The Political Economy of New Business Formation across the American States, 1970-1985

Objective. The issue of whether state-sponsored investment incentives stimulate the formation of new businesses has not been resolved for a lack of adequate measures of state policy activity and because researchers have failed to consider the effects of other, perhaps more important, features of sta...

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Bibliographic Details
Published in:Social science quarterly 1996-03, Vol.77 (1), p.28-42
Main Author: Grant, Don Sherman
Format: Article
Language:English
Subjects:
1970-1985
Business (1970-85)
Business growth
Business organization
Businesses
Capital flight
Economic Development
Economic Policy
Employment
Enterprises
Financial investments
Formation
Labor
Of General Interest
Political Economy
Politics
Public assistance programs
Social sciences
Spatialization
State Government
States
States (Political Subdivisions)
Tax policy
U.S.A
United States
United States environmental policy
United States of America
USA
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Summary:Objective. The issue of whether state-sponsored investment incentives stimulate the formation of new businesses has not been resolved for a lack of adequate measures of state policy activity and because researchers have failed to consider the effects of other, perhaps more important, features of states' political economies. The purpose of this research is to examine the politicaleconomic determinants of new business formation across the American states between 1970 and 1985. Methods. This research tests the effects of a new measurement model of states' economic development policies and other factors suggested by Gordon, Edwards, and Reich's framework of social structures of accumulation using pooled cross-sectional time series analysis techniques. Results. Results show that new business formation is related to several dimensions of states' political economies, including the organizational capacity of labor, social wage policies, fiscal capacities, and the political/electoral context of states. By contrast, state-sponsored economic development policies have minimal effects. Conclusions. Findings attest to the severe problems that states face in trying to replace businesses lost to deindustrialization. They likewise cast doubt on the conventional wisdom of "state entrepreneurship."
ISSN:0038-4941
1540-6237