The Teaching Notes below provide suggested solutions, along with comprehensive explanations, to the case questions.
Wisconsin's Foxconn deal is a targeted business incentive because the state and local governments intended to attract one particular company—Foxconn.
First of all, Wisconsin's state and local governments offered business incentives to Foxconn with the purpose of fostering job creation and economic development (via the economic spillover effects). Moreover, as Wisconsin's Racine County has been confronted with manufacturing decline and job loss over the past several decades, government officials hoped to revitalize the local economy by attracting the Foxconn investment.
Additionally, several other reasons may contribute to the lavishness of the business incentives offered to Foxconn.
The potential costs of business incentives include both direct and indirect costs (Mitchell, Farren, Horpedahl, and Gonzalez 2020).
State and local government officials should be mindful of several risks when competing for a corporate investment.
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