Prospects for and Barriers to Local Government Joint Ventures

This study examines the formation of local government joint ventures for economic development. The results of a survey of local government officials in 12 metropolitan areas are used to compare cities that do and do not have a joint venture agreement and identify prospects for interjurisdictional cooperation. Transaction cost theory is applied as an analytical framework to explain the barriers to collective action. The results suggest there are differences in the motivations for cooperation and significant variation among cities in the extent to which officials perceive coordination, division, and defection problems as obstacles to forming a joint venture. Local governments oftentimes establish interlocal agreements to deliver services and manage problems that cross jurisdictional borders. Voluntary agreements between cities can be flexible and informal in nature and are intended to address multiple local and regional issues, with costs and responsibilities shared among a small number of participants. From this perspective, horizontal cooperation is a mechanism by which local governments can complement existing governing arrangements and enable government units to address pressing urban problems while maintaining control over local land-use and development decisions (Steinacker, forthcoming). Furthermore, bilateral agreements between communities may be more acceptable politically than other forms of cooperation that reduce the latitude of a government unit to change policy directions and partners (Feiock and Scholz, forthcoming). Cooperation even extends into policy areas such as economic development in which the political economy strongly mediates policy choices and competition exists (Feiock and Kim 2001; Hawkins, forthcoming). There are numerous benefits to cooperation. Access to resources that are only available through cooperative actions, particularly when there are constraints on revenue-raising abilities, suggests that forming an agreement is one mechanism by which a city can achieve its goals. Joint venture agreements, for instance, are critically important to supporting local growth and future economic development (Feiock, Steinacker, and Park 2009). Rather than being potentially ad hoc or strictly related to the transfer of funds, as some interlocal service agreements are, a joint venture may be more legally binding and considerably costly depending on the policy focus and investment decisions made by the participating communities (Zeemering 2008). The literature notes a variety of benefits that may accrue from cooperation and identiProspects for and Barriers to Local Government Joint Ventures