It is a common view that government spending drives economic growth and development. However, history shows that it was the market economy, not the state, that produced the developed world’s economic growth and prosperity. The government has no resources on its own and must get its purchasing power by taking it from the private sector. It can do this and spend it on development, but without the price system, the government is unable to efficiently allocate resources more efficiently than can the market operating on its own.
In the process, the government undermines communities, steps on property rights, and distorts market signals that allow individuals to invest and purchase what is best for themselves. Ironically, this government distortion then creates more problems than before.
Much of the Economic Development spending by the federal government is administered by both the Department of Housing and Urban Development and the Department of Commerce. It includes community, area, and regional development, as well as economic “stimulus” spending for the advancement of commerce.
Learn more about Economic Development problems and solutions:
“Earthquakes and Economic Development”
William F. Shughart II (San Francisco Chronicle) January 21, 2010
“How Land-Use Planning Benefits Big Business Over Small”
Bruce L. Benson (The Freeman) May 1, 2008
“Kelo: Taking the E.D. out of Economic Development”
Edward J. López (North County Times) June 23, 2006
“Making Poor Nations Rich: Entrepreneurship and the Process of Economic Development”
Benjamin Powell (book summary)
Independent Institute Archive on Economic History and Development (International)
Independent Institute Archive on Economic History and Development (U.S.)
Independent Institute Archive on Economic Policy
The Center on Global Prosperity