Who's Afraid of Sunlight? Explaining Opposition to Transparency in Economic Development
Open Access
- 21 June 2021
- journal article
- research article
- Published by Cambridge University Press (CUP) in Business and Politics
- Vol. 23 (4), 474-491
- https://doi.org/10.1017/bap.2021.8
Abstract
Firms and governments often negotiate economic development deals, such as tax abatements, with limited transparency, using exceptions to public records laws or other strategies for nondisclosure. In this article we explore the motivations of firms for keeping economic development deals out of the public eye. We explore legal challenges to public records requests for deal-specific, company-specific participation in a state economic development incentive program. By examining applications for participation in a major state economic program, the Texas Enterprise Fund, we find that a company is more likely to challenge a formal public records request if it has renegotiated the terms of the award to reduce its job-creation obligations. We interpret this as companies challenging transparency when they have avoided being penalized for noncompliance by engaging in nonpublic renegotiations. These results provide evidence regarding those conditions that prompt firms to challenge transparency and illustrate some of the limitations of safeguards such as clawbacks (or incentive-recapture provisions) when such reforms aren't coupled with robust transparency mechanisms. We speculate that the main motivation for these challenges is to limit scrutiny of these deals that could lead to backlashes against future economic development agreements.Keywords
This publication has 38 references indexed in Scilit:
- E‐Participation, Transparency, and Trust in Local GovernmentPublic Administration Review, 2012
- “PRISONERS” OF PRIVATE INDUSTRY: ECONOMIC DEVELOPMENT AND STATE SUNSHINE LAWSCommunication Law and Policy, 2011
- Citizens' Learning, Involvement, and Participation in Decision-Making Under the Democratic Ethos: A Theoretical Framework and the Israeli ExperienceInternational Journal of Public Administration, 2009
- DOES MORE TRANSPARENCY GO ALONG WITH BETTER GOVERNANCE?Economics & Politics, 2006
- Democracy, Autocracy, and Tax Incentives to Foreign Direct Investors: A Cross-National AnalysisThe Journal of Politics, 2006
- Do Better Contracts Make Better Economic Development Incentives?Journal of the American Planning Association, 2002
- Fiscal Transparency, Gubernatorial Approval, and the Scale of Government: Evidence from the StatesState Politics & Policy Quarterly, 2002
- The Effect of State Tax Incentives on Economic Growth and Firm Location Decisions: An Overview of the LiteratureEconomic Development Quarterly, 2001
- Adding a Stick to the Carrot: Location Incentives with Clawbacks, Recisions, and RecalibrationsEconomic Development Quarterly, 1990
- Testing the bargaining hypothesis in the manufacturing sector in developing countriesInternational Organization, 1987