GlobalFoundries cash grant largest ever awarded in U.S.

Five years ago, when New York state political leaders were vying for a computer chip factory that would later become GlobalFoundries' $4.6 billion Fab 8 project in Saratoga County, they were competing against the rest of the world for the facility, which is why they offered a whopping $1.4 billion in incentives.

Louis professor who has spent years tracking government subsidies, ranked the largest U.S. economic development deals dating back to 1999 in his 2010 book "Investment Incentives and the Global Competition for Capital."

New York's 2006 offer to Advanced Micro Devices Inc., which spun off its manufacturing operation in 2009 to create GlobalFoundries in a joint venture with the government of Abu Dhabi, ranks second.

"Companies looking to develop manufacturing facilities in the U.S. are faced with an uneven playing field as other countries and regions have adopted competitive policies and financial incentives aimed at attracting these facilities outside the U.S.," said GlobalFoundries spokesman Travis Bullard, who says a mix of hefty tax breaks and cash incentives can tip the scales.

The state is betting that those corporate taxes will be replaced by new revenues flowing into the state treasury from thousands of new jobs and from companies flooding into the area to feed off GlobalFoundries.

Greg LeRoy, executive director of Good Jobs First, a Washington, D.C., watchdog group that tracks corporate subsidies, says at $1 million per job, recouping the state's investment will be especially difficult because high-tech product life cycles are short compared to other industries.

Josh Lerner, an investment banking professor at Harvard Business School, says there is a serious risk of a state like New York paying too much on incentives, especially in the tech sector.