Links between performance measures and local economic development: Examination of a two-stage model of internal and external factors

This study employs a two-stage model to investigate city government efforts to collect and report performance measures of economic development. In the first stage, a city decides whether to use performance measures for its economic development activities. In the second stage, the city decides what areas of performance to measure and report. The results of an ordered-probit model with sample selection demonstrate that a city is more likely to tie performance measures to economic development when it has a capacity to use performance measures of economic development, such as an economic development plan and a budget linked to economic development priorities. Two environmental factors are also critical. The level of barriers to economic development and the level of competition respectively decreases and increases the likelihood that city governments will use performance measures for economic development.