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

Jacob Bundrick and Thomas Snyder
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Jacob Bundrick: University of Central Arkansas
Thomas Snyder: University of Central Arkansas

The Review of Regional Studies, 2018, vol. 48, issue 1, 29-53

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.

Keywords: state government subsides; business subsidies; project analysis; deal closing funds; targeted economic development incentives (search for similar items in EconPapers)
JEL-codes: H25 H71 O22 (search for similar items in EconPapers)
Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:rre:publsh:v48:y:2018:i:1:p:29-53

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