Local Economic Development Incentives in the US

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Local Economic Development Incentives in the US
1. Description of the Issue
Local economic development incentives constitute essential aspects of urban development economic policies. Such incentives are meant to enhance the development of cities that are considered underdeveloped. The enticements assume different forms. However, the common ones are the policies for providing tax incentives together with improvement of infrastructure (Anderson and Wassmer ‘Bidding for Business 82). Government provides enticements for financial development in different ranks starting from home and state echelons to countrywide ranks. Fundamentally, economic incentives refer to the cash and or near-cash aid that is provided by local, state, and/or national government to boost or attract various businesses to operate within a given jurisdiction (Greenbaum 75). The key goal of offering local financial enticements is to foster progress within certain targeted areas. In return, this strategy helps in employment creation in the underdeveloped cities while also encouraging infrastructural growth to take place in stagnant cities. In the long-term, the plan also generates revenues to states and local governments. Amid these benefits, the issue of whether local economic incentives, which are aimed at fostering urban development in the US, qualify as a cost-effective mechanism of inducing economic growth in the underdeveloped urban areas is relevant to public policy developers.
2. Importance of the Issue
The effectiveness of local economic development is an important issue facing many metropolitan areas in the US. For instance, ensuring distribution of various businesses within all metropolitan areas and/or retaining economic activities without negating the...

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Local economic development incentives enhance the development in urban areas that have high rates of unemployment. This goal is achieved by using the incentives to attract and retain business in the effort to boost employment levels. The general concession is that increment of employment reduces poverty levels, hence raising the overall wellbeing of communities. This justifies funding local economic development incentives in the US using local government revenues generated from communities. A prevalent issue surrounding investments of local government revenues in local economic development incentives is whether they are the most cost effective mechanisms of inducing the development of metropolitan. In a bid to offer a response to this query, cost benefit analysis for the investments of local government revenue in local economic development incentives is important.

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