The regional incentives policy has been a major instrument for achieving regional develop¬ment goals in Greece. Economic incentives are offered to private firms, especially in the manufactur¬ing and tourist sectors, in order to locate in the problem regions of Greece and in this way contribute to their socioeconomic development. Since 1972 the incentives policy legislation has changed several times, its philosophy however remains the same. In this paper the ephasis is given in the analysis of the results for the incentives law currently into force, i.e. law 1262/82, and especially its impact on the East Aegean region. Results however are also presented for the earlier incentives laws as well, and it is demonstrated that the effectiveness of the regional incentives policy in Greece has not changed much through the entire period of its operation (1972-88). The main argument in this paper for assessing the effectiveness of the regional incentives policy relates to the spatial division of labor theoretical frame¬work for examining regional inequality problems. According to this framework, regional policies have limited impact on the locational decisions of private firms and they rather facilitate existing trends in the spatial distribution of private investment. The evidence presented in this paper for the regional in¬centives policy in Greece gives support to the above argument and shows that the incentives had limited effectiveness in influencing the location of private firms towards the problem regions of Greece, and the East Aegean region in particular.
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