Policies targeting individual companies for economic development incentives, such as tax holidays and abatements, are generally seen as inefficient, economically costly, and distortionary. Despite this evidence, politicians still choose to use these policies to claim credit for attracting...

The authors find that there are strong political benefits to attracting FDI at the state-level in the United States, and that fiscal incentives for attracting such investment, regardless of their effectiveness, may be a strategic political tool for state politicians.

Both countries and subnational governments commonly engage in competition for mobile capital, offering generous location incentives to attract investment. The use of tax incentives is a paradox, whereby fiscally strained governments offer lucrative tax treatment to firms, yet the economics...

Despite broad skepticism about the benefits of globalization, the majority of U.S. states have offered lucrative tax incentives to attract investment. The size of these incentives is generally considered too large to be welfare enhancing, and many economists are skeptical of the effectiveness of...

Prevailing work argues that foreign investment reduces corruption, either by competing down monopoly rents or diffusing best practices of corporate governance. We argue that this theory is too broad-brush and that the empirical work testing it is too heavily drawn from aggregations of total...