NEW YORK, March 28 /PRNewswire/ -- As the international and U.S. business
landscape continues to breed increased competition, a survey of state and
local economic development agencies, conducted by KPMG LLP's Strategic
Relocation and Expansion Services practice, revealed that an overwhelming
97 percent of respondents report attracting high-tech/digitally driven
companies as a high priority in 2001. Interestingly, the survey also found
that 78 percent of state respondents and 52 percent of local respondents have
modified incentive packages in their aggressive pursuit of high-tech business
related inward investment.
"Our survey results are surprising. Despite the recent fallout in the
high-tech sector, e-businesses are still seen as a top priority by state and
local economic development agencies looking to thrive and remain competitive
in today's marketplace," stated Kerstin Nemec, national partner in charge of
KPMG's Strategic Relocation and Expansion Services. "Interestingly, our
survey also finds that as state and local economic authorities continue to
seek out high-tech related investment, they are finding themselves enhancing
the types of incentive packages that they offer. This is becoming an
inevitable trend as states face increased competition domestically and
In addition to modifying incentive packages, KPMG's survey found that
economic development authorities are increasingly utilizing the Internet
(75 percent) to augment their economic promotion activities in an effort to
remain competitive and attract high-tech/digitally driven companies. Of the
agencies that have successfully harnessed the Internet and modified their
incentive packages, 49 percent of state respondents and 47 percent of local
respondents say they now yield a higher amount of total inward investment.
"As competition continues to thrive, economic development agencies across
the country are looking for ways to attract high-tech/digitally driven
companies to their respective states," added Betty McIntosh, partner in KPMG's
Strategic Relocation and Expansion Services. "Our survey has found that when
state and local agencies have modified incentive packages in the pursuit of
e-business, the return leads to a substantial amount of inward investment for
the respective locale."
Notably, KPMG's survey identified labor related benefits (29 percent) as
the most common type of incentive used by economic development agencies to
attract high-tech/digitally driven companies. Top labor force incentives
currently utilized by economic development agencies include: labor force
training (95 percent), specialized training (92 percent), recruitment
(76 percent), grants (75 percent) and college-shared curriculum (70 percent)
Additionally, KPMG's survey also found investment infrastructure (25
percent) and sales, property or employee tax credits (23 percent) to be key
incentive offerings that are helpful in attracting high-tech/digitally driven
companies to a prospective locale.
Interestingly, KPMG's survey also found that most state and local
respondents see the greatest competition for business coming from surrounding
state and communities rather than from other parts of the country. It is also
important to note that 75 percent of state agencies and 62 percent of local
agencies report that other countries are seen as competition, with the EU
(43 percent) topping the list. Among the agencies that see international
regions as competition, the most common response has been to increase
incentives in general and tax incentives in particular.
"As the burgeoning international business arena continues to provide
increased competition, state and local economic authorities will need to
continually upscale incentive packages in order to remain competitive in
today's globally dynamic marketplace," added Nemec.
To receive a copy of the survey or to schedule an interview with Kerstin
Nemec or Betty McIntosh, please contact Jennifer Risi at Weber Shandwick
During the months of October and November 2000, 113 interviews were
completed with both state and local Economic Development agencies.
Specifically, 77 local agencies and 36 state agencies were interviewed. All
interviews were conducted over the telephone by the executive interviewers of
Clark, Matire & Bartolomeo, Inc., a market research firm in Englewood Cliffs,
Strategic Relocation and Expansion Services is a component of KPMG's State
and Local Tax Practice.
About KPMG LLP
KPMG LLP is the accounting and tax firm that understands the needs of
business in the global economy. KPMG LLP helps its clients by devising
results-oriented business strategies, providing insights that help them stay
ahead of the competition and achieve market-leading results. KPMG LLP is the
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have more than 108,000 professionals, including 7,000 partners, in
159 countries. KPMG's Web site is http://www.us.kpmg.com.
SOURCE KPMG LLP