Do State‐Designated Enterprise Zones Promote Economic Growth?

In light of the economic stresses faced by many urban and rural places in the 1970s and 1980s, many communities began actively promoting local economic growth. Subsequently, sociologists became interested in the effectiveness of such efforts. In particular, they wanted to know whether places can purposefully alter their economies, or whether ecological and other factors commonly associated with growth are more powerful. State‐designated enterprise zones are an example of such attempts. Data were collected from 51 enterprise zones in the United States. The data indicate that growth in number of firms and number of jobs within the zones did occur. The data also indicate that the rate of growth in the zone often surpassed its respective county. Further, while tax incentives are often touted as the key to economic development, this research finds that attention to the services and quality of life in the zone and a wide range of incentives overall matter more than the provision of tax cuts, subsidies, and other financial incentives alone. These results hold after controlling for other factors known to affect economic development.