More Can Be Done To Ensure That Industrial Parks Create New Jobs

Industrial park projects funded by the Economic Development Administration (EDA) have helped distressed areas attract businesses, which in turn have saved or created jobs for area residents. GAO reviewed 101 park projects to assess the projects' effectiveness and to determine what management improvements are needed to maximize project accomplishments.

A number of park projects have problems. They have not attracted businesses, are not well utilized, and have not created as many jobs as anticipated when the projects were proposed. EDA must improve its assessments of the need for and location of proposed projects. EDA does not require feasibility studies; as a result, projects are being approved without adequate justification. EDA should also establish a management assistance program to help the park applicants attract business to their parks. Although a primary purpose of EDA-funded industrial park projects is to attract new businesses or business expansion, about 46 percent of the businesses reviewed were business relocations. Despite an EDA policy which prohibits businesses from relocating from outside of the immediate area of the park, such relocations are occurring. Many of the relocations did not provide additional jobs. EDA has not systematically gathered, monitored, or evaluated data on project accomplishments to judge their overall effectiveness. It will be several years until park project accomplishment data will be available. EDA has designed a system to monitor and evaluate all projects, including industrial parks. However, the criteria used may be too high and too easily attainable to be a realistic measure of project success, timeframes are too short for realizing employment projections, and the number of businesses required to submit employment reports is too limited to effectively measure employment data.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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