However, these are not just free giveaways to a company. In exchange for an incentive package, a business is expected to create value for that community. Whether the requirement is a specific number of new jobs created, investment into the local tax base, or even funding of new schools and parks, the goal is for an incentive to more than pay for itself and boost the local economy.
That said, governments do not just give out incentives and hope for the best either. They require reporting on commitments made or else they will rescind their offer going forward and many times require repayment of already earned benefits — something that can cost a business millions of dollars. Compliance with the terms of an incentive package are obligatory, but often difficult to manage across many jurisdictions.
In fact, Dell Inc. had to repay more than $26 million to Winston-Salem and Forsyth County, NC as a result of the company’s decision to close its facility in January 2010.
A Blockchain Solution
Blockchain technology, with its immutable audit trails and smart contracts, offers the basis of a transparent, automated, and paper-free system for trusted regulatory compliance. This creates solutions for both corporations and government agencies to seamlessly work together.
Eliminate Paperwork
A blockchain is stored electronically and decentralized from a single server creating a significantly more secure environment. As smart contracts are executed, the data is automatically “hashed” to the blockchain and permanently stored. No more data entry, messy spreadsheets, or manual paperwork.
Secure Audit Trails
Two Product Ecosystem
Imagine a permissioned blockchain, specifically designed for economic development incentives compliance with two functional products layered on-chain: one for the company receiving the incentive, and another for the government providing it. These products — or dApps — would act as oracles on the blockchain and allow the parties to interact through a smart contract design.
The government application would allow regulators to view, in real time, the progress that a business is making toward their commitments. This eliminates the time spent going back and forth asking companies for specific data and other necessary documentation that can take weeks.
Consensus Mechanism for Compliance
Conclusion
Creating jobs, attracting new business investment, and building infrastructure should not be hindered by creating mountains of paperwork and tracking down human errors. The value that blockchain technology provides will allow constructive growth, unencumbered by old world methodologies. Blockchain holds the key to providing the required transparency, provenance of data, trust of government, and one source of truth for all the stakeholders in this ecosystem. With a properly designed model, we can eliminate inefficiencies while lowering the cost of compliance, and improving overall security for both corporations and government.
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