enterprise zone

Geographical area targeted by the federal, state, or municipal government where small businesses are given incentives to create employment opportunities. Incentives may include tax credits, favorable financing terms, contract set-asides, zoning regulation relief, and other types of help.

An area of declining or derelict land, usually within an inner city, which is chosen for rejuvenation. Private enterprise is attracted by such inducements as concessions on land development tax and local council tax, 100% capital allowances, a general speeding up of procedures, and a relaxation of planning regulations. Enterprise Zones were introduced in the 1980s in tandem with the British government's emphasis on small businesses, and these highly localized initiatives were designed to replace in part the much larger Development Area which had been part of British regional policy since the 1930s. See also urban development corporation. For enterprise, see firm.

Enterprise zone

Enterprise Zones were economically depressed districts targeted for revitalization through tax breaks and regulatory exemptions. Originating in Great Britain in the late 1970s, the concept quickly migrated across the Atlantic and was incorporated into a series of bills introduced in the U.S. Congress during the 1980s. The bills proposed to reduce corporate income taxes and eliminate capital gains taxes for businesses that located in the designated zones. Moreover, federal agencies would be authorized to suspend certain regulations and thereby attract private investment to distressed districts.

With its reliance on incentives to private enterprise rather than government grant programs, the enterprise zone concept won the backing of the Ronald Reagan administration and became the chief element of its urban policy. The Reagan administration failed to secure passage of effective enterprise zone legislation, but by 1990, thirty-seven states had enacted enterprise zone measures that established active programs in at least 400 to 500 districts. Although not magic remedies for economic decline, the state programs achieved some successes. Finally, in 1993 Congress enacted a Clinton administration proposal that provided tax incentives for investment in distressed "empowerment" zones but deviated from the pure enterprise zone concept by also targeting federal technical assistance and grants to the designated areas.

Bibliography

Green, Roy E., ed. Enterprise Zones: New Directions in Economic Development. Newbury Park, Calif.: Sage, 1991.

—Jon C. Teaford