Urban Development Action Grants to Rural Communities

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Paper examines the characteristics of Urban Development Action Grants (UDAGs) to rural communities.

Based on HUD data, their findings show UDAG grants were 1) more likely to provide to subsidize industrial than commercial or housing developments, 2) the projects are concentrated in the most economically distressed rural communities, 3) UDAG grants are more likely to be allocated to firms in the most competitive industries, suggest recipients are in need of capital subsidy, and 3) there is no evidence that recipient firms are relatively capital intensive, as argued by some critics of capital subsidy programs. Paper also finds rural areas compete with suburban small cities for this small city portion (UDAG funding for cities with <50,000 population)

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