Governments and local authorities spend large amounts of money advertising the benefits of locating in their particular country/region. If this does not persuade businesses to locate in a particular area it is possible for the region to apply for regional aid.
Regional aid may be given to businesses to encourage them to locate in areas of high unemployment and/or high poverty. This is because the business will employ people from the area and the wages they pay will help improve the welfare of the community. The two main types of regional aid are from the Government and the European Regional Development Fund (ERDF)
Enterprise zones are areas where there is high unemployment. They are usually inner city locations, however the Rhondda Valley in Wales is one example of a rural enterprise zone. The government will offer businesses reduced rent and taxes in return for them locating here.
The Department of Trade and Industry can provide various forms of financial help for businesses in the assisted areas. The size of the grants that the DTI will give is linked to the number of jobs that will be created or safeguarded.
They support businesses with between 5 and 50 employees in manufacturing, service, tourism and some forms of retailing. The support the offer can include training courses on both rural and business skills.
The European Union provides assistance for areas of relative poverty. The European Regional Development Fund (ERDF) offers cheap loans to help build essential infrastructure, e.g., railways and roads. The European Social Fund provides money to help retrain people who are out of work.