Fain maintains gains pertain to incentives.

• Position: Economic Outlook - Jim Fain - Interview

Secretary of Commerce Jim Fain believes incentives play a vital role in economic recruitment in North Carolina. That puts him at odds with professors Dennis Rondinelli at UNC-Chapel Hill and William Burpitt at Elon University, who say that research, including their own, shows that companies are much more interested in the quality of highways, schools and the work force when deciding where to build factories (Economic Outlook, March).

BNC: Why are they wrong?

I believe they understate the importance of incentives. Being prepared to offer incentives that are reasonable and progressively prudent is important for us to make the list that companies and consultants will consider. We would never argue that you don't first compete on quality education, good infrastructure, exceptional training programs and quality of life. But often we compete with locations in other states and other countries that also have those attractive assets. Often at that point, this becomes a tough business decision based on the cost of the initial investment, and incentives can mitigate those costs and make a difference.

So North Carolina's incentives are viewed as inferior?

I believe we have not been put on the initial list for automotive assembly plants because we have not been regarded as among the most aggressive on incentives.

What are you doing about that?

The General Assembly, in approving the new job-development grant program in the last session, was making an important statement. The program provides up to $10 million per year in grants that can be awarded to companies that create jobs. Two sessions ago, at Gov. Easley's urging, the General Assembly appropriated $15 million for the One North Carolina Fund, a substantially larger appropriation than had been the case over the previous two or three years. The fund fluctuates with our success in landing projects. Currently, there is about $6 million in the fund, and I believe there is a willingness to add to that fund if business activity picks up.

Does the state's budget shortfall make it likely the appropriation will be cut?

I think the governor and the General Assembly are very attuned to the economic challenges we face, and I feel they are prepared to support initiatives and incentives that will help us attract and retain jobs in the state.

Are there safeguards for taxpayer money?

Our discretionary incentive programs, primarily the One North Carolina Fund and the job development grant program, are performance...