The use of targeted economic development incentives—or selective financial and regulatory incentives to encourage particular firms to relocate or expand—has proliferated in recent decades. However, the relationship between these targeted incentives and another approach to economic development, economic freedom, has not been studied. This article reviews several new studies assessing this relationship, and provides a review of academic literature evaluating how targeted incentives affect communities as a whole, including those firms and industries not receiving subsidies from government. It concludes by discussing areas for future work.
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