Corporate restructuring and urban economic development policy: Delaware back office strategy and the Wilmington metropolitan area

This study attempts to add to our body of knowledge in three ways through the case analysis of an economic development policy adopted by the state of Delaware. First, it identifies, analyzes, and relates theories of corporate restructuring to a largely unrecognized phenomenon of back office agglomeration, which has developed in the Wilmington metropolitan area as the result of the strategy. Second, the analysis locates this strategy in the historical context of economic policy in the state rather than treating it as a time-bound ad hoc event. Third, the research expands the method of assessing the success of an urban economic development policy by investigating positive and negative social effects of the policy and its longer-term viability as a local economic development strategy, beyond assessing the intended immediate economic impacts.; The study shows that the results of Financial Development Center Act of 1981 (FCDA) and subsequent related statutes support the position that subnational governments can play a significant role in affecting the economic viability of an urban center. Existing research on corporate location and mobility indicates that the FCDA can best be understood by locating it within general trends of spatial and functional dispersal of both production and headquarters functions of corporate structure and specific patterns of separation of back office activities from corporate headquarters sites in the banking industry. Global economic restructuring has created the opportunity for a strategy to attract and aggregate back offices, but Delaware's unique success in doing so cannot be explained without a knowledge of century-old policies, which the state has designed to create a favorable corporate climate and attract de jure corporate headquarters.; Several things are suggested concerning what can be learned from this case study. Delaware's strategy is not a model to be directly duplicated by other states and cities. Its success in attracting back offices to the Wilmington area is the cumulative result of current and past policies. This experience indicates that a theoretical understanding of the dynamics of corporate structural change is important in devising applied economic development policies to fit the particular strengths and histories of a given area. The study shows that evaluation analysis of such policies that included social and long-term as well as economic and short-term costs and benefits is important to adequately assess their stability, social equity, and desirable policy adjustments.