Discussion Papers 2001.
Role of the Regions in the Enlarging European Union 214-231. p.
Role of the Regions in the Enlarging European Union
Edited by Zoltcin Gal, Pecs, Centre for Regional Studies, 2001
LOCAL GOVERNMENTS AND
"STRATEGIC" DEVELOPMENT
STRATEGIES: THE ISSUE OF REGIONAL
GOVERNANCE
James Wesley Scott
Introduction and overview
It appears to be general consensus that innovative self-promotion and entrepre-
neurial strategies are increasing in importance for local and regional develop-
ment. This is evident in the unwavering attention devoted to endogenous po-
tentials, local milieu, urban marketing schemes and the idea of empowerment.
What is less clear is the means by which such policies can be put into place;
local development strategies based on externally imposed models of innovative
economic promotion have often brought disappointing results.
This discussion paper therefore combines two important regional develop-
ment issues. On the one hand, the necessity of more aggressive, flexible and
"entrepreneurial" strategies based on an integral concept of locality and com-
munity as opposed to "site" are emphasised. Only in this way can the attrac-
tiveness and potential of a community be properly communicated and the com-
plex requirements of strategic planning fulfilled. At the metropolitan and/or
regional level, on the other hand, the issue of governance as an effective form
of co-operation and co-ordination between municipalities within a context of
economic, environmental and functional interdependence must also be ad-
dressed. Regional co-ordination and flexible development strategies are thus
two closely related aspects of urban policy. However, it is not always auspi-
cious or politically feasible to act upon these realities and, as a result, frag-
mented and regionally unbalanced development policies that favour the par-
ticularistic interests of specific communities and/or groups have often pre-
vailed, particularly in the United States with its traditions of decentralised local
government.
There is little doubt that conventional notions of the antithetical nature of
economic development and environmental quality must be suspended. The

James Wesley Scott : Local Governments and "Strategic" Development Strategies: the Issue of
Regional Governance. In: Role of the Regions in the Enlarging European Union.
Pécs, Centre for Regional Studies, 2001. 214-231. p. Discussion Papers. Special
Local Governments and "Strategic" Development Strategies: the Issue of Regional...
215
problem, in fact, is one of co-ordination and strategy and not of short-term
trade-offs. This essay presents evidence for a judicious balance between local
mercantilism and comprehensive administrative (but often inflexible) solutions
to the vexatious problem of co-ordination. In order to find this balance, how-
ever,  urban analysis must develop richer frameworks for understanding the
complex processes behind urban growth and development.  For this reason, the
concept of governance as manifested by local and regional "regimes" will be
developed and portrayed as an essential element in the co-ordination of devel-
opment policies. The central empirical-theoretical question pursued in this pa-
per is the following: how can co-operation be promoted? More directly, which
forms of urban governance promote regionalism? What is the role of the state?
Can regionalism be induced/successfully encouraged by way of subsidies?
Here, I will develop a discussion of the ramifications of regionalisation as it
pertains to interlocal relationships and strategic-entrepreneurial development
policies. This discussion is based on observations of changes in urban and re-
gional governance systems in the United States as they apply to the develop-
ment issues mentioned above. These observations will then be briefly related to
possible European scenarios.
Framing the issues: regional interdependencies are
unfashionable realities
Increasingly, local and regional initiative in economic development and plan-
ning issues is being interpreted as an institutional response to the challenges of
globalisation. Similarly, both in Europe and North America, structural policies
at the state level are informed by a new appreciation of the strategic role of
local and regional actors. This re-discovery" of the local has been facilitated by
criticisms of traditional investor-oriented and supply-side economic develop-
ment concepts — concepts, which have failed to achieve employment growth
and/or sustainable economic vitality in the measure, promised and expected
(ARL,  1995;  Eisinger,  1988). Furthermore, regional development doctrine ap-
pears to be shifting its focus towards the social, cultural and institutional con-
ditions for successful local and regional development.
The consequences of this shift can be seen in a greater emphasis on demand-
side measures. More importantly, however, the "new" planning doctrine is very
much concerned with actual procedural issues, strategy and co-operation in
particular, in order to come to grips with the tenacious problem of co-ordination
(Healy,  1997).  Strategy  implies a more long-term and complex view of devel-
opment requiring the participation of various public agencies, the public sector
and civil society.  Co-operation,  on the other hand, is that which basically de-

James Wesley Scott : Local Governments and "Strategic" Development Strategies: the Issue of
Regional Governance. In: Role of the Regions in the Enlarging European Union.
Pécs, Centre for Regional Studies, 2001. 214-231. p. Discussion Papers. Special
216
J. W. Scott
fines a region; it is the propensity of communities to transcend narrowly de-
fined local interests, to develop a consensus on strategy and work with neigh-
bouring localities and other levels of government in providing direction for a
region.
What we might call "entrepreneurial" regional policies generally involve in-
novative industrial sectors, technological development and/or industrial clusters
as the foundations of a competitive regional economy. Local empowerment and
the promotion of small and medium-sized enterprises initiative are also vital
elements here. Many entrepreneurial policies conform to the new doctrine in
that they also target specific programmatic goals that include demand oriented
approaches, "hard" as well as "soft" locational factors and a concern for the
development of social community. Furthermore, in order that they are properly
implemented, they thus would also necessitate complex community develop-
ment strategies (education, culture, urban amenities, quality of life elements,
infrastructure) as opposed to the more straightforward and one-sided incentive
systems that have been employed  (Henton  et al. 1997). Criticism of traditional
structural policies, coupled with a greater sensitivity towards economic interde-
pendence of localities and regions (and hence the necessity to privilege com-
petitive economic activities) has encouraged states to adopt the network para-
digm and the concept of industrial clusters in formulating economic policies
(Scott,  1998). In contradistinction to traditional understandings of the local
economic base, network and cluster oriented strategies do not operate at the
level of individual investors, firms or even narrowly defined sectors. Instead the
locality (or region) is seen as a web of economic relationships and urban micro-
environments that promote innovation, investment and long-term growth  (Do-
eringer—Tekla,  1996). Core enterprises are thus interdependent elements within
the cluster and are supported by a wide range of services, social and technical
infrastructure as well as research and educational facilities  (Waits,  1996).
Thus, much more than in the case of traditional supply-side approaches, the
locational factors so important in "entrepreneurialism" are affected by the ac-
tions of many layers of government and the decisions of different groups of
actors. Educational policy, transportation infrastructure, incentives for research
and development, regulations impacting on land-use and community develop-
ment, housing policies, etc., are elements of a national, regional and local
equation that determines fundamental conditions for local development policy.
The task of co-ordinating these various layers of governance are admittedly
daunting and perhaps never entirely achievable  (Innes—Booher,  1997).
As a result, unfortunately, political responses often appear to have been
limited in scope, imagination and in their temporal dimensions. One has the
feeling that cities and regions have been "doing" entrepreneurial politics and
strategic planning, reading from the "correct" script as it were, but often pro-

James Wesley Scott : Local Governments and "Strategic" Development Strategies: the Issue of
Regional Governance. In: Role of the Regions in the Enlarging European Union.
Pécs, Centre for Regional Studies, 2001. 214-231. p. Discussion Papers. Special
Local Governments and "Strategic" Development Strategies: the Issue of Regional...
217
ducing strategies with rather more symbolic that substantive quality. Further-
more, effective and/or realistic implementation measures are seldom developed
as part of these strategies except in a piecemeal, issue-specific and generally
localised manner. The proper reading of the innovative development strategies
discussed here is not one of a mere, if sophisticated, extension of marketing
philosophy into the realm of urban and regional governance  (Newman-
Thornley,  1997) but of something much more substantial. In discussing
strategic and entrepreneurial approaches to planning we cannot ignore
metropolitan and/or regional dimensions nor can we underplay the necessity of
more comprehensive approaches to regional development (Roberts et. al. 1999).
Indeed, there can be no real planning strategy of the sort mentioned above
without commensurate  governance  mechanisms — that is, formal and semi-
formal arrangements that permit the management of the affairs of political
communities (regions, city-regions, metropolitan areas).' As a specific form of
governance, regionalism can be characterised as a problem of co-ordination in
securing economic, social development and environmental quality
(sustainability). The issue of co-ordination in this respect has been dealt with in
many different — if partial — ways at the practical level. However, it appears that
research has. only reluctantly followed this lead in recognising the relationships
between governance, regionalism and development.
Theoretical arguments: some insights of institutionalism
It has been clearly demonstrated that urban land markets bear little resemblance
to the autonomous unfettered "Market" of past economic theory but are largely
constructed by the decisions of agents with power over land-use decisions as
well as by developers and consumers. Unfortunately, much work in the area of
urban geography and economics continues to be informed by simplistic models
of economic behaviours and development, assuming an almost omnipotent real
estate market that assigns value to space according to universally valid laws of
supply and demand. This simplistic logic has influenced other areas of urban
analysis, ranging from studies on local government to planning policy and
housing issues.  2  In fact, much urban and regional analysis appears to be little
Within the context of this discussion we understand governance to include the establishment
and acceptance of a set of rules of conduct and norms (as embodied by social institutions) that
"define practices, assign roles and guide interaction so as to grapple with collective problems"
(Stokke,  1997. p. 28).
2  Institutional and political economy approaches have steadily developed since the late 1970's
in response to the limited focus of the "Ecological Paradigm" in Urban and Regional Geography
and Sociology. This paradigm, still influential in many departments of Geography, involves "an

James Wesley Scott : Local Governments and "Strategic" Development Strategies: the Issue of
Regional Governance. In: Role of the Regions in the Enlarging European Union.
Pécs, Centre for Regional Studies, 2001. 214-231. p. Discussion Papers. Special
218
J. W. Scott
more that a receptacle for academically sanctioned "fact" accumulation with
little bearing to actual reality. Often, the variables chosen, the levels of spa-
tial/statistical aggregation involved and even the basic premises informing
analysis do not address central issues. 3  In the case of regional governance and
its importance for spatial, social, ecological and economic development, the
most elementary aspects of interdependence as the rationale for regional co-
operation have often been neglected. Instead, analysis has focused much atten-
tion on purely economic motivations for co-operation or on arcane studies of
regional governance as an arena for political and policy networks.
As Lewis  (1996),  Savitch  and  Vogel  (1996) and others have argued, the New
Institutional Economics, applied to urban and regional studies, can fill this
analytical void. Political institutions, the value systems within which they oper-
ate, and incentives for specific modes of action inherent in political cultures are
among the elements of a complex political economy of urban development. In
this vein, urban regime theory has facilitated the development of urban govern-
ance typologies and meaningful comparative analyses of urban development
patterns. Regime theory has successfully and convincingly established links
between socio-economic and fiscal conditions of cities, the articulation of
group interests in local politics and modes of state intervention by developing
typologies of urban governance. 4  Regime theory has characterised development
policies at the local level (such as pro-growth, managerial, commercial and free
enterprise, planning and distributing regimes) 5  as well as co-operation patterns
at the regional/metropolitan level (e.g. avoidance and conflict, mutual adjust-
ment, metropolitan government) 6. This line of inquiry can help uncover various
reasons for successes and limitations of development strategies, among other
ways by identifying how behaviours, political relationships, incentive mecha-
nisms and policies interact. Such governance modes are not static, they evolve
as the constellation of actors and the roles they are assigned change over time.
What is expressed below, as "interorganisational ecologies of governance" is
uncritical acceptance of a self-regulating market system viewed as operating for the public good, a
technological determinism, an emphasis on regional convergence and the filtering of growth
down urban hierarchies, a neglect of the role of the state, a downplaying of inequality and con-
flict, and a macrostrucutral approach de-emphasizing human agency"  (Feagin,  1988, p.14).
3  I draw attention here to recent multivariate analyses of metropolitan regions, economic de-
velopment and socio-economic indicators such as those described by  Morgan  and  Mareschal
(1999) and  Carr and  Feiock  (1999). While well researched and competently written, I maintain
that the authors used indicators that did not properly address the issues raised in their essays.
4  Joe Feagin (1981), having coined the phrase "growth machine in his 1981 study of Houston
deserves particular mentioned here.
5  For a concise discussion of different regime types see  Kantor, Savitch  and Haddock (1997).
6  See Savitch  and  Vogel  (1996) for a comparative analysis of these different regional govern-
ance forms based on the experiences of US-American cities.

James Wesley Scott : Local Governments and "Strategic" Development Strategies: the Issue of
Regional Governance. In: Role of the Regions in the Enlarging European Union.
Pécs, Centre for Regional Studies, 2001. 214-231. p. Discussion Papers. Special
220
J. W. Scott
for this development has been fiscal retrenchment as well as (a decline in col-
lective political involvement) and an "individualisation" of interest-group poli-
tics, a phenomenon particularly characteristic of the United States.
However,  Newman  and  Thornley  (1997, p. 7), among others, have also ob-
served this trend in Europe, where fiscal retrenchment is diminishing capacities
for public action in the area of social, economic and regional policy. Here too,
the issue of more aggressive and strategically oriented development policies has
been 'raised. Urban and interregional competition are now watchwords in Euro-
pean Union policy discourse and, as dependence on transfer payments de-
creases, Europe's local authorities will be forced to re-evaluate their roles, their
relations with the private sector and their regional significance.
Interestingly enough and laissez-faire traditions notwithstanding, the reali-
sation has gradually emerged in the United States that a competitive free-for-all
and a lack of regional cohesion can be counterproductive to long-term eco-
nomic sustainability. Metropolitan areas throughout the US, working with fed-
eral and state agencies, have been attempting to transcend short-termism, local
patriotism and clientilism. Moves towards developing more effective and re-
sponsive management of regional complexity are evidenced by attempts to
break the mould of conflict avoidance and piecemeal adjustment that have pre-
vailed in metropolitan regions. 8  What we appear to be seeing is both a redefini-
tion of the planning process and a reconfiguration of roles and responsibilities
assigned to piiblic, private, state and non-state actors. Since the early 1980's
States and localities as well as the federal government have experimented with
new strategies involving more comprehensive and innovative development ap-
proaches. These will be discussed here and particular attention will be paid to
three aspects:
1) Local empowerment strategies in metropolitan settings,
2) Technology and industrial cluster strategies and
3) The promotion of effective regional governance. While not necessarily
interrelated, these three aspects accurately reflect changes in the political
conceptualisation of governance as it applies to regional economic de-
velopment.
8  In fact, one might argue that if there is a "systemic" logic to metropolitan and/or regional
development  (1nnes—Booher,  1997), the American solution has been to accept the status quo of
self-regulation and gradual adaptation of the system with predictable results. At the same time, for
a system of such a self-organising and unplannable nature, there is an astonishing regularity of
metropolitan development patterns in the United States

James Wesley Scott : Local Governments and "Strategic" Development Strategies: the Issue of
Regional Governance. In: Role of the Regions in the Enlarging European Union.
Pécs, Centre for Regional Studies, 2001. 214-231. p. Discussion Papers. Special
Local Governments and "Strategic" Development Strategies: the Issue of Regional...
221
Towards a new federal role?
Central government intervention in the United States has never reached the
levels typical of European post-war experience. While important (and during
the eras of the New Deal and Great Society vital), the federal government's
involvement in urban and regional development has remained a fiercely con-
tested ideological issue  (Cullingworth,  1997). The increasingly conservative
political environment in the United States has, without doubt, precluded a re-
turn to "great national programmes" in the foreseeable future. The primary
function of the federal government appears to lie more in securing the neces-
sary conditions for enhanced competitiveness and economic prosperity  (HUD,
1984;  Peterson—Lewis,  1986;  President's Commission,  1980).
President  William Clinton's  administration, taking office in 1993, has made
it clear that the federal government sees itself as a partner and not a supervisor
of regional and local actors  (Wolman—Agius,  1996).  Clinton's  urban and re-
gional policy agenda does not define, a priori, development strategies to be
implemented. Instead, it is based on general normative concepts and goals, such
as "community empowerment", "competitiveness", "innovation" and
"sustainability"  (Ham—Mowery,  1997). As vague and ambiguous as this norma-
tivity might seem, it has produced legislation that demonstrates considerable
promise in promoting more effective and flexible forms of governance. Among
the programmes thus created are Manufacturing Extension Partnerships,
Empowerment Zones and Enterprise Communities (EZ/EC), and technology
transfer initiatives for SMEs  (Scott,  1998). The Intermodal Transportation Effi-
ciency Act (ISTEA), passed in 1991, was also expanded. EZ/EC and ISTEA are
large (i.e. multi-billion dollar) programmes budgeted over several years. They
are remarkable in that they provide co-financing for economic development and
transportation improvement projects without intrusive requirements or exter-
nally defined restrictions. What these programmes do mandate, however, is that
strategic planning initiatives be developed and regional co-operation mecha-
nisms be incorporated within the scope of funded projects, conditions that ap-
ply to technology-oriented initiatives as well.
In the case of EZ/EC, the programme was initiated as a competition between
cities, each presenting a SWOT-analysis, planning elements, priorities, and
implementation strategies and indicating how neighbourhood development
organisations were to be included in project management  (Muniak—Auger,
1995). The 14 Empowerment Zones and 105 Enterprise Communities thus
designated have secured 2,5 Billion US$ in indirect (that is, tax-based) subsi-
dies and 1,3 Billion in direct grants. ISTEA, for its part, is a transportation-ori-
ented initiative that provides incentives for regional planning and the develop-
ment of metropolitan level co-operation. Monies made available through

James Wesley Scott : Local Governments and "Strategic" Development Strategies: the Issue of
Regional Governance. In: Role of the Regions in the Enlarging European Union.
Pécs, Centre for Regional Studies, 2001. 214-231. p. Discussion Papers. Special
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J. W. Scott
ISTEA are apportioned to regional bodies, most often regional transportation
commissions or councils of government, with the aim of enhancing their gov-
ernance role. ISTEA co-finances infrastructure projects, is competitive in that it
requires strategic plans from the cities and it creates incentives for intergov-
ernmental revenue sharing and co-ordination of land-use decisions.
The impetus federal programmes have created for strategic planning and re-
gional co-operation is basically one of "self-help" in order to encourage local
solutions based on regional self-organisation, although the presence and/or
creation of regional authorities is desired. Great emphasis is placed on multi-
level partnership and local commitment to strategic planning  (Berger,  1997).
The subnational level
In contrast to the US federal government, the states have entered rather late into
the regional development game as active participants. In the past more con-
cerned with improving their overall economic positions within the larger na-
tional market, states have realised that competitive pressures and fiscal re-
trenchment (reducing the amount of intergovernmental transfers) are forcing
them to adopt a more strategic co-ordinating role and to act as intermediaries
between local governments, the national context and the global economy
(Eisinger,  1988;  Soldatos,  1993). The federal government has, in fact, relegated
most responsibilities for local affairs to the states and must channel grants and
other transfer payments to urban areas through state governments. This, theo-
retically, gives the states greater leverage in formulating urban and regional
development policy. Oregon, Maine and Minnesota have adopted "smart
growth" policies to enhance the quality and economic potential of their urban
regions  (Lewis,  1996). Generally speaking however, state governments have
been reluctant to resort to greater interventionism given the entrenched tradi-
tions of local autonomy in the United States.
Instead, state policy in these areas remains focused on empowerment and
economic self-help. One of the most widespread of the entrepreneurial meas-
ures adopted by states is so-called Special Economic Zones (SEZ). These bear a
certain resemblance to the federal programme but have a greater business de-
velopment character. Since 1981 more than 33 states have defined such devel-
opment zones for areas suffering the effects of high unemployment. California
has been particularly active in this respect; in its attempts to encourage eco-
nomic initiative the state government has explicitly tried to combine redistribu-
tive social objectives with fiscal and policy efficiency. 9  Between 1986 and
9  See Enterprise Zone Act of 1984, Assembly Bill 40, Chapter 45 regarding "Economic De-
velopment: Depressed Areas", California State Assembly, Sacramento.

James Wesley Scott : Local Governments and "Strategic" Development Strategies: the Issue of
Regional Governance. In: Role of the Regions in the Enlarging European Union.
Pécs, Centre for Regional Studies, 2001. 214-231. p. Discussion Papers. Special
Local Governments and "Strategic" Development Strategies: the Issue of Regional...
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1992, 29 special economic zones were created, the majority thereof in small
and mid-size localities in rural areas but also several in metropolitan areas (Los
Angeles, San Diego, San Francisco, San Jose).
During the last 20 years, technology-oriented development strategies have
also been adopted at the state level. These strategies focus on market develop-
ment in areas of promising future growth (e.g. biomedicine, communications
and information technologies, microelectronics, innovative production proc-
esses, etc.) as well as on the restructuring of traditional industrial sectors.
Whereas the focus of SEZ strategies is often local, the states' technology ap-
proaches are decidedly more regional and interorganisational in scope. Cities,
universities, industry and business organisations as well as firms are generally
involved in the formulation and implementation of the policies. The concrete
measures revolve around technology parks, technology-transfer facilities (e.g.
"incubators"), the support of industrial clusters, training and re-training pro-
grammes, targeted grants for research and the provision of risk capital for
SMEs (Gittel—Kaufman—Merenda,  1998). 1°
The search for regional solutions
The local level is perhaps the most complex but, at the same time, the most
flexible arena for the elaboration of urban and regional development strategies.
As aggressive promoters of growth and fiscal health, localities have experi-
mented, with varying degrees of success, with many alternative forms of plan-
ning and management. Increasingly, Public-Private-Partnerships are being
sought in order, among other things, to help provide expensive infrastructure,
plan and market industrial and commercial areas, support local businesses,
elaborate accessible housing policies and establish local development agencies
(Knack,  1993;  Vidal,  1997)." Since the 1980s, localities have begun to co-op-
H)  North Carolina has aggressively supported the creation of technology parks. The Raleigh-
Chapel Hill-Durham triangle is, indeed, among the largest in the nation. In the 20 years since its
inception, this technology triangle has developed the region into an important international centre
for microelectronics, pharmaceuticals and medical research. "Induced" technology parks are now
an almost ubiquitous feature in growing metropolitan regions although the success of North
Carolina's experiments has not always been repeated. The state of New Hampshire was one of the
first to be active in promoting industrial cluster strategies. With the aid of the federal government
(in the guise of targeted grants for manufacturing extension services!) and private funds, New
Hampshire set up a statewide network of information and service centres for SMEs. Other states
have followed suite. Arizona, for example, has pursued a cluster strategy since 1992, identifying
10 economically viable and promising industrial sectors and promoting them  (Arizona Board of
Regents,  1996).
Besides the Atlanta Project (RAP), Baltimore (Maryland), Pittsburgh (Pennsylvania) and
Oakland (California) as well as many others pursue these interorganisational strategies

James Wesley Scott : Local Governments and "Strategic" Development Strategies: the Issue of
Regional Governance. In: Role of the Regions in the Enlarging European Union.
Pécs, Centre for Regional Studies, 2001. 214-231. p. Discussion Papers. Special
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J. W. Scott
erate with federal and state agencies in carrying out technology-oriented strate-
gies and job-creation schemes, incorporating these within their own local de-
velopment concepts. The question of regionalism and interlocal co-operation
looms large but, as mentioned above, there are few precedents of successful
strategic planning exercises at the metropolitan (or city-region) level. Only in a
handful of cases does metropolitan government exist — and primarily in an ad-
ministrative and regulatory capacity at that — but not as a vehicle for strategic
planning (Savitch—Vogel,  1996).
The San Fiancisco Bay Area (SFBA) is a typical US-American metropolitan
area in its lack of comprehensive regional government. Instead, regional gov-
ernance consists of a plethora of organisations covering very different jurisdic-
tions and providing wide variety of services as well as federal and state regula-
tory agencies. The only truly regional bodies in the SFBA deal with transit‘is-
sues (Metropolitan Transportation Commission) and general economic and land
use scenarios (Association of Bay Area Governments). While the MTC is re-
sponsible for planning transportation infrastructure projects funded by the fed-
eral government and thus enjoys a certain degree of authority, ABAG is strictly
an advisory body, a forum for the discussion of the future of the SFBA  (Roth-
blatt—Jones,  1998). However, at the subregional level, some promising devel-
opments are taking place, evidenced by events in area known as Silicon Valley
where some two million people live.
While famous for its leading role in global technological revolutions, it is
often overlooked that Silicon Valley is vulnerable economically, ecologically
and logistically to many undesirable consequences of its own success. Increas-
ing competition from outside, environmental pressures, a permanent transpor-
tation crisis, a lack of affordable housing as well as a severe loss in the area's
quality of life have all provided powerful rationales for regionalism as actors
realise that these issues are interdependent. In fact, problems are so grave that
co-operation is no longer questioned and local patriotism has partially receded.
Innovation, growth and the necessity of a sustainability agenda in order to
maintain the economic viability of Silicon Valley are now central to the plan-
ning concepts of cities, counties, NGOs, industry groups and other actors. Fur-
thermore, Silicon Valley's functional interdependence with the rest of the Bay
Area has also been addressed, although with less success.
As an example of the extensive interorganisational co-operation that is de-
veloping in this part of the SFBA, Joint Venture: Silicon Valley Network, es-
tablished in 1993, is developing a vision of a sustainable regional community

James Wesley Scott : Local Governments and "Strategic" Development Strategies: the Issue of
Regional Governance. In: Role of the Regions in the Enlarging European Union.
Pécs, Centre for Regional Studies, 2001. 214-231. p. Discussion Papers. Special
Local Governments and "Strategic" Development Strategies: the Issue of Regional...
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with the capacity to co-operate and thus compete globally.' 2  Its stated mission
is to "bring people together from business, government, education and the
community to identify and to act on regional issues affecting economic vitality
and quality of life".' 3  This is to be achieved via a series of projects and initia-
tives aimed at improving education, creating balanced regional housing mar-
kets, developing sensible transportation policies and avoiding overdevelop-
ment. Furthermore, The Network, according to their own programmatic state-
ments "helps retain, expand and attract business to Silicon Valley, is sparking a
renaissance of public education in Silicon Valley, supports entrepreneurs in
their efforts to start new businesses, sponsors a unique partnership between the
public and private sectors to streamline regulatory processes and reduce costs,
promotes the transition of defence firms to commercial and dual-use opportuni-
ties, brings business and government together to address tax and fiscal policy
issues important to the future of the Valley, stimulates the development of envi-
ronmentally-beneficial industry, promotes local efforts to create a healthy
community and, finally, "is leading the creation of an electronic community in
the Bay Area." Businesses, local governments, professional associations, labour
organisations, foundations, and individuals provide funding for JVSV, a non-
profit organisation. Among its board of directors are CEOs of major regional
firms, representatives of city and county governments, university and college
representatives, industrial associations and developers.
In addition to network initiatives such as these, the cities of Silicon Valley,
county authorities and industry representatives (such as the Santa Clara Valley
Manufacturers Group) have joined forces to secure important transportation
improvements, including light rail systems, that, because of their high cost,
would have been very difficult to engineer  (Scott,  1992). Here, federal support
via ISTEA and incentives for regional co-operation proved valuable indeed
(Rothblatt—Jones,  1998).
The story so far: a learning process with pitfalls
The "narrative" of policy change related above gives cause, at least from a US-
American point of view, for cautious optimism. The normative discourse of
"civic entrepreneurialism", "new regionalism", and "strategic vision" is being
reflected in important policy innovations. The traditional package of investor-
12  The website of Joint Venture: Silicon Valley Network is located at: www.jointventure.org .
Another interesting website is that of Collaborative Economics, an advoacy group dealing with
strategic planning and civic entrepreneurialism, located at is www.coecon.com .
13  Quoted from website text.

James Wesley Scott : Local Governments and "Strategic" Development Strategies: the Issue of
Regional Governance. In: Role of the Regions in the Enlarging European Union.
Pécs, Centre for Regional Studies, 2001. 214-231. p. Discussion Papers. Special
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J. W. Scott
oriented incentives, by far and large the most important form of regional devel-
opment policy for decades, has clearly evolved into something much more
complex. However, it would also be foolish to ignore the problems encountered
by federal, state and regional actors in their attempts to produce innovative
development strategies and governance structures to accompany them. Tradi-
tional urban and regional development politics, derided as zero-sum games in
which localities attempt to outdo each other in providing expensive cash incen-
tives to potential investors, have by no means vanished.  We are thus faced with
a difficult learning process in which mistakes will (and must) be made.
For one thing, according to numerous assessments, the employment effects
of Empowerment Zones, SEZ and technology strategies have been relatively
disappointing  (Ferguson—Ladd,  1992;  Logan—Whaley—Crowder,  1997;  Wilder—
Rubin,  1996), considering the policy efforts they involve. In a preliminary
analysis of California's SEZ programme, for example,  David Dowall  et al.
(1994) concluded that no increases in employment had been achieved but,
rather, indirect subsidies to firms had been provided. The reasons for these
modest results are complex but two interrelated causes have been singled out as
especially problematic. Firstly, the incentive regimes provided by the federal
and state governments are clearly insufficient. Secondly, the rationale of strate-
gic planning and co-operation often conflicts with short-term political orienta-
tions at the local level, where visible and rapid results from dollars spent are a
source of legitimacy for elites.
With regard to the first basic problem, incentives are overly dependent on
tax holidays and indirect fiscal enticements, a mix of instruments in no way
commensurate with the requirements of entrepreneurial and regionally inte-
grated development. Direct subsidies, in contrast, are limited although the fed-
eral EZ/EC programme is much more generous in this respect  (Wilder—Rubin,
1996). In California, for example, participating communities receive direct
funding exclusively for costs involved in project management and implementa-
tion — and the lion's share of these moneys derive from federal sources in the
guise of block grants for community development! 14  The burdens thus placed
on cities and counties are often too great too bear, detracting from the attrac-
tiveness of the programmes. Foregoing tax revenues without a clear perspective
of tangible employment and/or investment benefits is particularly expensive for
local governments notoriously strapped for cash. The incentive problem also
daunts technology-oriented development strategies. Policies of this nature are
complex and full of risks for the locality and region unable to either clearly
14  Community Development Block Grants (CDBG), greatly reduced since the 1970s, are the
most important form of federal aid to cities and regions. CDGB funds are transferred to the states
who are wholly responsible for administration and defining priorities for the distribution of said
aid.

James Wesley Scott : Local Governments and "Strategic" Development Strategies: the Issue of
Regional Governance. In: Role of the Regions in the Enlarging European Union.
Pécs, Centre for Regional Studies, 2001. 214-231. p. Discussion Papers. Special
Local Governments and "Strategic" Development Strategies: the Issue of Regional...
227
assess its potential or calculate the net benefits such policies bring  (Lucy—
Phillips,  1995). The successes of North Carolina's Raleigh—Durham—Chapel
Hill technology triangle or Arizona's cluster strategy have proven difficult to
repeat. Here, state largesse and political support have proved essential in
mobilising local support and private investor interest. Regions operating
primarily on the basis of tax write-offs may have a difficult time financing
physical and social infrastructure investment that is part and parcel of
innovative and attractive development milieu.
Similarly, a long-term view and integrated development thinking are neces-
sary to support innovative and entrepreneurial strategy. But here we find that
technology based growth, innovative community development and regionalism
often contradict local political rationales and economic interests. Precisely
those regions with fewer comparative advantages can lack political coalitions
with which to promote innovation. Direct cash subsidies to individual firms and
investors can prove more attractive to cities than complex programmes with
uncertain outcomes. This problem is even more critical in localities dominated
by traditional "oligarchies" with little interest in promoting economic change.
As a result and despite political rhetoric to the contrary, it does appear that
traditional practices frequently prevail due to political expediency and electoral
pressures  (Scheiber,  1993;  Scott,  1998). Furthermore, the sophisticated analyti-
cal tools necessary to evaluate local and regional potentials of cluster-based
development are not employed, either because of a lack of understanding of the
cluster concept or for political reasons  (Doeringer—Terkla,  1996).
While a relative lack of direct subsidies appears to hamper innovative re-
gional development policy, the search for effective regional governance contin-
ues, overshadowed by questions of government involvement, limits of local
sovereignty and land-use regulation. Attempts at comprehensive regional gov-
ernance have not been particularly successful, especially with a view to more
forceful administrative solutions. Fragmented approaches prevail  (Rothblatt,
1993). Nevertheless, many indicators point to the emergence of flexible re-
gional arrangements that might help solve problems of policy co-ordination. As
the examples of Silicon Valley, Atlanta and other metropolitan subregions
show  (Knack,  1993), interjurisdictional co-operation and public-private part-
nerships are eroding the distinctions between planning, economic prosperity
and sustainability. Finally, and contrary to received conservative doctrine, fed-
eral programmes initiated since 1993 seem to have had a considerable impact in
promoting community empowerment, regional technology partnerships  (Gittel
et al. 1996) 15  and  subregional co-operation in transportation planning and in-
IS  The state of New Hampshire recruited the support of the federal government in setting up a
"Technology Partnership" involving firms, universities and state and local authorities.

James Wesley Scott : Local Governments and "Strategic" Development Strategies: the Issue of
Regional Governance. In: Role of the Regions in the Enlarging European Union.
Pécs, Centre for Regional Studies, 2001. 214-231. p. Discussion Papers. Special
228
J. W. Scott
vestment. These could show the way for effective intergovernmental dialogue
and establishing precedents for long-term co-operation
Consequences, lessons, future research questions
This paper makes a case for a new kind of "strategic" and "situated", not
merely administrative, "top-down" regionalism. Based on the information pre-
sented here it appears that cities and regions in the United States are searching
for governance perspectives that will promote sustainable economic growth
through greater co-operation and dialogue. We should reject outright misguided
celebrations of metropolitan fragmentation in the United States as an expres-
sion of freedom and diversity (as Jon Teaford has sadly done in his otherwise
excellent book on post suburban politics). Self-satisfied apologies for the status
quo will not get us any closer to solving the puzzle of regional co-operation.
Nevertheless, without a system of clear incentives to long-term co-operation,
mere consolidation, amalgamation or other forms of creating administrative
regionalism will have a limited development impact. This issue has been ne-
glected in many empirical studies carried out on the utility of regional govern-
16
ance.
Discussion has focused on the United States and its peculiar traditions of
urban and regional governance. However the lessons that recent experiments in
policy innovation in the US provide are, in my opinion, also relevant to the
European situation. A central aspect in all of this is the necessity of nurturing
intergovernmental and public-private partnerships — developing new interor-
ganisational ecologies that allow actors greater flexibility in the roles they as-
sume. Here, perhaps surprisingly, the US federal government has played an
instrumental role; EZ/EC, ISTEA and Block Grants are conceived as frame-
works and incentives for local initiative based on very general goals set by fed-
eral agencies. Local priorities and governance mechanisms are to be defined
locally. Furthermore, the case of Silicon Valley indicates that subregional gov-
ernance can indeed evolve over time as an inclusive, multilevel and  non ad-
-
ministrative  network of actors. While political fragmentation is surely a prob-
lem, strictly administrative solutions and externally formulated incentive
mechanisms indeed appear too rigid and limited to promote the kind of innova-
tive governance and development policies that are so much in vogue. Civic
entrepreneurialism is required instead of limited, bureaucratic readings of the
16  Oddly, multivariate analyses have been carried out do provide empirical evidence in debate
over the economic and social benefits of metropolitan government. In fact, the most important
factors to be considered are probably not quantifiable in a user-friendly manner.

James Wesley Scott : Local Governments and "Strategic" Development Strategies: the Issue of
Regional Governance. In: Role of the Regions in the Enlarging European Union.
Pécs, Centre for Regional Studies, 2001. 214-231. p. Discussion Papers. Special
Local Governments and "Strategic" Development Strategies: the Issue of Regional...
229
local role in regional development  (Bellone,  1998). The latter, unfortunately,
prevail in Europe where career administrators attempt, too often with little suc-
cess and at great public expense, to innovate. Regional planning authorities
exercise a vital regulatory function, one that is sadly missing in the United
States. But it would be mistaken to equate administrative governance with the
innovative, project initiating and empowering regionalism hinted at here.
As such, the evidence seems clear: there is an (increasing) necessity for
clear incentives and governmental frameworks that can set regional agendas
and implement regional policy. However, the freedom of action of the region
must not be unduly restricted by inflexible legal requirements. Perhaps the most
important message that  Savitch  and  Vogel  communicate in concluding their
comparative survey of regional governance is that "regional strategies are best
promoted by unobtrusive support, positive incentives, and a long-term process"
(1996, p. 298). Consequently, public largess should be targeted to regional
bodies with regionally specific funding programmes for new development
strategies created out of existing initiatives. However, this should be done
without applying too many restrictions, externally defined requirements or a
priori goals, as is so often the case with EU regional and urban development
initiatives. Instead, the regional level should be given considerable leeway in
defining objectives and policies. These regional bodies that would then funnel
public funds into specific projects should be more than mere administrative
agencies, such as planning bodies or special purpose organisations, and should
be able to both promote the sense of region and to project a regional image in a
larger spatial context.  They should be allowed to learn and to make mistakes if
necessary.  Starting out as "think tanks", sources of regional information and
policy intelligence, they could gradually develop into development forums and
effective (although not necessarily formalised) policy co-ordination structures.
Generally speaking, EU policies are not conceived to support a variety of
local/regional experiments but exhibit in the words of  Storper  and.  Salais
(1997) "deformed universality" in attempting to define general categories of
action, excluding those who do not conform. I7  The route to policy innovation
17  Storper and Salais also contend that policies targeted for the support for small- and me-
dium-sized firms are classic example of deformed universality: "SMEs are not a category of col-
lective action; they have superficial resemblances to one another, and these can be defined in
opposition to the equally superficial resemblances among large firms. Furthermore, As an analyti-
cal category, "Small versus large" is overly abstract, and appropriate to external states; it has no
functional relation to real processes of economic coordination." (pp. 217-218). On the other
hand, "the situated state encourages the building of capacities that support real worlds of produc-
tion in which products with a strongly specialized character are made widely accessible by en-
dowing them with generic characteristics, as in the outputs of intellectual action. In such I state,
communities of mutually dependent persons establish freely available principle of interaction

James Wesley Scott : Local Governments and "Strategic" Development Strategies: the Issue of
Regional Governance. In: Role of the Regions in the Enlarging European Union.
Pécs, Centre for Regional Studies, 2001. 214-231. p. Discussion Papers. Special
230
J. W. Scott
can only lie in situated and not externally applied doctrine. Therefore, in clos-
ing I would like to warn against all too rigid definitions of success in evaluating
policy innovation. Positive results can often be a cumulative product of indi-
vidual successes and failures and, indeed, they need not be material but can be
institutional in nature, measured as an increase in social capital and trust. Re-
gionalism will perhaps then succeed when localities sense that integrating into
structures of regional dialogue and co-ordination can only enhance their ca-
pacities for action, their self-image and bargaining power.
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