To get started, regional economic development organizations (EDOs) can use these questions as a way to assess their readiness to develop and deliver incentives relevant to attract and assist foreign-owned enterprises.
Is your region prepared for foreign direct investment?
Have you examined your workforce’s strengths and weaknesses; identified potential properties; fostered connections with higher education community and utility companies; consulted local exporters; prepared background data; and engaged companies within regional industry clusters?
Can your region afford foreign direct investment?
Business incentives often involve long-term commitments from both parties. Can your region afford to spend and divert tax revenue over the next few years without budgetary surprises?
Is your region leveraging regional stakeholders to maximize the impact of business incentives?
Engaging stakeholders such as utility companies earlier in deliberations allows for more lead time to accommodate new and relocating businesses.
Are you prepared to structure business incentives to maximize the likelihood of receiving economic benefits?
You can configure business incentives to reduce fiscal risk by: capping program costs; modifying the timing of availability and termination; requiring lawmakers to pay incentives through appropriations; restricting the extent to which tax incentives are deductible; emphasizing pay-for-performance; and requiring businesses to provide advance-notice of interest.
Are the performance metrics selected appropriate to measure foreign direct investment?
Often metrics are selected by their availability and accuracy. However, have decisionmakers considered whether the inferences being drawn from the metrics are appropriate?
Is the review of incentives codified in legislation?
Legislation that considers citizen input, expert analysis, financial audits, and the regular review of business incentives provides lawmakers and the public with the information they need to make more informed decisions.
For a more extensive self-assessment regarding incentives, the OECD prepared 20 questions (pp. 22-33) that are very instructive.