Do Enterprise Zone Incentives Affect Business Location Decisions?

Abstract

The effect of enterprise zone incentives on business location decisions has been actively debated in academic, political, and program practitioner circles. This essay concludes that financial incentives, such as tax refunds, credits, and abatements, that are offered to new businesses through enterprise zone programs only marginally affect the firm's location decision and are not a major location factor Enterprise zones generally do not fare well in classical and nontraditional location factors causing enterprise zone incentives to be unable to offset the deficiencies of major location factors in zones. Whether the enterprise zone incentives can be a pivotal factor in the location decision is highly dependent on the percentage of the financial incentive to the initial investment of the new firm.

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