Benefits and Costs of Regional Development: Evidence from Ohio’s Enterprise Zone Programme

Abstract

As highlighted in Chapter 4, the challenge that has been raised against Ohio’s enterprise zone programme is that it is a means of lobbying by regions to get zone designation. Thus, most areas in Ohio enjoy the associated benefits of being able to offer incentives even though they may not deserve to be doing so, as in the case of limited authority zones. This results in the proliferation of such programmes, ending in the ‘pirating’ of firms and jobs from one place to another, that eventually become zero-sum in their effects. This challenge, which has been the topic of many legislative discussions in Ohio and elsewhere, provides the motivation for the research in this chapter. Further, in this chapter, as in Chapter 3, I test the theoretical model we developed in Chapter 2. The question of whether or not the cost of the EZ programme exceeds the economic rent from jobs created in the EZ, at equilibrium, forms the basis for the benefit-cost analysis reported in this chapter.