8. The determinants of economic growth and industrial location decisions: A critique of supply-side strategies
In this chapter, Eisinger reviews empirical literature regarding the effects of supply-side economic development incentives. I'm not going to summarize his review other than to say that his summary is the generally the same as what passes for near consensus today: incentives have small effects on the margin of business location decisions. The effects are more measurable when comparing extremely close subsitutes, such as municipalities within a metro area. However, the quality of public services and amenities affects the decisions also.
He also outlines the other factors that affect location decisions. He groups them in four broad categories. They are listed below along with major determinant factors:
Processing costs: taxes and regulations
Primary inputs: land, labor, capital, energy
Market access: transportation access and infrastructure
Contextual elements: services, amenities, geography
Eisinger, P.K. (1988). The Rise of the Entrepreneurial State: State and Local Economic Development Policy in the United States. Madison, WI: University of Wisconsin Press.
Posted by Chip on July 21, 2004 at 04:44 PM | TrackBack