BTC JUST RELEASED: How to make incentives work better for North Carolina

October 8, 2012

Few subjects remain more controversial in today’s state-level policy debates than economic development incentives as we saw again last week. Despite continuing questions about the long-term effectiveness of incentives, however, these programs are nonetheless one of the most common tools used by state and local professional economic developers for industrial recruitment and local business expansion.

We released a special report today provides credible evidence of specific, concrete policies (beyond those associated with clawbacks and performance requirements) that can improve the job creation levels associated with the state’s incentive programs.

Co-authored by leading economic development scholars Dr. Bill Lester and Dr. Nichola Lowe of UNC-Chapel Hill, and the Budget and Tax Center’s Allan Freyer, the report reveals the extent to which North Carolina’s incentive programs can be made more effective—and increase the level of job creation resulting from these programs—by harnessing these subsidies to strategic public investments in targeted, growing sectors of the state’s economy. Such strategic public investments range from workforce training programs at community colleges to sector-investments like the NC Biotech Center.

The key finding of the report is that for retention projects, firms in mediated industries that received incentives created almost 30 percent greater employment growth than similar non-incentivized firms in the same industries from 1996-2008, while incentive-backed recruitment projects in mediated industries created an average of 27 more jobs per firm than were created in non-incentivized firms in the same industries.

Related Publications

BTC Special Report: Special Deals, Special Problems

BTC Reports: The Career Pathways Model: Connecting North Carolina’s Workers to Skills, Supporting Growing Industries

BTC Brief: More Jobs, Better Jobs, and an Accountable Jobs Creation Process