FINANCIAL INCENTIVES TO INDUSTRY AND URBAN ECONOMIC DEVELOPMENT

Abstract

This paper examines the use of financial incentives to industry to promote urban economic development. It describes the types of incentives offered and sumniarizes the research on the effects of these incentives on firm location. It then examines and contrasts the costs and benefits of incentives to various political jurisaictions—municipality, state and nation. Finally, it aadresses the question of whether incentives, as currently designed, can solve urban unemployment and income problems. It considers the types and intrastate locational preferences of inciustries typically sttracted by incentives and concludes that current incentives may be of limitea effectiveness in promoting urban development. The discussion is particularly relevant in light of continued federal emphasis on introduction of enterprise zones as the major tool of urban economic development policy.