Economic Development: Efficiency and Effectiveness of Fragmented Programs Are Unclear

What GAO Found

In summary, based on our work to date, we have found that

• Programs that support entrepreneurs overlap based not only on their shared purpose of serving entrepreneurs but also on the type of assistance they offer. Much of the overlap and fragmentation among these 53 programs is concentrated among programs that support economically distressed and disadvantaged areas and programs that assist disadvantaged and small businesses. In addition, many of these economic development programs also operate in both urban and rural areas.
• While most (45) of the 53 economic development programs that support entrepreneurs have reasonable performance measures and tend to meet their annual performance goals, few evaluation studies have been completed and little evaluative information exists that assesses the programs’ effectiveness.

As we continue our ongoing work, we are conducting additional analyses of these 53 programs to determine, among other things, (1) what support do federal economic development programs provide to entrepreneurs and to what extent the programs are duplicative, overlapping, or fragmented; (2) the effects on entrepreneurs and the steps agencies have taken to address any duplication, overlap, or fragmentation; and (3) the extent to which these programs have established and met performance goals and been evaluated for effectiveness.

Why GAO Did This Study

This testimony discusses our work on overlap, fragmentation, and potential duplication in economic development programs. Over the past year, we have issued a series of reports on potential duplication among federal economic development programs, including a number of rural development programs. Most recently in February 2012 we reported new information on the existence of overlap and fragmentation among those federal economic development programs that support entrepreneurs. Specifically, we focused our analysis on 53 of the 80 economic development programs at the Departments of Commerce (Commerce), Housing and Urban Development (HUD), Agriculture (USDA), and the Small Business Administration (SBA) that fund entrepreneurial assistance because these programs appear to overlap the most. According to agency officials, these programs, which typically fund a variety of activities in addition to supporting entrepreneurs, spent an estimated $2.6 billion in enacted appropriations on economic development efforts in fiscal year 2010.

Economic development programs, if effective, can develop and expand, and thus contribute to the nation’s economic growth. However, the ways that these programs are administered could lead to inefficient delivery of services to entrepreneurs, such as requiring recipients to fill out applications to multiple agencies with varying program requirements, and could compromise the government’s ability to effectively provide the needed service and meet the shared goals of the programs.

This testimony today is based on information on these 53 programs that is discussed in our recent February 2012 report. Specifically, this testimony discusses our work to date on (1) the extent of overlap and fragmentation among these programs and (2) the availability of meaningful performance information on these 53 programs. Because we have ongoing work that will be issued later this year, we also provide an overview of the nature of our ongoing work.

For more information, contact William B. Shear at (202) 512-8678 or shearw@gao.gov