FOREIGN investments, SUPPLY-side economics, CORPORATE tax planning, INTERNATIONAL law, RAPID prototyping, and CAPITAL movements
The article focuses on legal incentives to foreign direct investment. Many countries turn to foreign direct investment simply because local savings are inadequate to support increased investment. The less developed a country is, the more severe are the domestic resource and capability constraints, and usually the greater are the expectations from foreign investment to alleviate them. Competition among countries to attract and keep foreign investment through incentives is strong and pervasive. Generally the most common incentive is the offer of tax holidays, for periods of five or more years, to new industrial undertakings. In most developed countries, the main objectives of investment incentive policies relate to regional objectives such as the promotion of a better distribution of activity or employment across the country concerned, or industrial objectives such as the promotion of productive investment, the stimulation of efficiency, the introduction of new products or processes, the structural adaptation of enterprises, and the promotion of industrial innovation.