Competing for Capital Revisited

Abstract

Over the course of the 1980s, Japanese and US automakers built six new assembly plants in the United States, each receiving subsidies from the state and local governments that were chosen as the winners of very public auctions. The cost per job rose steadily from $11,000 for Nissan in 1980 to $50,588 per job for Subaru and Isuzu in 1986 (Milward and Newman, 1990, pp. 34–7). This pattern spread to developing countries in the 1990s, with three auto assembly facilities receiving from $54,000 to $340,000 per job in Brazil, and a Ford factory in India from $200,000 to $420,000 per job, depending on the discount rate used in the calculation (Oman, 2000, p. 80). By contrast, in Europe, while assembly plants in the poorest areas of the EU received similarly large amounts in the 1990s (Oman, 2000, p. 80), in 2006 Hyundai received only about $70,000 per job for a $1.1 billion facility in the Czech Republic (Czech News Agency, 2006; EU, 2007a), a much poorer jurisdiction than Alabama, which in 2002 gave Hyundai about $117,000 per job on a present value basis comparable to EU calculations.¹