Investing in industry, underinvesting in human capital: Forest-based ruraldevelopment in Alabama

Alabama used property tax abatements extensively to recruit the pulp and pa per industry that became the foundation of the state's economy. Our objecti ve is to evaluate the tax abatement policy and its impact on local public e ducation from the perspectives of key local leaders. Data include historica l secondary data, a mail survey, and interviews with stakeholders in pulp a nd paper mill counties. Although tax incentives influenced individual compa nys' decisions to locate in particular communities, abundant wood, water, l abor, and transportation resources were the principle factors attracting th e industry to the South. Despite the economic stimulus of the mills, commun ities that used generous recruitment packages continue to lag behind other rural counties, the state, and the nation. Tax abatements, coupled with low property taxes, adversely affect funding for local public education. Under -investment in human capital, we conclude, is the primary obstacle to the f urther development of these rural areas.