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When Do States Pursue Targeted Economic Development Policies? The Adoption and Expansion of State Enterprise Zone Programs

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  • Robert C. Turner
  • Mark K. Cassell

Abstract

Objective. The objective of this article is twofold. First, why did states adopt enterprise zones, which allow designated economically distressed areas to provide significant financial incentives to attract firms? Second, why did some states significantly increase the number of zones within the state and transform what began as a spatially targeted program aimed at helping poor places into a state‐wide incentive program aimed at improving the state's competitive position? We also demonstrate the value of examining how changes in a state's policy environment can undermine a policy innovation, namely, the adoption of place‐based economic development policies. Methods. We use event history analysis to model when states adopt enterprise zones and an event‐count model to estimate when states increase the number of enterprise zones, and thereby undermine the original intent of the program. Results. States with larger urban populations and neighboring states with enterprise zone programs are more likely to adopt enterprise zone programs. States are more likely to increase the number of enterprise zones when they have larger urban populations, more neighboring states with enterprise zone programs, professional legislatures, more centrist elected officials, and as the program ages. Conclusions. Although the adoption of enterprise zones signaled states' commitment to improve conditions in the most distressed areas of the states, that commitment gradually wanes in the face of internal political demands and external competition for investment and jobs. By extending our analysis to examine what happens after the adoption of enterprise zones, we develop a more pessimistic assessment of states' capacity to pursue spatially targeted economic development policies to help economically distressed areas.

Suggested Citation

  • Robert C. Turner & Mark K. Cassell, 2007. "When Do States Pursue Targeted Economic Development Policies? The Adoption and Expansion of State Enterprise Zone Programs," Social Science Quarterly, Southwestern Social Science Association, vol. 88(1), pages 86-103, March.
    • Handle: RePEc:bla:socsci:v:88:y:2007:i:1:p:86-103
    DOI: 10.1111/j.1540-6237.2007.00448.x
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    References listed on IDEAS

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    1. Timothy J. Bartik, "undated". "What Should the Federal Government Be Doing About Urban Economic Development?," Upjohn Working Papers tjb1994c, W.E. Upjohn Institute for Employment Research.
    2. Alan H. Peters & Peter S. Fisher, 2002. "State Enterprise Zone Programs: Have They Worked?," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number sezp, November.
    3. John E. Anderson & Robert W. Wassmer, 2000. "Bidding for Business: The Efficacy of Local Economic Development Incentives in a Metropolitan Area," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number bb, November.
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    1. Robert T. Greenbaum & Jim Landers, 2009. "Why Are State Policy Makers Still Proponents of Enterprise Zones? What Explains Their Action in the Face of a Preponderance of the Research?," International Regional Science Review, , vol. 32(4), pages 466-479, October.
    2. Alexandra Tsvetkova & Mark Partridge & Michael Betz, 2019. "Self-employment effects on regional growth: a bigger bang for a buck?," Small Business Economics, Springer, vol. 52(1), pages 27-45, January.
    3. Manuel P. Teodoro, 2009. "Bureaucratic Job Mobility and The Diffusion of Innovations," American Journal of Political Science, John Wiley & Sons, vol. 53(1), pages 175-189, January.
    4. Sumei Zhang, 2019. "Rethinking U.S. enterprise zones: The role of research design in program evaluation," Local Economy, London South Bank University, vol. 34(6), pages 545-571, September.
    5. Dafna Schwartz & Joseph Pelzman & Michael Keren, 2008. "The Ineffectiveness of Location Incentive Programs," Economic Development Quarterly, , vol. 22(2), pages 167-179, May.
    6. Jolley, G. Jason, 2023. "The Political Economy of Local Government Enterprise Zone Designation," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 53(2), September.
    7. Yuxuan Pan & Tessa Conroy & Alexandra Tsvetkova & Matthew Kures, 2020. "Incentives and Firm Migration: An Interstate Comparison Approach," Economic Development Quarterly, , vol. 34(2), pages 140-153, May.

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