Incentives for Attracting FDI: The Case of the Lodz Region

The paper studies the role of incentives provided by local government units (LGUs) in attracting foreign direct investment (FDI) to Poland’s Lodz province. The authors draw conclusions based on the results of a direct study using two types of questionnaires, one for foreign investors in the province and the other for LGUs. To ensure the accuracy of the study, the authors conducted an array of statistical surveys and tests. The eta correlation coefficient was among the most important measures, the authors say. It was used to assess the relationship between the inflow of FDI to Lodz province and the investment incentives offered by local government. The method helped verify a hypothesis concerning the significance of statistical relationships between the analyzed variables. The obtained results demonstrate that most LGUs were interested in attracting investors, both Polish and foreign, the authors note. Incentives targeted exclusively at foreign investors were rare, according to the authors. Financial incentives were offered by only 7% of the districts and counties. Tax relief and allowances in property fees and local charges were the most popular types of financial incentives. Many LGUs resorted to various promotional methods. The results of the study show that investment incentives were of secondary importance to the inflow of FDI to Lodz province, the authors conclude. Nor was this kind of support a key factor behind the decisions of foreign investors to continue operating in the region.