ECONOMIC DEVELOPMENT POLICY ADOPTION IN A REGIONAL CONTEXT: A STUDY OF THE INDUSTRIAL REVENUE BOND

Economic development incentives are largely competitive instruments. Because they offer the promise of bettering the community's (local) competitive advantage, new incentives tend to diffuse rapidly, fueled by these same competitive pressures. This study reports on the diffusion of the industrial revenue bond (IRB) across northeastern Illinois. The overall diffusion pattern corresponds to a hierarchical diffusion; initially according to city size, subsequently according to information centrality. imitation (spatial contagion) effects surface only in later stages. These results suggest that early adopters are responding more to extra-regional competition, whereas the laggards are responding more to intra-regional competition. The paradox here is that those most in need of the incentive are often the last to adopt.