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 abroad." 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 Worldwide, 646-658-8242. Methodology 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, New Jersey. 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 U.S. member firm of KPMG International. KPMG International's member firms 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