Missouri’s Enhanced Enterprise Zones: the success or failure of a state-run place-based economic policy

The Missouri Enhanced Enterprise Zone (EEZ) Program is one example of a state-run place-based policy that provides tax incentives in designated geographic areas for certain business types. Little is known of the program outside of Missouri, and few, if any, studies have analyzed the impact of the EEZ program on economic development in the state. The purpose of this study is to analyze the spatial and temporal impacts of the EEZ program on county-level development in Missouri. Spatial Lag results indicate that the number of EEZs in a county has a significant and positive impact on the number of firms and total annual payroll. Results in the temporal analysis were counterintuitive, as counties that added EEZs performed worse than control counties in short-term and long-term growth rates for income, unemployment, poverty, and the number of firms. Negative spatial spillover may have occurred, as neighboring counties performed better than EEZ counties but worse than control counties. Additionally, counties adding EEZs had higher growth rates in total annual payroll than neighboring and control counties. These results indicate that the Missouri EEZ program may hinder county-level economic growth while stimulating payroll, suggesting that few are benefiting from the program.