Tax incentives for industry as a strategy to promote regional development

analysis of an empirical case

Abstract

The central objective of this investigation is to discuss the real contribution of tax incentives to industry as a strategy for promoting regional economic development. To this end, a comparative analysis was undertaken between two municipalities in Rio de Janeiro benefiting from policies of this nature (Itaperuna and Comendador Levy Gasparian) and two geographically close municipalities in Minas Gerais, not benefiting from incentives (Muriaé and Simão Pereira).  This is a study of a qualitative-quantitative nature, applied purpose, exploratory level and deductive method. The investigation is outlined as bibliographical research, documentary research and multi-case study, supported by the statistical method. It was found, on the one hand, that the tax incentives granted to the analyzed municipalities in Rio de Janeiro had a positive impact on the respective economic variables. However, in comparison with the selected municipalities in Minas Gerais, which did not benefit from similar incentives, the performance of the socioeconomic indicators of Itaperuna and Levy Gasparian was not significantly superior. This allows us to question the effectiveness of tax incentives as a strategy capable of promoting economic development.