People at times try to make the world to operate in an either/or sense. It doesn't work. Should North Carolina pursue innovation-based economic development or industrial recruitment? The answer comes down to the kind of an economy you want to create. In most cases, the answer is both are needed. Read on what a recent NC news article has to say.
The State of North Carolina recently gave two multinational tire makers located in the state over $60 million in tax incentives to remain in production in North Carolina, albeit at much reduced employment levels at each plant. The ostensible public policy logic of the tax incentives model was explained in a 2005 public policy research study on industrial cluster analysis in Eastern North Carolina, prepared by The Center for Regional Economic Competitiveness.
As they stated, “In order to replace the jobs being lost, (as a result of plant closures) North Carolina Eastern Regional Leaders seek to attract, expand and generate new companies in growing, competitive industries.” Giving private companies financial incentives to induce them to locate in the state is a tool that is used to attract the companies.
In the past, more modest incentives, in the range of $1 million per project, could be used as an inducement to locate a facility in the state. In recent years, the incentives have bloomed into hundreds of millions of dollars per project, both in the current tax year they are given, and in deferred tax savings extending out 30 years. The State of North Carolina gave Dell Computers over $300 million in financial incentives to locate a distribution center near Winston Salem, and gave Google over $250 million to locate an internet server farm in the Piedmont of the State, purportedly in exchange for the creation of 200 jobs.
Read more here.