"Industrial Development and Capital Grants Policy: European Example"

[From the Introduction]. Uneven development of regions within a national state has, as one of its dimensions, an imbalance in the distribution of employment opportunities. Countries such as Italy, Ireland, the United Kingdom, and Belgium, among others, provide examples of this phenomenon. In each of these countries there exists a locational problem - some region (or set of regions) experiences difficulty in attracting new industry and the employment opportunities associated with new industry activity. Recognizing this locational problem, a variety of national governments (including the four cited above) have attempted to modify the relative attractiveness of regions to firms by offering inducements to firms to locate in relatively disadvantaged regions. Typically, the inducement takes the form of a locational cost reduction mechanism. In Smith's (1966) terminology, the national government seeks to expand the spatial margins to profitability so as to include disadvantaged regions. Examples of such inducements are direct capital grants (utilized in Ireland), interest rate subsidies (utilized in Belgium), and employment premiums (utilized in the United Kingdom)