Investment incentive is a government-implemented incentive policy aimed to encourage investors into its domestic market or to promote expansion of existing businesses.[1] Investment incentives encompass creating an environment that enables foreign businesses to operate profitably and decreases risks.[2] They are widely used by developing countries to attract investments.[3] The incentives take form of "direct subsidies (investment grants) or corporate income tax credits (investment credit) that compensates the investors for their capital costs".[4]

Scholars generally consider investment incentives to be inefficient, economically costly, and distortionary.[5]

In South Korea and Taiwan, over one-half of all foreign subsidiaries benefit from some form of investment incentive, which is more than most other developed countries (Japan 9%, Switzerland 12%, Canada and France 18%, Germany 20%, Belgium 26%, Italy 29%, UK 32%, Australia 37%).[6]

See also

Further reading

References

  1. ^ Jan Drahokoupil. Investment incentive GOVERNMENT POLICY. Encyclopædia Britannica.
  2. ^ Checklist for Foreign Direct Investment Incentive Policies. oecd.org.
  3. ^ Effectiveness of Investment Incentives in Developing countries Evidence and Policy Implications. Dr. Sebastian James. The World Bank Group.
  4. ^ investment incentives Archived 2018-06-22 at the Wayback Machine. businessdictionary.com
  5. ^ Jensen, Nathan M.; Malesky, Edmund J. (2018). "The Economic Case Against Investment Incentives". Incentives to Pander: How Politicians Use Corporate Welfare for Political Gain. Cambridge University Press.
  6. ^ Ha-Joon Chang. Pages 687-715 | Published online: 24 Jan 2007 Regulation of Foreign Investment in Historical Perspective.
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