New companies have the advantage of taking more risks and investing more in the research and development process, being interested in addressing less developed industries.
It is difficult for large cities like New York to attract such companies. The main reason for this situation is represented by the high costs of doing business in these areas. Even so, the city can counteract this problem by providing strong productivity opportunities that are determined by high human capital and relative wages.
The most important economic sector of New York is represented by the financial services sector, including finance, insurance, and real estate business sectors. The importance of this sector is reflected in its influence on jobs evolution and of the city's earnings. Therefore, the authorities have recognized the potential of this source of jobs and of earnings, and their interest in this sector must be translated in a series of incentive intended to encourage and support the training of employees in this sector and companies interest in this region.
Biotechnology is another important sector for the city's economy. The significant developments made by companies in this industry have determined New York to become one of the most important and influential centers in the world. However, the increasing competition in the economic sector has lowered the importance of New York in this industry.
The views on policies and strategies regarding the economic sector are various and are usually influenced by the political environment. Certain Democrats consider that the level of taxes is too high, and the citizens of New York and the companies doing business in the city pay too many taxes. In addition to this, certain representatives consider that public spending must be reduced. There are several strategies that take such factors into consideration and that the authorities should focus on developing.
New York Policies
The authorities of New York City have thoroughly analyzed the situation and have developed a series of directions that the policies regarding the city's economic development should follow. The main aspect that the policies of the city's authorities intend to follow are represented by increasing revenues, given the fact that the budget is not able to cover the expenditures of the city, same as in the case of the budget of individuals.
Authorities' efforts regarding this issue are directed towards Wall Street and increasing its taxes (Parrott, 2010). In order to achieve this objective, the city's authorities intend to develop and implement policies that would temporarily tax Wall Street. These policies are intended to be based on:
Bonus tax paid by firms
Windfall profits tax
Disallow use of prior year losses to offset tax liability
Reduction in rebate on stock transfer tax
Raise top tax rate on millionaires
Bonus tax modeled on London tax
In addition to this, the Mayor of New York City has developed a series of propositions that are intended to help the city counteract the effects of the crisis. Therefore, the Mayor has decided that the following budget cuts are required: school funding, Police, human services, transportation, parks, libraries, arts, most city agencies, and others.
Effects of Policies
The effects of the policies developed and implement by the city's authorities are on medium term and on long-term. This means that it will be a while before their effects can be observed and felt by the population. Although these effects require certain periods to be produced, the measures will be felt immediately. This is because the budget reductions will significantly affect the services that the authorities provide the city's citizens.
However, the most important effects that are pursued by the authorities through these policies are represented by increasing revenues, increasing the number of jobs, and increasing the companies that do business in New York. Some of the policies that the authorities of the city intend to implement in this region have been successfully implemented by authorities in other cities, like London.
As a consequence, one cannot assess at the moment whether the policies developed and implement by the authorities in New York have been successful. It is necessary to analyze future budgets and to determine whether the revenues have increased.
1. Redlich, W. (2010). Economic Development Questions. Retrieved December 2, 2010 from http://wredlich.com/ny/2010/09/economic-development-questions/.
2. Orr, J. & Topa, G. (2006). Challenges Facing the New York Metropolitan Area Economy. Federal Reserve Bank of New York. Retrieved December 2, 2010 from http://papers.ssrn.com/sol3/papers.cfm?abstract_id=886519&http://www.google.ro/search?q=new+york+economic+challenges&btnG=C%C4%83uta%C5%A3i&hl=ro&source=hp&aq=f&aqi=&aql=&oq=&gs_rfai=.
3. Parrott, J. (2010). New York City: Economic and Budget Challenges. Fiscal Policy Institute. Retrieved December 7, 2010 from http://www.fiscalpolicy.org/FPI_Presentation_NYC_BudgetEconomicChallenges_20100520.pdf.