How do we know whether community or economic development programs represent smart uses of public subsidy? This chapter, included in the book Smart Subsidy for Community Development, tackles that question. Much of the conversation involving smart subsidies either follows logically from economic theory or is based on practitioner experience. These perspectives are compelling, but there is another way to consider whether a subsidy is smart: empirical evaluation of actual projects undertaken in conjunction with federal programs. The authors assert that a subsidy is smart if it is found to be essential to project initiation and produces beneficial results.

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