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Do Economic Development Incentives Crowd Out Public Expenditures in U.S States?

January 2016

Jia Wang


This paper finds that there is little efficacy in providing economic development incentives (EDIs) to sustain long-term economic growth. The common held claim that EDIs cause an in increase in public expenditures, however, is not held by these findings. The findings in the paper claim that public expenditures, while related to the efficacy of EDIs, are not drastically increased.

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Policy Implications

EDIs have unintended consequences on public expenditures, but these consequences vary in their magnitude. State and local level policymakers in search of long term economic growth solutions have to consider side effects of implementing an incentivized economic programs and policies.

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