OEDA Studies Economic Impacts of Enterprise Zones

(click here to see full study)

Many OEDA members have Enterprise Zones in their communities and consider them important business recruitment and retention tool for attracting new industrial investment and jobs to their communities. But how well do they work? OEDA conducted a study with EcoNW to use statistically valid methods to address this issue:

• Do enterprise zone tax incentives substantially spur investment?
• What is the impact of direct, new employment and other associated benefits?
• What is the fiscal/unfunded imposition on services from enterprise zone developments?
• Do the benefits or return from these enterprise zone developments outweigh the costs?

What does this and other research specific to Oregon’s enterprise zones tell us about how well they are achieving the goals of ORS chapter 285C and of local zone sponsors, as well as program adjustments that might be made?

Providing credible answers to these questions requires addressing the classic ‘but for’ issue…but for the enterprise zone program, economic development in the affected areas would be substantially different. Without sound causal evidence, one cannot rule out the possibility that all (or at least a large share) of the observed development in the enterprise zones would have happened anyway. The EcoNW team completed the following:

Phase One – Investigate Feasibility

• Placed Enterprise Zones into census tracts (or blocks) and then assessing whether or not the tracts without EZones form a credible control group.
• Demonstrated (via statistical comparison) that the control tracts are not dramatically and systematically different than the tracts that received EZones in any meaningful way.
• Produced a memo that describes the data and methods used in recent literature on local development incentives – including Oregon specific work outlines the data examined, and discusses if it is sufficient for investigating the questions of interest.

Phase Two – Conduct Causal Analysis

• Proceeded with a statistical analysis designed to calculate the effects of the EZone program on common local economic variables like employment.
• Augment this analysis with other available information and data that help improve understanding of the results.
• Produce a brief memo summarizing findings.

Based on inconclusive results from analysis of the NETS data used in this study, OEDA did not proceed with phase three: to place results in benefit-cost framework, because it was not merited. However we feel the study advances understanding of how to measure impacts of the Enterprise Zone program.

Please contact Renate Mengelberg at 503-742-4327 or Art Fish at 503-986-0140 with any questions or concerns.