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Competing for global capital or local voters? The politics of business location incentives
Abstract
© 2015, Springer Science+Business Media New York. The competition for global capital
has led to interjurisdictional competition between countries, states and cities as
to who can offer the most attractive incentives to firms. In this study, we examine
the domestic politics of this competition by focusing on incentive use in the United
States from 1999 to 2012. We define incentives as the targeted tax deductions or exemptions
that are used to lure businesses into a locality. Drawing on data from municipal incentive
programs, we examine how electoral competition shapes the use and oversight of targeted
incentives. We find evidence that cities with elected mayors provide larger incentives
than non-elected city managers by taking advantage of exogeneity in the assignment
of city government institutions and a database of over 2000 investment incentives
from 2010 to 2012. We also find that elected mayors enjoy more lax oversight of incentive
projects than their appointed counterparts. Our results have important implications
for the study of interjurisdictional competition and the role of electoral institutions
in shaping economic policy.
Type
Journal articleSubject
Social SciencesEconomics
Political Science
Business & Economics
Government & Law
Incentives
Economic development
Pandering
Local government
ECONOMIC-DEVELOPMENT INCENTIVES
FOREIGN DIRECT-INVESTMENT
UNITED-STATES
POLICY-MAKING
ACCOUNTABILITY
GOVERNMENT
AGGLOMERATION
PERFORMANCE
DYNAMICS
GROWTH
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https://hdl.handle.net/10161/17732Published Version (Please cite this version)
10.1007/s11127-015-0281-8Publication Info
Jensen, NM; Malesky, EJ; & Walsh, M (2015). Competing for global capital or local voters? The politics of business location incentives.
Public Choice, 164(3-4). pp. 331-356. 10.1007/s11127-015-0281-8. Retrieved from https://hdl.handle.net/10161/17732.This is constructed from limited available data and may be imprecise. To cite this
article, please review & use the official citation provided by the journal.
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Show full item recordScholars@Duke
Edmund Malesky
Professor of Political Science
Malesky is a specialist on Southeast Asia, particularly Vietnam. Currently, Malesky's
research agenda is very much at the intersection of Comparative and International
Political Economy, falling into three major categories: 1) Authoritarian political
institutions and their consequences; 2) The political influence of foreign direct
investment and multinational corporations; and 3) Political institutions, private
business development, and formalization.

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