Targeted state economic development incentives and entrepreneurship

2018 ◽  
Vol 7 (3) ◽  
pp. 235-247 ◽  
Author(s):  
Meg Patrick Tuszynski ◽  
Dean Stansel
Keyword(s):  
Economic Development ◽  
Economic Freedom ◽  
Entrepreneurial Activity ◽  
Data Set ◽  
Content Type ◽  
Incentive Programs ◽  
Economic Development Incentives ◽  
State Economic Development ◽  
Development Incentives ◽  
The Relationship

Purpose The purpose of this paper is to examine the relationship between state economic development incentives programs and entrepreneurial activity. Design/methodology/approach The authors use panel data and a fixed-effects model to examine the determinants of five measures of entrepreneurial activity. To measure state economic development incentives programs, they use a new and substantially improved data set from Bartik (2017). They also include a measure for economic freedom, the Fraser Institute’s Economic Freedom of North America index. Findings The authors find a robustly negative relationship between development incentives and patent activity. They find some evidence that incentives are negatively associated with small business establishments (<10 employees) as a percentage of total establishments but positively associated with the large business establishment (>500 employees) share. They also find evidence of a positive relationship between economic freedom and both patent activity and net business formation. Research limitations/implications The results imply that economic development incentive programs are unlikely to increase entrepreneurial activity and may decrease it. They also imply increased economic freedom (lower taxes, lower spending, and lower governmental restrictions on labor markets) may increase entrepreneurial activity. Originality/value To the authors’ knowledge, this paper provides the first examination of the relationship between development incentives and entrepreneurial activity that utilizes Bartik (2017), a new vastly improved data set of state economic development incentive programs. The paper also contributes to the literature on the relationship between economic freedom and entrepreneurial activity.

Brewing up entrepreneurship: government intervention in beer

2016 ◽  
Vol 5 (3) ◽  
pp. 325-342 ◽  
Author(s):  
Trey Malone ◽  
Jayson L. Lusk
Keyword(s):  
Negative Binomial ◽  
Entrepreneurial Activity ◽  
Negative Consequences ◽  
Brewing Industry ◽  
Data Set ◽  
Content Type ◽  
Excise Taxes ◽  
Significant Relationships ◽  
The Relationship ◽  
Alcohol Laws

Purpose While previous studies have looked at the negative consequences of beer drinking often as a prelude to discussing benefits of laws that curtail consumption, the purpose of this paper is to understand the downside of such regulations insofar as reducing entrepreneurial activity in the brewing industry. Design/methodology/approach Using a unique data set from the Brewers’ Association that contains information on the number and type of brewery in each county, this study explores the relationship between the number of breweries and regulations targeted at the brewing industry. Zero-inflated negative binomial regressions are used to determine the relationship between the number of microbreweries and brewpubs per county and state beer taxes, self-distribution legislation, and on-premises sales. Findings The authors find that allowing breweries to sell beers on-premises as well as allowing for breweries to self-distribute have statistically significant relationships with the number of microbreweries, brewpubs, and breweries. The authors do not find an economically significant relationship between state excise taxes and the number of breweries of any type. Originality/value Results suggest that whatever public health benefits are brought about by alcohol laws, they are not a free lunch, as they may hinder entrepreneurial development.

Economic freedom and entrepreneurial activity

2012 ◽  
Vol 50 (9) ◽  
pp. 1686-1711 ◽  
Author(s):  
Juan Carlos Díaz‐Casero ◽  
D. Ángel Manuel Díaz‐Aunión ◽  
Mari Cruz Sánchez‐Escobedo ◽  
Alicia Coduras ◽  
Ricardo Hernández‐Mogollón
Keyword(s):  
Economic Development ◽  
Economic Freedom ◽  
Goodness Of Fit ◽  
Entrepreneurial Activity ◽  
Government Size ◽  
Content Type ◽  
Heritage Foundation ◽  
Global Competitiveness ◽  
Level Of Economic Development ◽  
Economic Freedom Index

PurposeThe purpose of this paper is to examine empirically whether economic freedom affects entrepreneurial activity in three groups of countries, classified according to economic development.Design/methodology/approachData on the index of entrepreneurial activity cover the period between 2002 and 2009, and are taken from the annual GEM (Global Entrepreneurship Monitor) reports and from the Index of Economic Freedom published by The Heritage Foundation from 1995 to 2009. The same analysis is carried out, grouping the countries by development level, following the classification included in the Global Competitiveness Report 2009‐2010. A Ridge regression analysis is performed to measure the model's goodness‐of‐fit and to determine equations that can be used for future predictions.FindingsThe results obtained in the correlation analysis show that economic freedom is closely related to entrepreneurial activity. The results suggest that TEA rates, opportunity‐TEA rates and necessity‐TEA rates decrease when there is an increase in economic freedom in a country, as just two of the areas analyzed – i.e. “government size” and “fiscal freedom” – appear to foster the emergence of new entrepreneurs. When countries are grouped by level of economic development, the results for countries belonging to the “Innovation‐Driven Economies” group show that the opportunity‐TEA rates increase as the economic freedom index grows.Originality/valueThe study indicates that entrepreneurship by opportunity increases in the group of Innovation‐Driven Economies with smaller “government size” and more “fiscal freedom”.

scholarly journals The effect of economic development incentives and clawback provisions on job creation: A pre-registered evaluation of Maryland and Virginia programs

2017 ◽  
Vol 4 (2) ◽  
pp. 205316801771364 ◽  
Author(s):  
Nathan M. Jensen
Keyword(s):  
Economic Development ◽  
Capital Investment ◽  
Job Creation ◽  
Control Group ◽  
Incentive Programs ◽  
Time Period ◽  
Target Individual ◽  
Economic Development Incentives ◽  
Development Incentives ◽  
The Impact

Economic development incentives target individual firms for financial or non-financial benefits to induce capital investment or job creation. Previous studies have found a mixed impact of incentives on economic development, with numerous studies pointing to no impact of incentives on economic growth or job creation. I add to this literature by analyzing two different state economic development incentive programs using the same methods and time-period, allowing for direct comparability. My analysis is the first, “pre-registered” study of incentives, where all of the data collection, design and methodological decisions were made and documented prior to receiving the data. Using a pre-registered matching method design, I estimate the impact of Maryland and Virginia’s flagship economic development incentives on job creation. My main finding is that these incentive programs had essentially zero impact on job creation when they are compared to a control group of similar firms. My secondary results find that even after removing firms from the analysis that were subject to “clawbacks” based on non-compliance with the incentive agreement do not improve the overall performance of the program.

Entrepreneurship, corruption and economic freedom

2017 ◽  
Vol 6 (2) ◽  
pp. 181-192 ◽  
Author(s):  
Gregory Dempster ◽  
Justin Isaacs
Keyword(s):  
Human Capital ◽  
Design Methodology ◽  
Economic Freedom ◽  
Major Determinant ◽  
Entrepreneurial Activity ◽  
Moderating Effects ◽  
Content Type ◽  
The World ◽  
Entrepreneurial Activities ◽  
The Relationship

Purpose The purpose of this paper is to extend the literature on entrepreneurship and corruption by examining the link between productive and unproductive entrepreneurial activities as moderated by economic freedom. Specifically, the authors hypothesize that various aspects of economic freedom are contextual in their moderating effects, so that what matters in terms of economic freedom will depend on other factors such as levels of human capital. Design/methodology/approach The authors test these hypotheses by incorporating aggregated and disaggregated measures from the Economic Freedom of the World into a model of international entrepreneurial activity. Findings The results indicate that not only is economic freedom a major determinant of the level of entrepreneurial activity across countries, as previously verified, but that it also moderates the relationship between human capital, corruption, and productive entrepreneurship. Originality/value These findings resolve many of the ambiguities previously identified in the literature on the link between corruption, entrepreneurship, and growth.

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