Policy Sciences

, Volume 33, Issue 2, pp 181–205

Do government incentives attract and retain international investment? A study of foreign-owned firms in North Carolina

  • Dennis A. Rondinelli
  • William J. Burpitt
Article

Abstract

In an era of strong global competition, national, state, and localgovernments are vying to attract and retain investment by international firmsby increasing the range and value of public incentives for businesses toinvest in their jurisdictions. A survey of executives in 118internationally-owned firms in North Carolina reveals that they rank stateincentives low in a list of factors that they believe attract foreign-ownedcompanies and retain them in the state. Labor force, transportation, qualityof life, and overall business climate factors are consistently ranked highestby business executives, and state tax, finance, plant services, and marketingassistance are consistently ranked low. Questions concerning theeffectiveness, appropriateness, and equity of such incentives and theirimpacts on influencing domestic and international firms to choose locationsin a state or locality continue to be debated. Why do governments persist insuch questionable policies? Often perception offsets reality in publicpolicy-making. The political need to `do something' even if it is ineffective,a `follow the herd' mentality, fear of political criticism, and anunwillingness to `disarm' unilaterally all seem to explain the persistence ofstate incentive policies that even the intended beneficiaries claim are of lowpriority in their decisions.

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Copyright information

© Kluwer Academic Publishers 2000

Authors and Affiliations

  • Dennis A. Rondinelli
    • 1
  • William J. Burpitt
    • 2
    • 3
  1. 1.Center for Global Business Research at the Frank Hawkins Kenan Institute of Private Enterprise, Kenan-Flagler Business SchoolUniversity of North CarolinaChapel Hill
  2. 2.Meredith CollegeRaleigh
  3. 3.Center for Global Business ResearchKenan Institute of Private EnterpriseUSA

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