Institutional structures of economic promotion

Economic promotion activities can be organized in different institutional forms.

In many industrialized countries, as well as in some advanced developing countries, regional and local economic promotion is organized as a separate public service entity. This may be a department of local government or an organizationally separate entity.

Another option is to organize economic promotion as a public-private partnership, where it depends on the specific circumstances which side has the majority stake.

Yet another option is an active role of Chambers and Associations or utilities in local economic promotion. In particular in the U.S. it is quite common to find that utilities play this role, which is motivated by the interest to attract new large-scale customers for their services.

The following table summarizes the advantages and disadvantages of each type. It should become obvious that there is no clear first-best option.

Type	Advantage	Disadvantage
Public	Direct contact to public administration Potential strategic role, beyond short-term thinking	Distance to private sector Risk of bureaucratic culture Risk of political peddling
Public-private	Flexibility Potentially business-like organizational culture	Lack of democratic accountability Different, potentially conflictive expectations of public and private stakeholders Distant from economically relevant departments of public administration
Chambers and Associations	Very close to the private sector Business-orientation	Distance to the public sector Conflict between lobbying and promotion
Utilities	Business-orientation Clear performance indicators	Distance to the public sector

 

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