Put yourself in our place

Competition is a wonderful thing. The rapid growth of the internet and other forms of information technology may mean that in today's global economy it is possible for corporations to be based just about anywhere.

But that does not mean individual localities will lightly surrender what they see as their fair share of these footloose operations.

One of the concerns often voiced about the regional development authorities established in Britain last month is that canny corporations can use such a system to gain inducements to set up in one region, or even one country, over another.

Even in the laissez-faire US, southern states have been known to offer tax holidays and other incentives to firms willing to help employ-ment by setting up plants.

This is not the only approach. Fairfax County, which covers the area between Washington Dulles International Airport and the District of Columbia, has been able to take a "build it and they will come" attitude. As Gerald Gordon, president of the county's economic development authority, says, the area is fortunate because of its proximity both to an airport and the US capital.

But it is not leaving things entirely to chance. Speaking on a trip to Britain aimed at attracting UK companies that might want to set up US operations alongside the likes of Cable & Wireless and Rolls-Royce, Dr Gordon stressed that the area was not always an economic powerhouse.

Though few would rate Washington DC as a hi-tech centre to rival Silicon Valley, he pointed out that the area was the home of the internet, which was developed to aid communications between the academic and defence communities.

He said that he and his colleagues had used this to help establish the area as a viable home for hi-tech firms.

The story of Fairfax County over the past two decades suggests that attitude could have a more important role in business success than marginal financial inducements.

Accordingly, it could be said that the fiddling with capital allowances, capital gains tax reliefs and other fiscal measures indulged in by successive British chancellors has been a waste of time. After all, it is a little hard to argue that you are creating an entrepreneurial environment by throwing businesses upon the mercies of lawyers and tax accountants.

Christopher Spray of the international venture capital firm Atlas believes that if the capital gains tax rate was cut to zero, "the rest will take care of itself".

Whether even this Government is sufficiently enamoured of the US model to go this far remains to be seen. But it would be interesting to see if attitude is more powerful than money.