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4 <br />For several reasons, the Small Cities Economic Development Program is a useful <br />vehicle for assessing political-economic explanations for the ineffectiveness of state and local <br />efforts to stimulaUe economic development in distressed areas through business subsidies. <br />First, the program is � comrx�on type, so findings should be helpful in understanding many <br />programs. As of 1986 twenta►-six states offered direct loans to businesses, and fowrteen <br />affered grants. Other states have used the federal Small Cities Development Progr,am for <br />similar efforts. 'The Small Cities Ecanomic I)evelopment Program is also similar in design <br />to the federal [�rban I�evelopment Action Grant program that operated from the late 1970s <br />through the late 1980s.6 <br />A► second reason for examining the Small Cides Economic Development Program is <br />that the program is supposed to respond to community distress and help low- and moderat�- <br />income peopl�e, in part because of its connection with the federal Community Development <br />�lo►�k �irar�t progr�m. '�'he program is more likely than less targeted efforts to deal with two <br />issues of innportance to m�ny state and iocal governments--regional decline and economic <br />distrcss. � � <br />1986; data collxted from the project files of t�e 5ma11 Cities Economic Development Program, Minnesota <br />Department of 'Trade aad Economic Developmeat, St. Paul, MN; JWia Mfason Friedmaa, "Impmving C,�ital <br />Market Efficiency Through State Programs," Research Paper E in �'he Renort of the Governor's Commission <br />s�� the Economic Futua,e of M'n esota (St. Paul: Dtpartment of Ttsde nnd F.conomic Development, 19�7), p, <br />Y47. <br />`National �asoci�cion of Stat� Development Agencies et al., Iairectorv of Incentives for Busiaess Ynv�,tnnent <br />gnd Dcvelo�e�,t� the Unita! ,�tacts: A State-bv-State Guide (Washington, DC: Urbaa Insti2ute PressY 19$� <br />and 1986); 'Thc �pital f'rroup, O�c� of Foderal Gra�t Maaagement, "Final Program 5tatemeat: 1988 Ie�iir,big�a <br />Commuaity �evalopmeat Block Graat Program," (I,ansing: Michigan Department of Commerce, n.d.); Ed�vx�d • <br />T. Jeanings, Jr. et al., ods.� Fmm Nation to St�tr.s: The Small Cities Communitv Develonment Block Graat <br />PrnQram (Albany: Sta,tc University of New York Pr�ess, 198G); Marie �-Iowiand and Tod Miller, "Uri�an <br />Develop�eat Acdan Graats to Rural Communities," Projoct Report, Ur�aa Institute, Washington, DC, IVSay <br />1988. <br />