Industrial recruitment policy and rural development: A case study of pulp and paper industry in Alabama

Alabama has used property tax abatement policies to recruit industries for many years. Forestry is the major economic sector in Alabama and the pulp and paper industry is one of the main beneficiaries of property tax abatements. Such state sponsored industrial development aims at improving economic conditions of its citizens by providing more jobs and better income. This study applies a case study and survey approach to assess the impacts of the policy and the industry on rural development of Alabama.;The role of tax abatement policies in attracting the pulp and paper industry to the state was marginal. The industry's migration to the South in general, and Alabama in particular, was most influenced by changes in market conditions, technology and economy, and abundance of natural resources in the region and the state.;The study explores the impacts of property tax abatements on one key public service, public education. Survey, interview and secondary data indicate that abatements have profoundly affected local schools in their capacity to deliver quality education. Loss of potential school revenue is a serious constraint for rural schools, the effects of which on quality of education are lower learning opportunities and lower student achievement. These conditions severely restrict the future economic and social development of rural Alabama communities as modern industries seek places with skilled labor force and more amiable places to live.;The study explores the linkages between public industrial policies, investments in human capital, and forestry for sustainable rural development. It documents the linkages forestry has with rural well-being, and the problems associated with development policies that are more efficient and more equitable.