Voting issue---Broad definitions could include 40 different mechanisms---destroys limits and makes it impossible to be negative

Voting issue---Broad definitions could include 40 different mechanisms---destroys limits and makes it impossible to be negative

Guisinger finds that if “incentives” are broadly defined to include tariffs and trade controls along with tax holidays, subsidized loans, cash grants, and other fiscal measures, they comprise more than forty separate kinds of measures. Moreover, the author emphasizes, the value of an incentive package is just one of several means that governments use to lure foreign investors. Other methods—for example, promotional activities (advertising, representative offices) and subsidized government services—also influence investors’ location decisions. The author points out that empirical research so far has been unable to distinguish the relative importance of fundamental economic factors and of government policies in decisions concerning the location of foreign investment—let alone to determine the effectiveness of individual government instruments.