The promotion of small-scale tourism is intuitively perceived as a suitable form of economic development for rural areas. However, its impact is controversial and not always obvious. To examine these issues, this paper presents an empirical analysis of public support to small-scale tourism enterprises in rural areas in Israel. Using the tools of cost-effectiveness and cost–benefit analysis, public assistance for this type of activity is shown to be able to generate considerable returns. Methodological issues in this kind of analysis are also discussed and the policy implications arising with respect to the suitability of different forms of tourism activity in rural areas are presented.

This paper analyzes the role of finance capital in regional economic development. A cost-benefit approach is invoked in order to estimate the welfare impacts of a regional loan and guarantee program for small firms in Israel. Program-created employment is treated as a benefit and an employment account that separates net from gross employment, is presented. An estimate of net wage benefits is then derived. This involves adjusting wages across different earnings classes in order to account for the variation in opportunity costs of labor at different levels. The estimation of costs includes the opportunity costs of capital, administration, default, and tax-raising costs. Results point to substantial regional welfare effects. We stress the need to account for changing regional economic structure in this kind of evaluation framework.

This article claims that the local welfare effects of employment generation are often treated inadequately in the evaluation of economic development programs. Opportunity costs of labor are often either ignored or overstated, resulting in misleading indicators of welfare changes. Appropriately accounting for these costs requires recognizing employment creation as a benefit in terms of the chain reaction that it sets off in the local labor market. This article uses the concept of “job chains” and describes the different labor market circumstances in which they are likely to form. The local development of these chains, the impacts of in-migrants on their length, and the likelihood of their completion within the local area are all particularly important economic development issues with public policy implications. The article discusses the empirical estimation of these chains and their implications for evaluating the welfare impacts of alternative economic development projects.

This article presents a relatively simple and transparent accounting-type approach to measuring employment impacts that can be applied by practitioners and policy analysts. This method uses program-generated employment impacts as a starting point and then adjusts these figures to account for the issues outlined in the text. These adjustments are performed using a variety of readily available indices and coefficients that are generated by some of the stock tools of regional analysis. The workings of this approach are then illustrated using data on a regional small business assistance program operating in Israel. The results emphasize the discrepancy between program-declared employment outcomes (gross employment impacts) and those "distilled" from the data on the basis of the procedure outlined below (net employment impacts). The conclusions relate to the need for methods and tools that will give analysts and practitioners the capability for performing rigorous yet straightforward evaluations of public policy.

Over the past decade, casino gambling has become increasingly popular as a local economic development strategy. This article makes the case that using gambling as an economic development tool presupposes a rather different economicdevelopment “game” from that traditionally played. While the introduction of gambling into a community might induce the same short-run effects (local jobs and incomes) as the introduction of any other economic development project, the economic development processes at work are very different. This article compares the way the economic development game is traditionally played to the way it is played “in reverse” when casino gambling is used as the tool. The main differences are in the areas of community-corporate relations, fiscal versus economic impacts, market development, the role of government, and the provision of public goods. In light of these differences, distinctions in strategic behavior are drawn. Empirical evidence from Indiana is used to analyze the economic development game as played in the traditional setting of corporate recruitment and in the context of casino gambling. The conclusions point to some of the factors that constrain a community from fully maximizing its negotiating advantage as a resource holder.

Gambling and tourism are often perceived as comple mentary activities. This article examines this relationship both conceptually and empirically. While land-based casino gambling is not a legalized activity at present in Israel, the economic impacts of introducing a casino at Israel's premier vacation resort, Eilat, are simulated. This ex ante evaluation shows that much of the output, income, and employment gains generated by a casino are likely to be captured outside the region and that localized impacts are small. The dis placement of existing local economic activity is examined, and the case of increased tourism expenditures generated by the casino is simulated. The public policy implications of these findings point to the necessity of developing activities that complement tourism at the local level, not just at the na tional level. The gambling-tourism relationship simulated for Eilat shows that national and local interests are not al ways synonymous.

Capital subsidy programmes aimed at small businesses attempt to compensate for market failures that exist in the conventional financing markets. The existence of these market failures means that some small firms can be denied access to credit despite the fact that they have viable business projects. This rejection occurs because the ‘risk profile’ of the small business is likely to be weighted by factors other than project viability such as ownership structure, business experience and location of the firm. Information on firms with these characteristics is often limited and thus they are overlooked by otherwise well-functioning credit markets. This paper presents an empirical examination of the subsidy embodied in a capital assistance programme that addresses this situation. Data are analysed pertaining to nearly 500 loans and loan guarantees authorized for small businesses in peripheral regions in Israel over the period 1993–95. The gross size of the subsidy embodied in the programme is calculated and a methodology is presented. Employment impacts of the programme are also presented. On this basis, the magnitude of the subsidy-per-job is estimated and the implications of this kind of programme for increasing regional welfare are discussed.

The complementarities between tourism and gambling at the local level are examined empirically from two rather different gambling environments (Indiana, USA and Eilat, Israel) in order to show how gambling acts as an import substitution activity and impacts on existing demand. In both contexts, the sources of demand for gambling, the extent to which these are 'tourist' sources and the question of gambling-generated demand displacing existing tourist demand, are examined. Despite the rather different market and political contexts in Indiana and Israel, the findings on the gambling-tourism relationship and the effect of gambling on local economies, are remarkably consistent. In both cases, gambling is seen to be grounded in import-substitution rather than pure 'export' activity. Additionally, in both cases there is evidence that the introduction of gambling displaces tourist demand. The policy implications of these findings point to the need to differentiate between local and national impacts of gambling and between the local fiscal and local economic development impacts.

This article describes the key elements of a computerized spreadsheet model that can be used by public officials and agency staff to assess in advance the likely economic and fiscal effects of economic development projects. While the model in its current state is based on Chicago, local data can be used to adapt it to other places. The project is innovative in its use of current economic theory, data, and tools to create a model useable on a routine basis by non-specialist public agency staff. The aim is to narrow the gap between academic economic analysis and public sector practice. A key element of the model is that it was developed in close cooperation with staff of the Chicago Department of Planning and Development and combines rigorous economic analysis with the political priorities and choices of public agency staff. Also, the model includes key data about the local economy and standard industry data, but can be overridden by an analyst if project-specific information is available.

This paper conceptualizes the role of Israel's high technology sector as that of a node in a global production network. A node can be characterized by the intensity of the incoming and outgoing flow of information, investments and so on, that pass through it. Foreign investment is one indicator of the centrality of a node. Using case study and aggregate firm level evidence of US foreign investment in Israeli high technology, the paper tests the hypothesis that foreign involvement in the node economy is based on a rather different set of forces than those suggested by the foreign investment literature. The results seem to indicate the importance of node-type factors such as the centrality of small firms in R&D activity and labour force stability, rather than the standard determinants such as incentives, labour costs and infrastructure. The implications and policy issues relating to the development of a node economy are discussed.

This paper seeks to illustrate that within a systematic and reproducible evaluation framework there is room for subjective inputs based on local experience and knowledge. A spreadsheet model for evaluating economic development projects is presented which also evaluates "neighbourhood spillover impacts" generated by local economic development projects. These spillover effects - visual impacts in the neighbourhood, investor confidence and so on - are classified and characterised and a quantitative index is constructed in order to gauge the magnitude of their impact. Two hypothetical case studies are presented to suggest the trade-offs between monetary benefits and neighbourhood effects.

This paper estimates some of the impacts associated with a metropolitan university. The impact of the university in the metropolitan arena is conceptualised as a series of backward (expenditure) and forward (knowledge-related) linkages. These relationships can be both positive and negative and can operate in both the short and long terms. Their correct identification requires that the counter-factual situation of the area without the university be adequately specified. On the basis of a case study of the impacts associated with Northwestern University on the Chicago metropolitan area, some of these issues are highlighted. The results emphasise the magnitude of the university expenditure links with the metropolitan economy and the importance of scale when comparing these with more localised negative impacts. The paper concludes with some public policy implications relating to the role of the university as a non-profit organisation competing with local businesses and as an export base sector in the metropolitan economy.