Building regions’ economies must move beyond ‘incentive wars,’ leading researcher says
Too often, state and local governments try to attract large tech companies with tax breaks and other sweeteners. But true growth should build an ecosystem that lets businesses of all sizes scale up.
Building regional economies requires a strategic shift away from what is often referred to as "incentive wars," where state and local governments compete to offer the most attractive tax breaks and subsidies to lure large tech companies. This approach may yield short-term gains, but it is not a sustainable way to foster long-term economic growth. By focusing solely on enticing a few high-profile businesses, governments may be neglecting the underlying infrastructure and support systems that enable businesses of all sizes to thrive.
A more effective approach, as noted by the leading researcher, involves creating an ecosystem that allows businesses to scale up and succeed. This means investing in initiatives such as workforce development, infrastructure, and access to capital, which can benefit a diverse range of businesses, from startups to established enterprises. By taking a more holistic view of economic development, governments can create a more resilient and dynamic business environment that fosters growth and innovation.
As governments consider their economic development strategies, it's essential to watch for efforts to measure the effectiveness of incentive-based approaches versus more comprehensive ecosystem-building initiatives. Additionally, policymakers should examine successful models from other regions and consider how to adapt these approaches to their local contexts. By prioritizing sustainable and inclusive economic growth, governments can create thriving business environments that benefit their communities in the long run.
Originally reported by route-fifty.com. GovNews adds analysis for government & civic readers.