governance networks influenced this change in cities’ use of incentives. The dataset includes 162 council-manager cities that responded to both the 2004 and 2009 ICMA Economic Development Surveys. Most governance networks contracted during the recession. A large proportion of cities increased their use of business incentives regardless of any changes to the sizes of their decision-making networks. These findings suggest that the explanatory power of governance theories weaken during times of economic crisis. When facing severe resource constraints, many private actors abandon the network undoubtedly to focus on self-preservation instead of citywide development initiatives while cities attempt to subsidise their way out of economic decline.