Regional impact of public support with a focus on investment incentives

Investment incentives are a tool of the state economic policy, which is used to support the economic development of individual regions and the creation of new jobs in the Czech Republic. At the same time, they are a source for maintaining the competitiveness of the Czech Republic in competition with neighbouring countries, as they attract not only foreign investors to invest in the Czech Republic.
Within the framework of this project, an in-depth analysis of the influence and impact of investment support at the regional level will be carried out on the basis of a large amount of quality input data. The outputs of the project have the potential to be published not only in the Czech Republic, but also abroad, especially as investment promotion and its impact on regional development remains a subject of debate. Investment incentives are essentially a form of redistribution of public funds to the private sector. On the one hand, such redistribution may be desirable, but on the other hand, questions arise as to what the real benefits of such support are and how much it distorts the competitive environment. Since the beginning of investment incentives, there have been two opposing strands of opinion, generally on whether positive externalities outweigh negative ones in the redistribution of money and how much competition is distorted.
Investment incentives (i.e. including FDI attracted by investment incentives) generally contribute to the inflow of new technologies, job creation and know-how. When companies invest in a region, they often rely on local suppliers and service providers. This brings additional opportunities for local businesses, thereby strengthening the local supply chain and providing incentives for other investors to enter the market in the region. But what is the reality? Many theories identify a huge range of possible spillover effects induced by attracting FDI through investment incentives, but clear empirical evidence is still lacking or at least questionable. Blaschke (2021) concludes that investment incentives contribute to FDI inflows to the host country, but their impact on positive economic development is statistically insignificant. The present project can be considered as a sub-part of a comprehensive and long-term research on the evaluation of regional and local impacts of financial interventions in economic policy in the Czech Republic. Taking into account the time and financial possibilities of the project, it should be noted that the data obtained will be further analysed in the follow-up projects planned by the authors.