ABSTRACT
In many countries economic development and social conditions are uneven between regions. The historical reasons for the emergence of such gaps vary from one country to another. Within the context of regional development direct financial incentives can be defined as those financial benefits which are given to a firm investing in a designated region. In order to close economic gaps, through fiscal incentives governments try to increase the level and often to change the type of industrial investment in less developed regions. The goals are profit maximization in the long-term and minimum risk, goals which may compete one against the other. The investment decision of a multi-plant firm makes is based on the profitability of all the branches, while investment decision of a firm which has only one branch is based on the profitability of the single investment.
