Kenneth P. Thomas

Tax Increment Financing in Missouri: An Analysis of Determinants, Competitive Dynamics, Equity, and Path Dependency

Tax increment financing (TIF) has been a popular and controversial economic development tool for several decades. This research considers the determinants of competitive dynamics, equity, and path dependency on TIF use. The authors use logistic and ordinary least squares regressions on the approval, number, and value of TIFs in Missouri to flesh out the competitive dynamics, effects on intermunicipal inequality, and path dependency of TIF use. They find that there are competitive dynamics that affect TIF use: Being adjacent to another city that uses TIF increases the likelihood that a city will approve a TIF. The study finds evidence that TIF adoption patterns contribute to intermunicipal inequality, and it provides some support for the importance of path dependency in TIF use.

The Brenner-Wallerstein Debate

One of the most critical evaluations of Immanuel Wallersteins world-systems perspective comes from Marxists who dislike the dominant role played by trade as opposed to class interaction in his analysis. At the forefront of this critique is Robert Brenner, whose article in New Left Review , “The Origins of Capitalist Development: A Critique of Neo-Smithian Marxism,” has elicited far less of a debate than is warranted. In the first part of this article we carefully outline the various parts of this important critique, briefly drawing attention to some of the much more fundamental issues each addresses. In the second part we consider one of the most important of these issues, that of the most appropriate level of analysis for understanding political phenomena. The debate over this point revolves largely around events in Poland in the fifteenth and sixteenth centuries. Thus this rather arcane topic takes center stage in an argument with far broader implications. We conclude that while one should maintain a wider system level of analysis, more attention must be paid to the concrete determinants of power within political units as well.

The Challenges and Trajectories of EU Competition Policy in the Twenty-first Century

Abstract Sixty years have now passed since the signing of the Treaty of Paris establishing the European Coal and Steel Community in 1951, and during that period competition policy has become firmly anchored as one of the key pillars of European integration. A regime of European competition governance has emerged that centers on the European Commission, specifically its Directorate-General for Competition (DG COMP), and has matured to tackle the four constituent parts of the EU competition policy brief, cartels, monopolies, mergers and state aid. The focus and enforcement of EU competition policy is constantly being reviewed in response to new challenges and opportunities as DG COMP seeks greater consistency in competition norms and greater policy convergence both within the EU and the wider global environment. The opening article of this volume introduces the context in which substantive changes to the EU competition regime has occurred in the twenty-first century. It identifies the major drivers for such change including economic interdependence, the proliferation of national competition laws, and the current financial and economic crisis, and describes how EU competition policy has evolved in response to these challenges.

‘Corporate Welfare’ Campaigns in North America

One important consequence of globalization has been the cumulative shifting of tax burdens from corporations to individuals. While this trend holds for the OECD as a whole, it is especially pronounced within the United States, where the corporate income tax share of total taxes (federal, state, local, and Social Security) fell from 21.51 per cent in 1955 to 7.87 per cent in 1993 (Webb, 1996, p. 8). An equally sharp drop occurred in Canada, with the corporate income tax share falling from 18.5 per cent in 1955 to 6.9 per cent in 1993.1

Geographic Scales and the Competition for Economic Growth States, Subnational Governments, and Cities

One of the key features of globalization is the increase in capital mobility, which propels national and subnational governments alike into a heightened competition for investment as more locations become feasible for any particular investment. This can be seen most clearly in the case of state and local governments in the United States, where the absence of controls on development incentives allowed a rapid increase in their level during the 1990s. State and local governments are caught in a Prisoners’ Dilemma that can only be solved at the federal level. In the absence of such intervention, many local organizations have tried to at least bring more transparency and accountability to the use of development incentives, with some success in moving the deals out of the back rooms and institutionalizing clawbacks of incentives where recipients fail to produce the promised investment.

Regulating Investment Attraction: Canada's Code of Conduct on Incentives in a Comparative Context

Le gouvernement du Canada a inclus dans l’Accord sur le commerce intérieur adopté en 1994 un Code de conduite en matière de stimulants qui interdit aux gouvernements provinciaux d’offrir des subventions pour favoriser la relocalisation d’entreprises venant d’une autre province. Dans cet article, basé sur des entrevues menées auprès de fonctionnaires fédéraux, de consultants en développement économique et de fonctionnaires de toutes les provinces spécialisés en stimulation des investissements et en commerce intérieur, je montre que l’incidence des activités de « braconnage » et la taille des entreprises relocalisées à la suite de celles-ci ont diminué, quoique que le phénomène soit toujours présent. Mes observations indiquent par ailleurs que ce sont toutefois les changements de gouvernement qu’il y a eu dans les provinces, plus que le Code de conduite en matière de stimulants, qui ont entraîné les progrès réalisés.

Auto Bargaining in Canada, 1965–87

The US-Canada Auto Pact of 1965 created not only a North American market for automotive production and sales but a North American market for automotive investment as well. For the first time, bidding for investment between US states and Canadian provinces was possible. In this new environment, the bargaining power of the Canadian government fell relative to that of Ford and General Motors (GM) because of the new cross-border mobility of production and investment competition among states and provinces. This is indicated by the cost the Canadian federal and provincial governments incurred for automotive investments, as measured by investment incentives given to the automakers. No incentives were provided for the Auto Pact-era plants built in the 1960s; in the late 1970s, Canadian governments gave Ford 12.8 per cent of the value of its investment for an engine plant in Ontario and were prepared to give 15 per cent for a GM parts plant in Quebec which was ultimately not built. In the mid-1980s, the Canadians gave 17 per cent of the capital cost of the GM/Suzuki joint venture in Ontario and provided 43.8 per cent of the cost for GM to modernize its assembly plant in Ste.-Therese, Quebec. These worsening outcomes took place despite the decreasing concentration of the industry (a factor which should favor the host) and without such firm-favoring developments as acquisition of new allies in the host country or new technology beyond the reach of the host government (both more relevant with less developed host countries).

EU Control of state aid to mobile investment in comparative perspective

Abstract European Union policy on regional aid has always exhibited a concern for the possibility of bidding wars for mobile investment, but it is only since 1998 that the EU has had comprehensive rules designed to address investment incentives. The Multisectoral Framework on Regional Aid for Large Investment Projects, now incorporated into the Regional Aid Guidelines, provides for reduced aid maxima for projects over €50 million. This paper shows that the Multisectoral Framework has largely accomplished its goals: aid award levels have fallen significantly since the reform of the Framework in 2002, and in comparison with the unregulated location tournaments of the US, aid packages are smaller in the EU. In fact, in 2010–2011, there were only three aid awards of

Industry Case Studies: Steel, Biofuel Production, Semiconductors, Automobiles, Call Centers

100 million or more in the EU, versus 21 in the US.

Models, Models and More Models

This chapter will present case studies of incentives in five industries. The first concerns the steel industry. Classic locational tournaments have characterized the announcement of new plants, while during the current recession, companies have been asking for subsidies to avert shutdowns. The second case examines the use of incentives to biofuel production facilities (note: not general subsidies to biofuels) in a number of countries throughout the world. The third case is microchip fabrication, which pits several locations in the US and Europe against developing countries like Singapore, China and soon, India. Fourth, there will be a brief recounting of selected bidding wars for auto facilities in both the industrialized and developing world. Finally, we analyze a much less capital intensive sector, the call center industry. It will focus in particular on the use of incentives in the spread of this industry to India, South Africa, the Philippines, parts of the Caribbean and Canada, as well as some cases in the US where the use of incentives have been credited with a decision in their favor over competing jurisdictions in India. In all of these cases, there is no way to be exhaustive; instead, limitations of space and information availability play a role.