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Foxconn: Worse Than Nothing

Below are the abstract and full study from George Mason University on The Economics of a Targeted Economic Development Subsidy (examining the Foxconn deal in Wisconsin).  There’s much to consider in this work, for the Foxconn project, and by reasonable extension to other government-targeted business subsidies.

Abstract:

In an effort to spur economic growth and to burnish their job-creation bona fides, policymakers at the federal, state, and local levels often dispense targeted economic development subsidies. These selective incentives include targeted tax relief, targeted regulatory relief, cash subsidies, and in-kind donations of land and other valuable goods and services. The weight of economic theory suggests that these subsidies do not work and may even depress economic activity. In this paper, we review the economic case for and against targeted economic development subsidies, using Wisconsin’s $1.2 billion to $3.6 billion subsidy to Foxconn to illustrate these points. We show that under realistic scenarios the subsidy may depress state economic activity by tens of billions of dollars over the next 15 years.

Full study:

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