The Effectiveness of Incentives and a Push for Local Entrepreneurship

1
The Effectiveness of Incentives and a Push for
Local Entrepreneurship

• Frank D. Beck
• Stevenson Center, Department of Sociology
• Illinois State University

2
Track Record of Economic IncentivesAbsentee
-Ownership and the Hurdle Rate of
ReturnCapital, Locality, and the State
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Track Record of Economic Incentives

• Infrastructure, Location, Labor Force
  Characteristics, and Amenities Matter More
• Effectiveness of Enterprise Zones
• If Zones Work, Why?

4
Absentee-Ownership and the Hurdle Rate of
Return

• Longevity and Interest in the Community v.
  Decision-Making Based on Profits
• Locally-owned more likely to reinvest (we want
  the to stay where they are spent)
• More times dollars cycle through an economy
  instead of leaving more tax revenue and more
  development

5
Capital, Localities, and the State

• Capital is mobile (especially if based on
  profit-margins alone)
• Residents of communities are mobile, but less so
  than capital
• Political entities (e.g., localities and states)
  are not mobile and therefore at the mercy of
  capital
• Illinois needs to find economic development
  strategies less based on finding mobile capital,
  but more so on developing local entrepreneurship
  (less absentee-ownership and more reinvested)