Enterprise Zones as Tools of Urban Industrial Policy

This note examines the operation of the enterprise zone program in the United Kingdom and considers the program’s implications for the United States (U.S.), which also suffers from urban industrial decay and which has now begun studying proposals for an enterprise zone program of its own. The note concludes that, based on the limited data available thus far, the enterprise zone program alone is inadequate to lure industry back to depressed areas. The success of the enterprise zones depends in large measure upon parallel government programs, suggesting that the zones cannot be viewed as potential replacements of existing government aid programs. Part I of the note describes the British program and examines how it has performed in three major industrial centers. Part II discusses the leading U.S. proposal and examines its underlying assumptions. The note concludes that both the assumptions underlying the U.S. proposal for revitalization and the proposal itself are unrealistic in their current form.