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if any land appreciation or capital gains result in later years, those gains will
not benefit anyone in the local area.
Similarly, a local entrepreneurial team is less likely to seek such a subsidy,
although their need for it and potential productive use of it are probably
greater. All gains in local wealth, including taxable incomes, remain in the
community and its immediate surroundings.
8. Direct Financial Grants
In recent years, it has become a common practice to make direct, financial
grants (often administered through the state in question) to firms that agree
to locate in the area. Typically, only large corporations can qualify, because
only they are assumed to employ enough workers to really make a differ-
ence. This is little more than legalized bribery, even though it may be in lieu
of offering some public service or infrastructure. Rest assured that if some
service is forsaken, it is either not needed by that firm, or the firm can provide
it inexpensively. Again, this goes to the bottom line of the overall corporation.
Any direct, financial grants under a local strategy end up enhancing
incomes, profits, and thus wealth in the local area, and will, in all likeli-
hood, be handled with much more transparency. For instance, the funds
could go to salaries, training programs, or purchases of capital equipment,
all of which have long-term benefits for the area, may represent expenditures
subject to local spending multipliers, and may even increase the tax base and
thus represent a measurable return on investment for the granting entity.
9. Education and Training Programs
Cooperative partnerships between economic-development agencies and
local community colleges are frequently forged for the purpose of assur-
ing any potentially interested business firm that it can be readily supplied
with a sufficiently skilled labor force or that one can be quickly developed.
Although this type of investment in human capital is a good idea under
any strategy, the problem with this factor and big corporate clients is two-
fold. First, they want to be at full production as quickly as possible, and any
needed training program is probably not up and operating.
Second, as mentioned earlier, most corporate expansions seek to offer jobs
at the very bottom end of their salary range and with little needed technical
skills. You do not need to attend a local college to work in a communica-
tions industry call center, as many English-speaking people in India and the
Philippines already realize. In addition, if a newly locating firm needs key,
technically trained people, they are often brought into the area from other
branches in the corporation. Any time a job is created that also requires a
new person to move into the area, the net job creation benefits of the new
business are lessened.
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