KPMG Survey: Majority of State & Local Authorities Cite Attracting E-Business As a Top-Priority in 2001 Despite Downturn in High-Tech Sector

Survey Finds That 97% of Respondents View High-Tech Investment as a Priority

- Majority of States Have Enhanced Incentive Packages

In the Pursuit of e-Business

Mar 28, 2001, 00:00 ET from KPMG LLP

    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
 Worldwide, 646-658-8242.
     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
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