investment incentives

investment incentives

inducements offered by the government or local authorities to encourage capital INVESTMENT by the PRIVATE SECTOR either generally or in a specific area. Government inducements may take the form of capital grants towards the cost of equipment or tax reliefs on any profits earned (see CAPITAL ALLOWANCES for details). Local authority inducements usually take the form of reductions or exemptions from local taxes and organizing the local infrastructure for the convenience of potential investors. The rationale for such incentives depends primarily upon the government's objectives. It may want to increase ECONOMIC GROWTH and reduce UNEMPLOYMENT, in which case investment through the MULTIPLIER effect will help, or it may want to give certain ASSISTED AREAS additional help in tackling local problems of unemployment or urban renewal. See REGIONAL POLICY, INDUSTRIAL POLICY, BUSINESS EXPANSION SCHEME, ENTERPRISE INVESTMENT SCHEME, ENTERPRISE GRANT SCHEME.

Collins Dictionary of Economics, 4th ed. © C. Pass, B. Lowes, L. Davies 2005