Targeted Tax Incentives for Diversification and Resiliencin Macau’s Gaming Economy: A Greater Bay Area Study

Gaming-dependent economies like Macau are vulnerable to external shocks, as starkly revealed by the COVID-19 pandemic. The gaming industry in Macau brings in more than 70% of the government’s money and makes up about 50% of the GDP. However, relying on just one industry makes the economy less stable. The role of tax policy in bringing about structural change in gaming economies hasn’t been studied enough, especially in small, open economies like Macau that are facing complicated fiscal problems as they become more integrated with other regions, like the Greater Bay Area. This study employs a sequential mixed-methods design. Quantitatively, it employs Ordinary Least Squares regression with instrumental variable estimation on a 16-year dataset (2009–2024). It compares the policy frameworks of Singapore and Las Vegas as gaming hubs using government and economic reports. The analysis includes data from Macau’s “1+4” diversification strategy and takes into account changes in the global economy and uncertainty about policies. The results show that there is a strong positive relationship between generous tax breaks and growth in non-gaming industries (β=0.15, p < 0.001). Diversification also significantly lowers macroeconomic volatility (γ=–0.08, p=0.001). The technology, cultural tourism, and MICE (meetings, incentives, conferences, exhibitions) sectors are especially sensitive to tax policies, with elasticities of 0.28, 0.22, and 0.19, respectively. Case studies show that personalized tax policies work well in these areas. This study enhances fiscal policy theory by illustrating how targeted tax incentives can rectify market failures and promote economic diversification. It tells policymakers to set up tiered, sector-specific incentives that are designed to be resilient, especially in the Greater Bay Area’s strategic scope. Even though the focus is on Macau, comparative analysis shows that it is relevant to a wider audience.