The re-election of President George W Bush was the most keenly watched event in the US in 2004, and will shape key global trends such as the war in Iraq and the impact of America’s fiscal and current account deficits on the global financial system.

So far there has been little from the Bush Administration to calm jittery markets. The US economy grew by an annualised rate of 3.7% in the third quarter, below expectations but faster than the second quarter. Crucially, the fate of the dollar remains uncertain. The US economy is the largest and most advanced in the world, highly diversified and well-developed. Heavy investment in research and development keeps the country at the forefront of technology and competitiveness.

However, there is no national investment promotion body responsible for granting incentives. Investors must navigate through a maze of about 80,000 state, county, municipal economic development agencies with varying mandates to offer incentives. In addition, incentive levels vary considerably from state to state and from city to city, according to unemployment rates and political persuasions.

The power of state governments also varies. In some states, the state finance authority takes almost all investment incentive-related decisions; in others, incentives are not granted at state level but by county and city economic development agencies.