Using incentives sometimes means walking a very thin line: Bonusing as an economic development tool

Abstract

This paper examines the experience of attracting an international company to establish new operations to a location through government grants and subsidies. The author uses the deal reached between Stream International and the City of Belleville, Ontario, as a case study to develop an understanding of subsidies or bonuses, their nature, for what reasons they are sought, and in what context they are (or should be) awarded. While bonuses and subsidies are prohibited in Ontario, there is no limitation in law that precludes municipalities pursuing unconventional initiatives or applying unique solutions that create positive business climates as an incentive for new investment.  Through an assessment of the legal, political and business implications, the author provides a greater understanding and reasonable and appropriate solutions to this common practice.

Keywords: incentives, investment attraction, Stream International, site selection