Incentives
Investment Incentives: How to Evaluate Their Real Economic Value
A framework for comparing tax, cash, infrastructure, workforce and other incentives without letting headline packages distort location decisions.
Start with the project economics without incentives
A project should first be understood on its underlying market and operating merits. Incentives can improve a location case but should not conceal structural disadvantages.
Classify the incentive
Separate direct grants, tax credits, abatements, infrastructure support, workforce support, financing, land arrangements and other forms because timing and certainty differ.
Model realizability
The nominal value of an incentive is not the same as cash value. Consider eligibility, performance thresholds, tax position, timing, clawbacks, reporting and approval risk.
Price obligations and restrictions
Job, wage, investment, location, operating-duration and reporting commitments create real obligations. Model the downside if the project underperforms the assumptions.
Integrate incentives into the full location model
Compare net present value and execution certainty alongside labor, utilities, property, logistics, taxes and time to operation.
Turn the framework into an investment mandate.
FDI Desk can structure the market, site, data, partner and establishment workstreams around the actual investment requirement.