Economic Development:

Limited Information Exists on the Impact of Assistance Provided by Three Agencies

RCED-96-103: Published: Apr 3, 1996. Publicly Released: Apr 11, 1996.

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Pursuant to a congressional request, GAO provided information on the impact of the economic development assistance provided by the Appalachian Regional Commission (ARC), the Department of Commerce's Economic Development Administration (EDA), and the Tennessee Valley Authority's (TVA) nonpower programs, focusing on: (1) the impact of these economic development programs; and (2) how these agencies calculate the programs' performance ratios.

GAO found that: (1) there is no study that establishes a strong causal link between agencies' economic development assistance and positive economic effects beyond particular locations, projects, and programs; (2) only two of the several studies reviewed attempted to assess the overall impact of ARC and EDA assistance on economic development and they only showed marginal linkage between programs and economic development; (3) there are no studies on the TVA nonpower programs' economic impact; (4) the lack of definitive research is due to the difficulty of linking a program's impact to economic improvements and isolating its effects from other causes; (5) no study attempted to address the issues of whether one region's economic growth came at the expense of another's or whether federal funds replaced state and local spending; and (6) each of the 3 agencies calculated its 3-to-1 performance ratio by dividing total investment dollars by the investment dollars it provided, but the agencies' definitions of total investment dollars differ and calculations are made to only a portion of their programs.

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