Assessment of economic impact studies: The cases of BMW and Mercedes-Benz

Abstract

In 1992, the state of South Carolina offered an incentive package in excess of $120 million for the possible location of a BMW auto assembly plant. As part of the location effort, the state of South Carolina sponsored an impact study that appeared to be very optimistic. This paper evaluates this very optimistic impact study. The results presented in this paper fail to support the assumption made in the South Carolina impact study that 21 net new supplier chain firms would accompany a new BMW plant opening. Our findings suggest that the impact studies overestimated the total impact on the state economy.