Data Center Development and Local Economy: Assessing the Persistence of Economic Growth Benefits
Travyn Rasiah
21/07/2026
This paper examines whether data centers generate sustained local economic growth or whether their effects are short-lived and limited. As demand for cloud computing, artificial intelligence, and digital infrastructure continues to rise, data centers have become increasingly important to regional economic development. Using county-level GDP data from the U.S. Bureau of Economic Analysis from 2001 to 2024, this study analyzes the relationship between major data center activity and local economic output. The analysis uses a two-way fixed effects regression with log GDP as the dependent variable and data center treatment as the main independent variable, while controlling for county-specific and year-specific factors. The results show that data center treatment has a positive and statistically significant relationship with county-level GDP. The coefficient of 0.1609 translates to an estimated 17.46% increase in GDP for treated counties. However, the findings do not prove that data centers alone caused all of this growth. The regression also pools its estimate across all post-treatment years, so it cannot tell whether gains build over time, hold steady, or diminish after the initial investment. Instead, data centers appear to function as one contributor to broader growth-related conditions, such as infrastructure investment, business activity, and regional technology development. The evidence points toward data centers as contributors to local economic growth, though their long-term impact depends on surrounding economic conditions and whether communities can channel that initial investment into broader development.