State Economic Impacts of Industrial Park Development: Evidence from Virginia’s Tobacco Region Megasite Program

Abstract

Industrial park development is commonly advocated by state and local economic developers to aid in business attraction efforts. However, there is limited evidence of its effectiveness in promoting economic growth, particularly in rural and lagging regions in comparison to other economic development tools. This paper examines the literature on the relationship between business site availability and economic development and the rationale for public sector industrial land development assistance. Results from a survey of local economic developers in Virginia are used to characterize industrial park absorption and occupant attributes. Using this information, ex-ante state economic and tax revenue impact analyses are performed for a state-funded industrial park development program serving a rural region of Virginia, the Tobacco Region Megasite Program. The paper examines conditions that affect the economic and tax revenue impact potential of industrial parks and highlights remaining information gaps.