Introduction

The Paradox of Idaho's Economic Development Strategy

Idaho prides itself on being business-friendly, a claim seemingly supported by its recognition as the least regulated state in the nation—an accolade based on research from the Mercatus Center at George Mason University. However, a comprehensive analysis of Idaho's economic development practices reveals a stark and troubling reality: the state's strategies are fundamentally flawed and potentially counterproductive according to extensive research from the Mercatus Center and other academic sources[1].

The Scope of the Problem

This article examines the intersection between Idaho's economic development strategies and the authoritative research conducted by the Mercatus Center and others. These studies thoroughly debunk the effectiveness of targeted economic development subsidies and incentives—the very tools Idaho relies upon almost exclusively in its economic development efforts[2].

The Mercatus Center's findings are particularly relevant given their estimation that state and local governments spend up to $95 billion annually on targeted economic development subsidies. This massive expenditure, according to their research, is largely wasted, as only one out of every eight subsidies influences a company's decision about where to locate, expand, or remain[3]. The economic and opportunity costs of these subsidies are substantial, effectively amounting to a significant misallocation of resources that could be better used for broad-based tax relief or improved public services[4].

A Century of Evidence

This comprehensive examination draws from a substantial body of academic literature. The Mercatus Center studies alone contain hundreds of citations, with the paper on anti-aid provisions referencing over 250 sources. This research spans over a century, with citations dating back to the 1800s and continuing through recent years. The historical depth provides crucial context on the long-term effects of economic development subsidies. This extensive research base represents a thorough examination of targeted economic development incentives, their historical usage, and their economic impacts over time.

Scope of Analysis

In this analysis, we will delve deep into the Mercatus Center's findings and other relevant research, connecting it directly to Idaho's economic development practices. We will explore how these policies, far from fostering broad economic growth, may be actively hindering Idaho's economic potential, wasting taxpayer money, and exacerbating economic inequalities.