The objective of this paper is to assess the effectiveness of regional incentive policy applied in Spain during the period 1988-2001 at a municipal scale. Specifically, the relation between economic growth and the amount of incentives received by each Spanish municipality is analysed, taking into consideration the characteristics of the subsidised projects and the municipalities concerned. One of the main problems faced was the lack of economic information at a local scale. Therefore, it was necessary to create an indicator of the municipal economic situation that could provide a comparison of the economic level of each municipality between 1991 and 2001.