By Caleb Taylor
Does Arkansas’s Quick Action Closing Fund (QACF) increase county-level private employment and establishments?
ACRE Policy Analyst Jacob Bundrick and Scholar and UCA Assistant Professor of Economics Dr. Thomas Snyder investigate this question in their academic journal article “Do Business Subsidies Lead to Increased Economic Activity? Evidence from Arkansas’s Quick Action Closing Fund” published in The Review of Regional Studies on March 6, 2018.
The QACF allows the state to provide cash grants to select entities in the hopes of attracting and retaining businesses within Arkansas. The state legislature has appropriated approximately $176 million to the QACF since it was created in 2007. The Arkansas Economic Development Commission has said the program is responsible for creating or retaining nearly 20,000 jobs in Arkansas.
Bundrick and Snyder find contrary evidence. Their research shows that QACF subsidies provided to businesses within a given county have no statistically meaningful relationship with private employment or private establishments over a four-year period after the subsidies are disbursed.
These scholars have presented these findings less formally before, but this new, peer-reviewed publication opens the doors for more researchers to examine the promises — and realities — of job subsidy programs like QACF.
They also find no evidence that counties experience measurable employment or establishment spillover effects related to QACF subsidies awarded to businesses in neighboring counties. Bundrick and Snyder conclude that the evidence provides reason to be skeptical of the QACF as a job creator.
A summary infographic of Bundrick and Snyder’s work can be found here. For more on the pros and cons of targeted economic development incentives, be sure to check out Bundrick’s Policy Review Tax Breaks & Subsidies: Challenging the Arkansas Status Quo.
Bundrick and Snyder’s research paper was subject to the peer review process of the journal. Dr. Amanda Ross, Assistant Professor of Economics, Finance and Legal Studies at the University of Alabama, is the Editor-in-Chief of the The Review of Regional Studies. Dr. Dan Sutter, Professor of Economics at Troy University, served as guest editor of the most recent edition.
The focus of the The Review of Regional Studies is to foster the exchange of ideas and promote studies focusing on regional topics and issues and utilizing tools, methods, and the theoretical frameworks specifically designed for regional analysis as well as concepts, procedures, and analytical techniques of the various social and other sciences.