Using incentives to attract firms is the primary economic development policy for many local governments. Yet, relatively little is known about the local economic development outcomes induced by successful attraction of new establishments. The empirical challenge lies in correctly identifying the counterfactual outcome. This article tests for induced economic development in winning counties using a set of highly incentivized large plants. The article makes a methodological contribution by comparing difference‐in‐differences results from a natural experiment (in which counterfactuals are losers reported by Site Selection magazine) with a geographically proximate matching control by design strategy. Estimates are sensitive to identification strategy, with distributional and placebo tests suggesting geographically proximate matching as preferable to the natural experiment. The preferred estimates indicate successful attraction of a large new plant induces modest increases in new economic activity that does not generate fiscal surplus for winning counties. (JEL R11, R31, H71, O18)