In 1936 the Mississippi legislature established the nation’s first state-sponsored economic development plan, Balance Agriculture with Industry (BAWI). An initiative of Gov. Hugh L. White, the BAWI program attempted to minimize the effects of the Great Depression by coupling low taxes, cheap land, and low wages with tax abatements and other subsidies and incentives to entice northern industries to expand or relocate in the South.
While cities and counties throughout the nation had established a variety of programs to attract business to their areas, BAWI was the first organized statewide endeavor of this kind. BAWI targeted companies for recruitment after the state industrial commission had researched them for suitability. The primary criteria for suitability were a low risk of business failure and a high number of jobs created. After a company was selected, the State Industrial Commission issued a certificate to the pertinent locality stating that the recruitment of the firm was a public necessity because of poor economic conditions. The certificate legally authorized the company to receive public funds provided that voters in the locality ratified the subsidy arrangement via a bond election. Proceeds from bonds bought land, erected factory buildings, and leased the buildings to the manufacturing concern. Under the leasing contract, approved by the State Industrial Commission, the company might pay as little as one dollar per year for use of the facilities. The operating tenant installed its own machinery (which was exempt from taxation) and guaranteed a specific number of jobs.
Before the legislature terminated BAWI in 1940, the program brought twelve companies to Mississippi, the best-known of which was Ingalls Shipbuilding. The others included four hosiery plants, three shirt factories, a chenille concern, a woolen-goods mill, a plywood plant, and a rubber and tire plant. Various economic development activities have continued in Mississippi and elsewhere, with most states using industrial development bonds of some sort by the 1960s. Evaluating BAWI’s effectiveness has proven difficult: although statistics show a rise in Mississippi manufacturing jobs after the legislation passed, other southern states without such programs enjoyed greater growth rates during the same period.
Some critics have faulted BAWI and similar programs for institutionalizing low wages, poor working conditions, antiunion tendencies, and poor environmental policies. Considering BAWI to be corporate welfare, these critics have argued that companies established through industrial recruiting programs attract a greater number of uneducated, unskilled workers to the target area, keeping wages depressed. Others have argued that Mississippi’s use of its lower-wage structure successfully drew industry from the Rust Belt and the Frost Belt and that other southern states followed Mississippi in developing such programs.
BAWI is still cited in current economic development debates. Mississippi House Speaker pro tempore Robert Clark expressed concern about Mississippi workforce skills after Hyundai’s 2002 decision not to locate a one-billion-dollar plant in the state. According to Clark, when BAWI was passed, “out-of-state firms were attracted to the non-unionized, cheap labor force. But now, that work is moving into cheaper markets.”
The debates continue. The 1988 Mississippi Economic Development Plan indicated that some individuals cited BAWI as the basis for the state’s enduring economic problems, creating what became a sustained tradition of low wages and low income. The 1988 plan characterized BAWI as a short-run marketing strategy and stressed the long-run economic development of fundamental resources such as existing manufacturing. However, the Advantage Mississippi initiative passed by special legislative session in 2000 returned to the mechanism of a business assistance fund involving a two-level (local and state) approval process, very much in the tradition of BAWI.
- John E. Anderson and Robert W. Wassmer, Bidding for Business: The Efficacy of Local Economic Development Incentives (2000)
- James C. Cobb, The Selling of the South: The Southern Crusade for Industrial Development, 1936–1990 (1993)
- Osha Gray Davidson, Broken Heartland: The Rise of the Rural Ghetto (1990)
- Julie Goodman, Jackson Clarion-Ledger (26 March 2002)
- E. J. Hopkins, Mississippi’s BAWI Plan: An Experiment in Industrial Subsidization (1944)