Rust Belt Renaissance: Assessing Outcomes of Market-Based Urban Renewal Policies in Post-Industrial American Cities

• In Event: 20481 - Section on Sociology of Development Roundtables
  In Refereed Roundtable (60 minute): Table 3. Markets & Economic Development

Abstract

In this study, I assess the efficacy of municipal and state-level economic development initiatives in driving manufacturing sector growth in the “Rust Belt” region after the 2008 financial crisis. Analysis specifically treats the success of various tax incentive instruments in drawing corporate investment to the region, as well as the non-financial factors that influence place-based investment decisions.

My research analyzes three case study cities: Milwaukee, Detroit, and Chicago, respectively archetypal of small, medium, and large urban industrial hubs by population size. Within each city, I highlight three cases of industrial redevelopment. Each case utilizes a different tax incentive structure, including Tax Increment Financing (TIFs), industrial facility tax exemptions, Enterprise and Renaissance Zones, and Business Improvement Districts (BIDs). The selected redevelopment projects include both greenfield and brownfield initiatives aimed at expanding the cities' manufacturing sectors (NAICS 31-33).

My analysis is both qualitative and quantitative. Quantitative methods use municipal budget data to evaluate total expenditures on tax incentives for selected development projects, employing a difference-in-differences regression to analyze economic variables before and after incentives were granted and funds disbursed. Data sources include state and municipal records, American Communities Survey, and the Census. Qualitative analysis consists of interviews with relevant state and municipal government officials, labor leaders, and private sector stakeholders. These interviews identify the most salient factors influencing corporate decision-making when considering relocation in these cases.

Preliminary findings suggest that tax incentive policies influence initial phases of investment interest, allowing the site to enter in competition with other regions. However, my research finds that institutional, non-financial factors are of greatest centrality for the ultimate choice of location in these cases. The institutionalist argument advocates a shift away from economic incentive battles between states, urging regions to focus on competing on the basis of workforce quality, innovation capacity, land availability, and infrastructure accessibility.

Author

• Lydia Palmer, The University of Chicago