Columbia International Affairs Online: Policy Briefs

CIAO DATE: 02/2012

Investment incentives and the global competition for capital

Kenneth P. Thomas

December 2011

Columbia Center on Sustainable Investment


Investment incentives (subsidies designed to affect the location of investment) are a pervasive feature of global competition for foreign direct investment. This Perspective analyzes what is known about the extent and cost of incentives used as well as the potential efficiency, equity, and environmental consequences of using incentives. Finally, it analyzes methods of controlling incentives, the most successful of which is embodied in European Union regional aid policy.