A new book explores how governments use economic development incentives and efforts to address the policy and governance challenges associated with incentives.

Rethinking Investment Incentives provides an interesting look at incentives around the world, including those targeted to both domestic and foreign investors, and tools to ensure incentives accomplish their intended objectives. I was pleased to contribute the chapter on “Cost-Benefit Analysis of Investment Incentives” to this edited volume from Columbia University Press.

The volume suggests that careful investment policies are crucial to guide the strategic and efficient mobilization of public and private resources and that investment incentives can play a useful role if they are strategically and thoughtfully designed.

The book covers:

Part I: Investment Incentives: An Introduction

  • Types of Investment Incentives (Ana Teresa Tavares-Lehmann)
  • Definitions, Motivations, and Locational Determinants of Foreign Direct Investment (Sarianna M. Lundan)

Part II: A Global Overview of Investment Incentives

  • The Use of Investment Incentives: The Cases of R&D-Related Incentives and International Investment Agreements (Christian Bellak and Markus Leibrecht)
  • Incentives in the European Union (Philippe Gugler)
  • Incentives in the United States (Charles Krakoff and Chris Steele)
  • Tax Incentives Around the World (Sebastian James)

Part III: Designing Incentives Programs to Get Value for Money and Achieve Intended Goals

  • A Holistic Approach to Investment Incentives (Louis Brennan and Frances Ruane)
  • Investment Incentives for Sustainable Development (James Zhan and Joachim Karl)
  • Cost-Benefit Analysis of Investment Incentives (Ellen Harpel)

Part IV: Reducing Incentives Competition: Regulatory Efforts to Limit “Races to the Bottom”

  • Regulation of Investment Incentives: National and Subnational Efforts to Regulate Competition for Investment Through the Use of Incentives (Kenneth P. Thomas)
  • Regulation of Investment Incentives: Instruments at an International/Supranational Level
  • Conclusions: Outstanding Issues on the Design and Implementation of Incentives Policies (Lise Johnson, Perrine Toledano, Lisa Sachs, Ana Teresa Tavares-Lehmann)

You can learn more and purchase Rethinking Investment Incentives here.

From my perspective, it was a pleasure working with the editors and the team at the Columbia Center on Sustainable Investment. Their efforts to direct attention to the topic and provide practical guidance on using incentives effectively to attain development goals are to be applauded – and I hope will be sustained.

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