Michigan,Mazda,and the Factory of the Future: Evaluating Economic Development Incentives

Abstract

Before formulating incentives to attract a Mazda assembly plant, Michigan officials evaluated the project's impact on state employment and revenues, and on transformation of the state's economic base. This article examines the considerations which guided their deliberations, in relation to Eisinger's typology of supply-side and demand-side policies; although the inclusion of some incentives is supported by quantitative analysis of costs and benefits, other components seem to have been included despite the results of such analysis, and to be justified more by their relationship to political priorities or substantive development objectives. "Old-style politics" limited the choices available to policymakers and their ability to rely solely on rational analysis. Examination of the project's initial impacts reveals that the validity of quantitative measures is limited by incomplete data and differences between state- and local-level impacts. Future economic development policies, it concludes, should be guided by criteria based on review of both qualitative and quantitative impacts of past policies.