Assessing Sustainable Development Impacts of Investment Incentives: A Checklist

By Kenneth P. Thomas on March 5, 2009

As the use of investment incentives proliferates around the world, the actual impacts of such incentives on attracting foreign direct investment, let alone on promoting socially and environmentally sustainable economic growth, remain seriously under-researched. Assessing such impacts is certainly a challenge - not least due to difficulties in evaluating the costs and benefits of investment incentives and isolating the role of incentives from other factors - but also crucial to maximise potential sustainable development benefits of investments. The checklist provides an analytical framework to examine the sustainable development impacts of investment incentives with regard to the individual projects, the incentive policy in general and the implications of and for international agreements. The checklist is designed to be used either by governments or by stakeholders. It is stressed that incentive evaluation should be seen as an iterative process, with information gained from earlier incentives and programs used to benchmark later ones, to enable governments to move from reactive to proactive investment policy-making.

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IISD, 2009