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When Do States Pursue Targeted Economic Development Policies? The Adoption and Expansion of State Enterprise Zone Programs *
Author(s) -
Turner Robert C.,
Cassell Mark K.
Publication year - 2007
Publication title -
social science quarterly
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.482
H-Index - 90
eISSN - 1540-6237
pISSN - 0038-4941
DOI - 10.1111/j.1540-6237.2007.00448.x
Subject(s) - incentive , state (computer science) , competition (biology) , pessimism , politics , legislature , business , investment (military) , position (finance) , economics , economic growth , market economy , finance , political science , ecology , philosophy , epistemology , algorithm , computer science , law , biology
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.