By Caleb Taylor
Is there a “more proven path” Arkansas should take for economic development?
ACRE Policy Analyst Jacob Bundrick says yes in an op-ed published in the Arkansas Democrat-Gazette on March 19th. Arkansas officials should focus on “broad, comprehensive reforms to increase economic growth” rather than targeted economic development incentives.
One example of an ineffective incentive is the Quick Action Closing Fund (QACF). The QACF allows the state to provide cash grants to select entities in the hopes of attracting and retaining businesses within Arkansas.
Bundrick and ACRE Scholar and UCA Associate Professor of Economics Dr. Thomas Snyder examine the effectiveness of these incentives in an academic journal article titled “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 6th. They found 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.
Bundrick says in his op-ed:
“Statistical and anecdotal evidence strongly suggests economic development incentives are not working. And these programs are not free. When the state provides incentives to businesses that would have invested in Arkansas regardless of the aid, the state is forgoing revenue that would have been collected and giving away tax dollars that could be better spent.”
Bundrick is also the author of the ACRE policy review, “Tax Breaks and Subsidies: Challenging the Arkansas Status Quo” and recently participated in a panel on the use of data in economic development organized by UCA’s Center for Community and Economic Development.