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The Ineffectiveness of Location Incentive Programs

Author

Listed:
  • Dafna Schwartz

    (Ben Gurion University of the Negev, dafnasch@som.bgu.ac.il)

  • Joseph Pelzman

    (George Washington University and Ben Gurion University of the Negev)

  • Michael Keren

    (Hebrew University of Jerusalem)

Abstract

Many countries use location incentives programs to attract investment into a recipient country as a whole or to priority regions, with the goal of promoting growth. The authors focus on two cases, both involving location-related incentives programs, one to shift resources to disadvantaged regions within a country (Israel) and the other to shift investment flows from the United States to a possession (Puerto Rico). In both cases, the programs led to increased employment in the short run but did not alter the fundamental economic problems of these areas. The authors show that there is a governmental failure in their operation of location-related incentives programs and that these governments find it difficult to discontinue incentive programs once they have been introduced.

Suggested Citation

  • Dafna Schwartz & Joseph Pelzman & Michael Keren, 2008. "The Ineffectiveness of Location Incentive Programs," Economic Development Quarterly, , vol. 22(2), pages 167-179, May.
    • Handle: RePEc:sae:ecdequ:v:22:y:2008:i:2:p:167-179
    DOI: 10.1177/0891242408314100
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    References listed on IDEAS

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    2. Robert T. Greenbaum & Blair D. Russell & Tricia L. Petras, 2010. "Measuring the Distribution of Economic Development Tax Incentive Intensity," Economic Development Quarterly, , vol. 24(2), pages 154-168, May.
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    4. Linda Lobao & P. Wilner Jeanty & Mark Partridge & David Kraybill, 2012. "Poverty and Place across the United States," International Regional Science Review, , vol. 35(2), pages 158-187, April.
    5. Shelley M. Kimelberg & Elizabeth Williams, 2013. "Evaluating the Importance of Business Location Factors: The Influence of Facility Type," Growth and Change, Wiley Blackwell, vol. 44(1), pages 92-117, March.

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