This paper examines the effectiveness of state economic development incentive programs in stimulating new business activity. It reviews literature that identifies factors that potentially influence the effectiveness of incentives. Empirical work draws on a 2018 survey of approximately 150 firms that received at least one award for startup, expansion, or relocation purposes during the period SFY2010–SFY2016 from a state economic development incentive program (i.e., grant, tax credit, loan, equity investment) offered by the Commonwealth of Virginia. The paper evaluates the role of program design features (e.g., discretionary vs. automatic, relative size of incentive), firm characteristics (e.g., size of firm, industry), and locational variables (e.g., state boundary location, rurality) on firm assessments of the role of incentives in business growth decisions. It finds that firms that receive up‐front or discretionary program awards and undertake multistate site searches are less likely to report that the incentive was not needed for their project to succeed. These results suggest that automatic, back‐loaded award programs, and programs that fund noncompetitive projects are less likely to affect firm location and expansion decisions.

中文翻译：

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经济发展激励计划的载重量：计划设计功能，公司特征和位置的作用

本文研究了国家经济发展激励计划在刺激新的商业活动中的有效性。它回顾了确定可能影响激励措施有效性的因素的文献。实证研究基于2018年的一项调查，该调查涉及约150家公司，这些公司在2010财年至2016财年期间从州经济发展激励计划（即赠款，税收抵免，贷款，股权投资）中至少获得一项关于启动，扩展或搬迁目的的奖项。 ）由弗吉尼亚联邦提供。本文评估了程序设计功能（例如，自主权与自动权，激励的相对规模），公司特征（例如，公司规模，行业）和位置变量（例如，州边界位置，乡村性），评估激励措施在企业增长决策中的作用。它发现，获得前期或全权计划奖并进行多州站点搜索的公司不太可能报告说，他们的项目成功不需要激励。这些结果表明，自动进行的后备奖励计划以及为非竞争性项目提供资金的计划不太可能影响公司的位置和扩张决策。