Is High-Tech Your Firm's Niche? Survey Says It Should Be

Coming to a city or town near you in 2001!

According to a recent survey of state and local economic development agencies, 97% of respondents view attracting high-tech businesses as a top priority in 2001.

As the international and U.S. business landscape continues to breed increased competition, interestingly, 78 percent of state respondents and 52 percent of local respondents said they 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 abroad."

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, the 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, 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.

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