CREC Project News and Updates

The State Economic Development Performance Indicators White Paper

October 12, 2016

Given states’ pressures to demonstrate economic development investment impact, The State Economic Development Performance Indicators White Paper, recently published by the Center for Regional Economic Competitiveness (CREC) and Smart Incentives, examines commonly used indicators and provides guidance to improve and expand evaluation efforts.

Developed from the Business Incentives Initiative conducted by CREC and Pew Charitable Trusts, state economic development leaders were asked about performance indicators used to evaluate incentives programs. Based on state feedback, data was categorized by business need and type of performance indicator. Of the states that responded, capital access is the dominant category of business need addressed by programs; jobs and investment are the leading indicator type.

Dissatisfied with how common performance indicators – jobs and investment – tell the story of programs’ achievements, state leaders asked for peer advice. All states count jobs, however, this definition varies place to place. A robust jobs indicator should: include a clear definition of (new) jobs; establish a baseline for counting; distinguish between new and existing jobs; include a job quality measurement; explain reporting and verification procedures; and allow for exceptions to the rule. The white paper references two states’ examples including many of these principles, Virginia and California.

Measuring investment as an indicator proves problematic as it includes various metrics across programs and business needs. Investment indicators may include: capital investment, loan or equity investment to a small business, spending to redevelop a brownfield site, or total state assistance to a project.

Three steps states can implement to better select program performance indicators are to develop a clear goal or performance statement; distinguish between indicators that describe outputs and those that describe outcomes; and determine data sources and availability when selecting metrics.