(4) In thinking about the effects of state/local fiscal policy on economic devel
ID: 1108065 • Letter: #
Question
(4) In thinking about the effects of state/local fiscal policy on economic development, attention is usually focused on what government can do to attract economic activity. Some communities, however, actually discourage or prohibit new industrial or commercial investment. What are the gains to the community from new business investment? What are the costs or problems to a community from a new shopping center, for example? What about a new manufacturing plant? When would a community discourage these types of activities?Explanation / Answer
Gains to a community from new business investment:
1. Increased employment opportunities
2. Increases variety of goods offered and sold
3. Prices may be lower for local people
4. Property prices will shoot up
Problems to community from new business investment:
1. Too much industrialization will create too much pollution or wastage
2. Too much commercialisation will kill the essense of the community
3. Over crowding of area because of many outside people coming to live in the area to work
A community would discourage these types of activities when it finds that it is causing more harm than gains.
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