Regional development policy: an international survey of incentive schemes

Abstract

Industrialisation of backward areas has attracted the attention of governments all over the world, both developing and advanced. These efforts vary from direct investment to indirect assistance. This paper reviews the scheme of assistance offered, broadly categorised as physical financial and fiscal incentives. Data for this study were collected from a mail survey of incentive schemes and published literature. No particular sampling technique was used to select the countries for study. This analysis of schemes in fiftyfive countries suggests that fiscal incentives are used as the major incentive in poor countries, whereas financial incentives are more important in rich countries. The type of incentive offered depends on the capacity of country to spare funds for regional development and the risks involved in blocking up scarce resources in unused investments. Advanced countries compete among themselves to attract international investments by offering liberal incentives. Also, incentives are more where environmental risk is high. The findings are useful to regional development policy making in countries at different levels of development to draw on the experiences of others. The pattern of changes in regional incentives is useful to understand the structure of incentive system.