 | Private Finance and Economic Development Local governments and development agencies are being called upon to take an increasing role in securing economic competitiveness and social cohesion in their cities and regions. But public budgets for these activities are being squeezed. In order to plug the funding gap, local agencies are increasingly developing frameworks and instruments to lever private finance into activities that the public sector has traditionally funded alone. This book shows how city and region authorities can optimise private financing for economic development purposes. Practical examples from North America and Europe are examined and issues of transferability are discussed. The main conclusion is that the private sector can act as a partner with the public sector over a range of activities, such as regenerating derelict land in inner cities, supporting the social and economic development of marginalised communities and participating in public efforts to overcome barriers to small firm development. However, appropriate instruments and structures must be put in place to remove some of the information gaps and risks that currently prevent private companies from making what could be profitable investments in these areas. A wide range of such instruments are examined, such as tax increment financing, community development financial institutions, public guarantees for private investment and removal of new investment from the liability chain for environmental contamination. It is shown that long-term structures are also to be preferred over one-off actions. It is hoped that city and region governments and development agencies will learn from the information in this book in order to develop their own toolbox of instruments and structures for leveraging private finance. |
