Research on Economic Development

Metroplex is an unaccountable authority that raises your taxes to support businesses that would have sited in Schenectady anyway.

The following is an excerpt from a review of Michigan's Economic Development policies.

A meta-review of economic development literature in 2004 by Alan Peters and
Peter Fisher of the University of Iowa is probably the most comprehensive survey
yet published. Their paper, “The Failures of Economic Development Incentives,”
appeared in the Journal of the American Planning Association and evaluated
a wide body of other scholarly articles on economic development programs.
These programs included targeted tax incentives, enterprise zones, tax-increment
financing, industrial revenue bonds and “non-tax discretionary incentives.”
As with many previous literature reviews, the findings were somewhat ambiguous,
but on balance Fisher and Peters surmise that these programs are either ineffective,
or the costs exceed the alleged benefits. They write:
The upshot of all of this is that on this most basic question of all —
whether incentives induce significant new investment or jobs — we
simply do not know the answer. Since these programs probably cost
state and local governments about $40-50 billion a year, one would
expect some clear and undisputed evidence of their success. This is not
the case. In fact, there are very good reasons — theoretical, empirical,
and practical — to believe that economic development incentives have
little or no impact on firm location and investment decisions.174
And
The most fundamental problem is that many public officials appear
to believe that they can influence the course of their state and local
economies through incentives and subsidies to a degree far beyond
anything supported by even the most optimistic evidence. We need to
begin by lowering [policymakers’] expectations about their ability to
micromanage economic growth and making the case for a more sensible
view of the role of government — providing the foundations for growth
through sound fiscal practices, quality public infrastructure, and good
education systems — and then letting the economy take care of itself.175
In October 2007, Gary Sands of Wayne State University and Laura Reese of
Michigan State University released a paper for the Michigan Land Use Institute
examining the performance of “Public Act 198” tax abatements, which are
frequently part of the MEGA deals described earlier. Sands and Reese found that
abatement data “fail to show a clear, consistent relationship between abatement

174 Alan Peters and Peter Fisher,
“The Failures of Economic
Development Incentives,” Journal
of the American Planning Association
70, no. 1 (2004): 32.
175 Ibid.: 35-36.

http://www.mackinac.org/archives/2009/S2009-06.pdf