Do you want to know a secret?  Apparently a lot of Americans do.  We annually spend millions on books, products, and advice to learn the secrets to everything from weight loss to the perfect golf swing.  We doggedly pursue the secret knowledge that holds us back from success, even as the true secret to all of these endeavors is revealed.  That is that there are no secrets.

There shouldn’t be any secrets to economic development.  Communities and governments have been promoting growth and development for hundreds of years.  There has been ample opportunity to copy what’s worked for others and shy away from strategies and practices that have failed.

Yet a new study that summarizes the results of 40 individual studies of different community’s and state’s experiences with economic development shows that many commonly used methods to promote economic growth are surprisingly ineffective.  The report of the “independent economist” project sponsored by the state of Louisiana, mentioned in last week’s column, questioned the effectiveness of enterprise zones in urban areas, or targeted incentives given to individual firms, as a means of growing the economic pie.

Those conclusions stand in contrast to assessments made by others, particularly those associated with the programs.  The key to the Louisiana project is their independent perspective.  Virtually all public programs spend money and claim success.  But a more careful examination of how the world would have looked without that spending, and with the resources released to address other needs, can tell us whether that spending was cost-effective.

What kinds of development efforts are likely to be effective?  To begin with, we need to focus on increasing investment by companies that do business with the world outside our community’s borders.  Football stadiums, casinos or shopping malls may employ thousands and cycle through millions of dollars of revenue, but if their customer base is local, then their revenue gain is another local business’s loss.

As we reported last week, the study is sour on the special incentives used to attract and retain individual firms that are the bread and butter of economic development officials nationwide.  But there are circumstances and exceptions that temper that conclusion.

In areas with high unemployment and unused physical facilities and other underutilized assets, such incentives can be highly effective.  Individualized recruitment of companies can also be effective when it is coordinated with regional policies and strategies to build up competitive clusters – existing or emerging collections of businesses who essentially feed off of each other’s activity.

The report was surprisingly skeptical about a changing a state’s business tax climate to attract business.  State taxes are too much alike, they argue, for taxes to make much difference.  The tax changes that would make a difference are too large to be politically feasible.

But there’s plenty our governments can do on the other side of the ledger book.  Spending on physical infrastructure, education, and in efforts to improve the flow of information is strongly correlated with success.  Cuts in those activities, even when matched by tax cuts, is perilous.

With the pressure on communities throughout Indiana to reinvent and redirect their economies, we can only hope that this advice is heeded.