Enterprise Zone

An urban enterprise zone is an area in which policies to encourage economic growth and development are implemented. Urban enterprise zone policies generally offer tax concession, infrastructure incentives, and reduced regulations to attract investments and private companies into the zones. They are a type of special economic zone where companies can locate free of certain local, state, and federal taxes and restrictions. Urban enterprise zones are intended to encourage development in blighted neighborhoods through tax and regulatory relief to entrepreneurs and investors who launch businesses in the area.

They are common in the United Kingdom and the United States. In other countries, regions with similar economic policies are often referred as export-procession zones, tax and duty-free zones, and Special Economic Zones most predominantly present in China and India.

The 1970s witnessed a shift in city planning, leaving behind Keynesianism and entering an era of growth machine. Urban planning had thrived during the 1950s and 1960s. Planning was fostered by a period of constant economic and physical growth. The recession of the 1970s and 1980s was compelled to transform the nature of urban planning. This shift was especially marked in the UK, when the strong capitalist economy shifted following the great recession. Britain lost its core economic motive: manufacturers.

In an urban context, cities had to create growth at any cost. Due the Stagflation of the economy, the British Centre for Policy Studies and the American Heritage Foundation challenged the theory of Keynesianism which consists of a mixed economy in the private sector accompanied by government interventions and regulations. City planning stopped regulating and controlling growth, and started promoting that growth by any possible means: through tax concession, deregulation, or infrastructure incentives. By encouraging urban growth, city authorities were expecting to boost the economy, reduce unemployment rates, and the progression of decay of its core cities.

The enterprise zone concept evolved from a combination of theories, policies and social forces. The philosophy is most closely associated with the theory of supply side economics and the assumption that employers will respond positively to tax incentives and reduced government regulation. The enterprise zone philosophy suggests that by encouraging the production of goods, investment will improve; therefore, the supply of goods and services and the providing of job opportunities will increase accordingly.

As policy mechanism, enterprise zones are proposed to stimulate economic activity in decaying areas. When compared with other areas, these areas have higher unemployment rates, lower income level, lower employment opportunities, vacant land, and decayed building and infrastructures. Enterprise zone programs provide the incentives to businesses to overcome economic obstacles that hinder economic growth.

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