James, Sebastian2012-08-132012-08-132010-01https://hdl.handle.net/10986/10511Are tax incentives effective at attracting investment? Or are they a waste of resources? The answer depends on the policies used and the sectors where investment is sought. This note consolidates the policy implications of the latest research by the World Bank Group's investment climate advisory services on the efficacy of investment incentives. The research finds that such incentives are ineffective where investment climates are weak, and they cannot compensate for such deficiencies. Moreover, even where incentives are effective in attracting investment, they have significant costs. When incentives are clearly ineffective, political considerations often drive their continued use. This note identifies best practices for incentive policy and administration and provides a framework for analyzing the likely effectiveness of investment incentives under different conditions and in different types of countries.CC BY 3.0 IGOACCELERATED DEPRECIATIONAMOUNT OF CAPITALAUDITSBARRIERS TO INVESTMENTBUSINESS ENVIRONMENTBUSINESS ENVIRONMENTSCAPITAL INVESTMENTSCHECKSCOMPETITIVE MARKETSCOMPETITIVENESSCORPORATE TAXCORPORATE TAX RATEDEPRECIATION ALLOWANCESDEVELOPING COUNTRIESDEVELOPING ECONOMIESDOUBLE TAXATIONEXCLUSIONEXPENDITUREFINANCE CORPORATIONFINANCIAL CRISISFISCAL POLICYFOREIGN DIRECT INVESTMENTFOREIGN INVESTMENTGDPGOOD INVESTMENT CLIMATEGOVERNMENT REVENUEHOME COUNTRYHOST COUNTRYINCENTIVES TO INVESTORSINCOMEINFRASTRUCTURE PROJECTSINTERNATIONAL FINANCEINVESTMENT ALLOWANCESINVESTMENT CLIMATEINVESTMENT CLIMATESINVESTMENT DECISIONSINVESTMENT ENVIRONMENTINVESTMENT GROWTHINVESTMENT INCENTIVESINVESTMENT POLICYINVESTMENT PROCEDURESINVESTMENT PROCESSINVESTMENT PROMOTIONINVESTMENT TAX CREDITSJOB CREATIONLEVEL PLAYING FIELDLIQUIDITYLOCAL ECONOMIESLOCAL ECONOMYMARGINAL COSTMULTIPLIER EFFECTSNATURAL RESOURCESOPPORTUNITY COSTSPER CAPITA INCOMEPOLITICAL CONSIDERATIONSPOSITIVE EXTERNALITIESPOTENTIAL INVESTORSPUBLIC FUNDSPUBLIC GOODRED TAPERENT SEEKINGRETURNSSINGLE TAXSTARTUPSTATEMENTSTAXTAX ADMINISTRATIONTAX BASETAX BENEFITSTAX CODETAX COMPETITIONTAX CREDITTAX EVASIONTAX EXEMPTIONSTAX EXPENDITURETAX INCENTIVETAX INCENTIVESTAX LAWSTAX LIABILITYTAX PAYMENTSTAX POLICIESTAX POLICYTAX PROVISIONSTAX RATETAX RATESTAX RETURNSTAX REVENUETAX REVENUESTAX SIMPLIFICATIONTAX SPARINGTAX SYSTEMTAXPAYERSTRANSFER TAXTRANSPARENCYUNEMPLOYMENTWorld Bank10.1596/10511