Economic development incentives, non-financial and financial, include a broad range of tools, ranging from expedited planning and permitting processes to direct or indirect funding. Jurisdictions often use these incentives to pursue specific economic goals such as tax base diversification, job creation, or business retention and expansion. Incentives are usually set by federal, state, or local law or practice.
The use of financial incentives to benefit private parties, especially those that involve the transfer of public funds to private parties, introduces risk factors not generally present in other public financial management areas. For this reason, economic incentives must be based on a policy that establishes parameters for their appropriate use in relation to the economic development goals of the jurisdiction.