Evaluating Decentralized Policies: How to Compare the Performance of Economic Development Programs across Different Regions or States

This paper proposes an empirical method to evaluate decentralized economic development programs with heterogeneous characteristics implemented in different regions or states. The evaluation design developed in the paper is a comparative analysis that operationalizes differences in regional policy features and controls for pre-intervention heterogeneous characteristics of targeted areas. The proposed method is illustrated and tested through the evaluation of the U.S. Enterprise Zone (EZ) programs. The results of the analysis show that the proposed evaluation design is an effective tool for turning the heterogeneity of decentralized economic development programs from a threat to the validity of the analysis into a great opportunity for testing the effectiveness of a variety of region (or state) specific policy implementation features.