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Do Business Subsidies Lead to Increased Economic Activity? Evidence from Arkansas's Quick Action Closing Fund

Author

Listed:
  • Jacob Bundrick

    (University of Central Arkansas)

  • Thomas Snyder

    (University of Central Arkansas)

Abstract

State governments rely heavily on targeted economic-development incentives to promote economic activity. In recent years, many states have adopted targeted subsidy programs known as “deal-closing funds†to attract and retain businesses. Despite the increased use of deal-closing funds, it remains unclear whether they provide value in terms of increasing private employment and establishments. In this paper, we analyze the relationship between deal-closing funds and county-level private employment and private establishments from Arkansas’s Quick Action Closing Fund (QACF). We estimate these relationships using a variety of fixed-effects and OLS techniques to measure both within-county and across-county relationships. We find little evidence to suggest that the QACF creates significant job and establishment growth. The results from this study should serve to better inform public policy across states as it relates to the use of targeted business subsidies.

Suggested Citation

  • Jacob Bundrick & Thomas Snyder, 2018. "Do Business Subsidies Lead to Increased Economic Activity? Evidence from Arkansas's Quick Action Closing Fund," The Review of Regional Studies, Southern Regional Science Association, vol. 48(1), pages 29-53, Spring.
    • Handle: RePEc:rre:publsh:v48:y:2018:i:1:p:29-53
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    Citations

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    Cited by:

    1. Jacob Bundrick & Weici Yuan, 2019. "Do Targeted Business Subsidies Improve Income and Reduce Poverty? A Synthetic Control Approach," Economic Development Quarterly, , vol. 33(4), pages 351-375, November.
    2. Koirala, Samjhana & Jakus, Paul M. & Watson, Philip, 2023. "Identifying Constraints to Rural Economic Development: A Development Guidance Function Approach," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 48(3), September.
    3. Russell S. Sobel & Gary A. Wagner & Peter T. Calcagno, 2024. "The political economy of state economic development incentives: A case of rent extraction," Economics and Politics, Wiley Blackwell, vol. 36(1), pages 104-151, March.

    More about this item

    Keywords

    state government subsides; business subsidies; project analysis; deal closing funds; targeted economic development incentives;
    All these keywords.

    JEL classification:

    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • O22 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Project Analysis

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