This paper, coauthored by April Roggio, In Hae Noh, Seunghwa Kim and Luis Luna-Reyes,, is published in the Sustainability Journal at https://www.mdpi.com/2071-1050/17/21/9507

New York State’s Regional Economic Development Councils (REDCs) were created to support sustainable, equitable, community-driven growth by distributing state funding across diverse regions. While allocations are geographically widespread, our research suggests that structural features of the REDC model may unintentionally reinforce disparities in local capacity and limit long-term impact, particularly in rural and under-resourced communities. This paper asks: To what extent does the REDC model reinforce or reduce disparities in economic development funding? Using qualitative system dynamics, specifically causal loop diagramming, and drawing on public data of RECD funding, interviews with municipal leaders, and public administration theory we examine systemic patterns that shape which municipalities repeatedly secure funding, and which remain excluded, identifying reinforcing and balancing processes that explain such systemic patterns. Key feedback structures include: the Capacity-Investment Loop, where high-capacity communities grow increasingly competitive over time; the Need-Funding Mismatch Loop, where administrative burdens block access for distressed communities; and the Collaboration Loop, which shows how competition can disincentivize shared regional strategies. These loops highlight how program structure—not just intent—shapes outcomes. Our findings suggest that, while the REDC model is intended to promote fairness and efficiency, it risks reproducing the disparities it seeks to address. Adjustments that strengthen regional collaboration, support capacity-building, and align funding with community need may help advance more inclusive and sustainable economic development.