vision2020
No Subject
http://www.news-observer.com/daily/1999/11/05/nc03.html
Raleigh N&O 11/5/99
Tax breaks not big lure for industry
Leaders of international firms say in a new survey that North
Carolina's tax incentives to attract companies are not an
important factor in the firms' decisions on where to locate
plants.
The survey, conducted by two professors at the Kenan Institute of
Private Enterprise at the University of North Carolina at Chapel
Hill, included responses from chief executives and top managers
at 118 foreign-owned companies with operations in the state.
They were asked to rank the factors that influenced their
decisions to come to the state or to expand operations.
For the period between 1997 and 2006, the state has committed
more than $1.72 billion in tax relief and business incentives to
attract and retain companies.
But in the survey, executives said the quality and availability
of labor and transportation, the overall quality of life, and the
general business climate were the most important factors. Tax
incentives, location assistance from government agencies,
government financing efforts, and state marketing assistance
ranked at the bottom.
Most companies ranked education high on the list, but several
executives noted that the poor quality of schools in some
communities discouraged them from expanding operations.
The study's authors are Dennis A. Rondinelli, the Glaxo Professor
of Management at the Kenan-Flagler Business School and director
of the Center for Global Business Research, and William J.
Burpitt, a senior research associate at the center and a
management professor at Peace College in Raleigh.
"These findings confirm the conclusions of other studies in the
United States and abroad that state incentives play only a
marginal role in the location decisions of private firms,"
Rondinelli and Burpitt said. Such incentives "can divert public
expenditures from investments in human resources, quality of
life,
infrastructure, and services that business executives consider
more important in the location decisions," they said.
The study noted that despite evidence of their ineffectiveness,
public officials think that they must have incentives to compete
with other states.
The alternative, the researchers said, is to de-emphasize
targeted incentives and instead build the state's infrastructure
and educational facilities that provide the labor and quality of
life factors that seem far more attractive to 21st-century
businesses.
------------------------
William K. Medlin
Dev-plan associates
930 Kenneth Street
Moscow ID 83843
208/892-0148
dev-plan@moscow.com
Back to TOC