Institute of International Management and Entrepreneurship (IIME) Speaker Series

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"Beyond smokestack chasing: toward a new typology of subnational investment subsidies in the United States"

Chase Foster and Melike Arslan examine the growing role of locational investment subsidies—tax breaks, financial incentives, and public subsidies provided to businesses in exchange for private investments—in shaping state and local economic policy in the U.S.

Despite the increasing scale and prominence of these incentives, they argue that existing research often treats them as uniform “corporate welfare” or simple supply-side inducements, overlooking significant variations in their design and purpose.

They introduce a novel typological framework that distinguishes between market-conforming and market-shaping subsidies, as well as horizontally- and vertically-focused policies. This approach helps differentiate between four distinct types of investment incentives—laissez-faire, beggar-thy-neighbor, developmental, and Pigouvian—each representing a different logic of state intervention in business decision-making. They support this categorization with a broad statistical analysis of investment subsidies, complemented by in-depth examinations of investment incentive programs in South Dakota, Alabama, Michigan, and California.

Their study highlights how the pressures of American federalism drive states to adopt different strategies in response to business mobility and economic competition, often leading to the coexistence of multiple subsidy logics within a single state.

Speakers

Chase Foster is a Lecturer in Politics at King’s College London, specialising in comparative and international political economy. His research focuses on the politics of market regulation in Europe and North America.

Melike Arslan is a Lecturer in International Management at Loughborough University London. As an economic sociologist, her work explores the legal and regulatory frameworks of market economies.