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Poor Places, Thriving People
BOX 6.1 (Continued) In the West Bank and Gaza, the law of 1998 grants extended tax exemptions for investments in remote areas or for areas under the threat of settlement. In the Syrian Arab Republic, an extended two years of income tax exemption is granted for agricultural and industrial projects set up in developing governorates. Source: Study team, from Web sites and publications of national investment promotion bureaus.
initiated in lagging areas. Technical assistance and training grants for investment in remote areas are also offered in Egypt. Some investment incentives are specifically aimed at facilitating access to land for investors in priority development areas. In Morocco, an additional investment grant is offered covering 20 percent of land costs for projects started in less-developed regions. The Egyptian government grants land freely for investments in Upper Egypt and some areas of Middle Egypt. Access to land at particularly competitive prices is offered within special development zones in Jordan, the Islamic Republic of Iran, Morocco, and Tunisia. Other incentives support employment in lagging areas. In Egypt, a grant is offered for each person employed in Upper Egypt and certain areas of Middle Egypt for investments of a certain size. Special economic zones (SEZs) are often located in lagging areas as an instrument of regional economic development policy. This is the case of zones located in the oriental, northern, and southern regions of Morocco, in the inland governorate of Gafsa in Tunisia, and those in the southeast and northeastern regions of the Islamic Republic of Iran, where population is scarce and economic activity is, therefore, low (map 6.1). On top of fiscal exemptions and investment grants, SEZs usually offer streamlined business services, such as one-stop shops and simplified bureaucratic procedures. The physical infrastructure and the services provided reduce start-up costs for investors and to attract enterprises of similar types, thereby favoring industrial clustering.
Financial Incentives to Steer the Spatial Pattern of Development Have Not Been Successful Despite the prevalence of spatially targeted financial incentives in MENA economies, there is no clear evidence of their effectiveness.