Competition between countries, states, and cities for talent, jobs, and businesses can be a very healthy activity. It incentivizes governments to formulate policies that promote economic growth and improve local assets such as workforce development programs, quality of life enhancements, infrastructure investments, and efficient regulatory and tax structures.
But competition for jobs can also lead to inefficient policy choices, namely counterproductive intraregional competition, commonly referred to as “poaching.” In these situations, communities deploy some of their resources, usually in the form of finance or tax incentives, to lure companies away from jurisdictions next door. This type of behavior is also common with the attraction of new companies, where cities within the same region try to undercut their neighbors to make sure a business lands within their own respective borders.
To read the original article: Regional Cooperation Agreements in Economic Development
