Public-sector financial incentives for business relocation and effectiveness measures based on company profile and geographic zone

Abstract

Do public financial incentives still influence business location and relocation decisions? Examined herein will be empirical evidence drawn from three regional policies in three regions of France. This study will propose various location modeling types, both older and more contemporary cost-minimization models. We will also be proposing an empirical test to determine the effectiveness of public financial incentives for location and relocation decisions on the basis of profiles from 301 companies set up in three French regions. Our results underscore that in this case, subsidies do not trigger the dynamic of self-sustaining territorial construction. This finding proves less detrimental for core and intermediate regions than that for outlying region (like the Limousin). These results could lend confirmation to the premise that innovative companies should prefer the advantages associated with technology-based externalities, which for the most part embody tacit knowledge, in comparison with the positive perception of subsidy awards. The simple financial public location incentives from the past should be challenged anew.