Institute for Research on Labor and Employment

Business incubators are a widely used economic development policy tool which aim to nurture and support the development of small, often high‐technology oriented firms within local economies. In a short period of time, business incubators have become a very popular mechanism aimed at engendering economic growth in local economies, not only in the US, but also around the world. In 1980, there were only 12 business incubators in the US; by 2006, this number had grown to more than 1,000 (Qian et al. 2011).  In this paper, we detail the emergence of business incubators in the US and outline the rationale underlying the wholesale arrival of incubators as an economic development policy tool. We then provide a descriptive account of business incubators in Metropolitan Los Angeles, which outlines where within the region incubators are located, what goals they seek to achieve, what services they provide, and what industries they target. Finally, we draw from a number of studies to examine the impact of business incubators, to determine how successful they are as an economic development policy tool.