BTC REPORT: Mediated Incentives: Making North Carolina's Economic Development Incentive Programs Work Better through Strategic Investments

By Dr. T. William Lester, Dr. Nichola J. Lowe, and Allan M. Freyer
October 2012

  • North Carolina’s incentive programs can be made more effective—and increase the level of job creation resulting from these programs—by harnessing these subsidies to strategic public investments in targeted, growing sectors of the state’s economy. This process is called “mediation.”
  • North Carolina’s discretionary incentive programs demonstrably generate meaningful employment growth in both retention and recruitment projects. In terms of industry retention, firms receiving an incentive from one of the state’s discretionary programs (OneNC and JDIG) generated 15 percent more overall employment growth than those firms that did not receive a subsidy from 1996-2008. Incentive deals geared toward attracting new industry to the state generated an average of 11.5 more jobs per firm over the same period than were created by similar firms that did not receive incentives.
  • North Carolina’s incentive programs can be made more effective—and increase the number of jobs created as a result of these programs—by harnessing these subsidies to strategic public investments in targeted, growing sectors of the state’s economy. This process is called “mediation.”
  • Mediation dramatically improves the ability of the state’s incentives to generate meaningful job creation. For retention projects, firms in mediated industries that received incentives created almost 30 percent greater employment growth than similar non-incentivized firms in the same industries from 1996-2008, while incentive-backed recruitment projects in mediated industries created an average of 27 more jobs per firm than were created in non-incentivized firms in the same industries.
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