Posts

Showing posts with the label principle agent theory

Principle-Agent Theory in Economic Development

Economic development is seen as a business and government partnership. The author’s Lombard and Morris (2012) analyze how the principle-agent theory can foster public-private partnerships and privatization to foster growth. They use a specific case example to help highlight their overall concept of cross-pollination. It is this cross-pollination that should help develop other projects within the area. Local entities seek to increase their economic activity as well as the potential spill over benefits of additional employment. They look for and solicit businesses to move into their areas and develop productive capacity. In many cases using approaches such as an advantageous business environment and lower taxes helps nudge businesses to consider local investment.  The authors use Virginia Beach, Virginia as their case study. The historically suburban city was struggling to create a vibrant business downtown business district. As the project started as a single government enti