Assessing the Performance of Place-Based Economic Development Incentives: What's the Word on the Street?

46 Pages Posted: 6 Mar 2024 Last revised: 17 May 2024

See all articles by Matthew J. Rossman

Matthew J. Rossman

Case Western Reserve University School of Law

Date Written: April 01, 2024

Abstract

Although politically popular, place-based economic development incentives have had limited success and proven difficult to evaluate. Unlike most legal scholarship on this topic, this article takes a qualitative approach in examining them. It studies the performance of four distinct types of development incentives intended to alleviate economic distress, using insight gathered from interviews with business owners, development professionals, and community members in six adjoining neighborhoods, where past efforts at revitalization have failed despite locational advantages.

The challenges faced by economically distressed places are typically varied and complex. The qualitative sampling techniques employed in this article’s research generated nuanced, ‘on the ground’ insight that is a critical addition for understanding what features of economic development incentives actually influence business decisions and the community impact these decisions make. This contrasts with past studies that focused on changes in secondary data points (e.g., neighborhood median income, commercial property values) as the primary indicators of whether an incentive works. Both qualitative and quantitative information are necessary to get the full picture.

Significant takeaways from this study include a clear consensus among interviewees that incentives that are carefully tailored and only selectively or competitively available generate greater community benefit than widely available incentives that reward any business activity within a community. Interviewees criticized inefficiencies caused by what they viewed as unnecessary red tape associated with certain types of incentive programs. Additionally, and of particular note, interviewees emphasized the value of long-standing incentive programs that are periodically evaluated and can be adapted to work out design flaws and to reflect changing circumstances. These takeaways hopefully spark interest and innovation among legislators and policymakers in crafting economic development incentives with greater potential to successfully revitalize distressed communities.

Keywords: incentive programs, economic development

JEL Classification: K22

Suggested Citation

Rossman, Matthew J., Assessing the Performance of Place-Based Economic Development Incentives: What's the Word on the Street? (April 01, 2024). 63 Washburn Law Journal 325 (2024), Case Legal Studies Research Paper No. 2024-2, Available at SSRN: https://ssrn.com/abstract=4749031

Matthew J. Rossman (Contact Author)

Case Western Reserve University School of Law ( email )

11075 East Boulevard
Cleveland, OH 44106-7148
United States

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