Investing in Industry, Underinvesting in Human Capital: Forest-Based Rural Development in Alabama

Publisher Website
Google Scholar
Abstract
Alabama used property tax abatements extensively to recruit the pulp and paper industry that became the foundation of the state's economy. Our objective is to evaluate the tax abatement policy and its impact on local public education from the perspectives of key local leaders. Data include historical secondary data, a mail survey, and interviews with stakeholders in pulp and paper mill counties. Although tax incentives influenced individual companys' decisions to locate in particular communities, abundant wood, water, labor, and transportation resources were the principle factors attracting the industry to the South. Despite the economic stimulus of the mills, communities that used generous recruitment packages continue to lag behind other rural counties, the state, and the nation. Tax abatements, coupled with low property taxes, adversely affect funding for local public education. Under investment in human capital, we conclude, is the primary obstacle to the further development of these rural areas.