The Effectiveness of Promotion Agencies at Attracting Foreign Direct Investment
A perplexing question has become increasingly important: Does investment promotion really work? The authors hereby made a major step in providing a convincing answer to this question. Because many countries were not yet trying to promote investment...
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| Language: | English en_US |
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Washington, DC: World Bank
2013
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| Online Access: | http://documents.worldbank.org/curated/en/2003/10/2809356/effectiveness-promotion-agencies-attracting-foreign-direct-investment http://hdl.handle.net/10986/15073 |
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okr-10986-150732021-04-23T14:03:12Z The Effectiveness of Promotion Agencies at Attracting Foreign Direct Investment Morisset, Jacques Andrews-Johnson, Kelly INVESTMENT PROMOTION PROMOTIONAL STRATEGIES FOREIGN DIRECT INVESTMENTS INVESTOR CONFIDENCE BUSINESS ENVIRONMENT PRIVATE SECTOR PARTICIPATION COST-BENEFIT ANALYSIS SURVEYS EXPENDITURE PATTERNS RATE OF RETURN POLICY FORMATION ORGANIZATIONAL STRUCTURE ADVERTISEMENTS BENEFIT ANALYSIS CHAMBERS OF COMMERCE CONCEPTUAL FRAMEWORK CROSS-COUNTRY REGRESSIONS DOMESTIC INVESTMENT ECONOMIC DEVELOPMENT ECONOMISTS ELASTICITIES EMPIRICAL ANALYSIS EXPENDITURES FDI FINANCIAL RESOURCES FOREIGN DIRECT INVESTMENT FOREIGN INVESTMENT FOREIGN INVESTOR FOREIGN INVESTORS GNP GROSS NATIONAL PRODUCT HOST COUNTRY HOST ECONOMY INCOME INCREASING RETURNS INDUSTRIAL COUNTRIES INDUSTRIAL DEVELOPMENT INFLATION INTERNATIONAL INVESTMENT INTERNATIONAL STANDARDS INVESTMENT CLIMATE INVESTMENT CLIMATES INVESTMENT DECISIONS INVESTMENT GUARANTEE AGENCY INVESTMENT INCENTIVES INVESTMENT LEADS INVESTMENT PROMOTION INVESTMENT PROMOTION AGENCIES INVESTMENT PROMOTION AGENCY INVESTMENT SERVICES IPA IPAS LABOR COSTS LEGAL STATUS LOCAL FIRMS LOCAL MARKET MARKET FAILURE MARKET SIZE MEDIA NATIONAL POLICIES NATURAL RESOURCES POTENTIAL INVESTORS PRIVATE INVESTMENT PRIVATE SECTOR PRIVATE SECTOR INVOLVEMENT PROFESSIONAL STAFF PROGRAMS PUBLIC SECTOR REGIONAL AGREEMENT SUBSIDIARY RIGHTS TAX INCENTIVES TAXATION TECHNICAL ASSISTANCE TECHNOLOGY TRANSFERS A perplexing question has become increasingly important: Does investment promotion really work? The authors hereby made a major step in providing a convincing answer to this question. Because many countries were not yet trying to promote investment, the authors could conduct a very simple test: compare foreign direct investment (FDI) flows into countries that had promotion activities in the United States, with the flows into countries that didn't. The study provided some crude support for the idea that promotion worked and, with some assumptions, the costs of attracting an investor, or its trade-off seemed to favor promotion. But more recent data from this survey provided the authors a more sophisticated methodology; as a result, their study is more convincing, and addresses many more questions than earlier work. They find the median expenditure on investment by developing countries to be smaller than expected. However, the study shows that expenditures below a certain annual level yield few, if any returns. Where the investment climate is bad, efforts to improve policy seem sensible; but in fact, in countries with very poor investment climates, returns to expenditures on other promotion activities are likely to be especially low. Similarly, it is likely that promotion has more impact on certain kinds of investors than on others. The research stipulates important factors about organizational issues, and, results show that agencies with some kind of participation from the private sector, do better than those that are purely governmental. It also provides evidence to suggest that, at least for many countries, a dollar spent on investment promotion yields a better return than a dollar provided as a subsidy or given up through a tax incentive program. 2013-08-14T19:15:55Z 2013-08-14T19:15:55Z 2004 http://documents.worldbank.org/curated/en/2003/10/2809356/effectiveness-promotion-agencies-attracting-foreign-direct-investment 0-8213-5606-2 http://hdl.handle.net/10986/15073 English en_US FIAS Occasional Paper;No. 16 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank Washington, DC: World Bank Publications & Research :: Publication Publications & Research :: Publication |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English en_US |
| topic |
INVESTMENT PROMOTION PROMOTIONAL STRATEGIES FOREIGN DIRECT INVESTMENTS INVESTOR CONFIDENCE BUSINESS ENVIRONMENT PRIVATE SECTOR PARTICIPATION COST-BENEFIT ANALYSIS SURVEYS EXPENDITURE PATTERNS RATE OF RETURN POLICY FORMATION ORGANIZATIONAL STRUCTURE ADVERTISEMENTS BENEFIT ANALYSIS CHAMBERS OF COMMERCE CONCEPTUAL FRAMEWORK CROSS-COUNTRY REGRESSIONS DOMESTIC INVESTMENT ECONOMIC DEVELOPMENT ECONOMISTS ELASTICITIES EMPIRICAL ANALYSIS EXPENDITURES FDI FINANCIAL RESOURCES FOREIGN DIRECT INVESTMENT FOREIGN INVESTMENT FOREIGN INVESTOR FOREIGN INVESTORS GNP GROSS NATIONAL PRODUCT HOST COUNTRY HOST ECONOMY INCOME INCREASING RETURNS INDUSTRIAL COUNTRIES INDUSTRIAL DEVELOPMENT INFLATION INTERNATIONAL INVESTMENT INTERNATIONAL STANDARDS INVESTMENT CLIMATE INVESTMENT CLIMATES INVESTMENT DECISIONS INVESTMENT GUARANTEE AGENCY INVESTMENT INCENTIVES INVESTMENT LEADS INVESTMENT PROMOTION INVESTMENT PROMOTION AGENCIES INVESTMENT PROMOTION AGENCY INVESTMENT SERVICES IPA IPAS LABOR COSTS LEGAL STATUS LOCAL FIRMS LOCAL MARKET MARKET FAILURE MARKET SIZE MEDIA NATIONAL POLICIES NATURAL RESOURCES POTENTIAL INVESTORS PRIVATE INVESTMENT PRIVATE SECTOR PRIVATE SECTOR INVOLVEMENT PROFESSIONAL STAFF PROGRAMS PUBLIC SECTOR REGIONAL AGREEMENT SUBSIDIARY RIGHTS TAX INCENTIVES TAXATION TECHNICAL ASSISTANCE TECHNOLOGY TRANSFERS |
| spellingShingle |
INVESTMENT PROMOTION PROMOTIONAL STRATEGIES FOREIGN DIRECT INVESTMENTS INVESTOR CONFIDENCE BUSINESS ENVIRONMENT PRIVATE SECTOR PARTICIPATION COST-BENEFIT ANALYSIS SURVEYS EXPENDITURE PATTERNS RATE OF RETURN POLICY FORMATION ORGANIZATIONAL STRUCTURE ADVERTISEMENTS BENEFIT ANALYSIS CHAMBERS OF COMMERCE CONCEPTUAL FRAMEWORK CROSS-COUNTRY REGRESSIONS DOMESTIC INVESTMENT ECONOMIC DEVELOPMENT ECONOMISTS ELASTICITIES EMPIRICAL ANALYSIS EXPENDITURES FDI FINANCIAL RESOURCES FOREIGN DIRECT INVESTMENT FOREIGN INVESTMENT FOREIGN INVESTOR FOREIGN INVESTORS GNP GROSS NATIONAL PRODUCT HOST COUNTRY HOST ECONOMY INCOME INCREASING RETURNS INDUSTRIAL COUNTRIES INDUSTRIAL DEVELOPMENT INFLATION INTERNATIONAL INVESTMENT INTERNATIONAL STANDARDS INVESTMENT CLIMATE INVESTMENT CLIMATES INVESTMENT DECISIONS INVESTMENT GUARANTEE AGENCY INVESTMENT INCENTIVES INVESTMENT LEADS INVESTMENT PROMOTION INVESTMENT PROMOTION AGENCIES INVESTMENT PROMOTION AGENCY INVESTMENT SERVICES IPA IPAS LABOR COSTS LEGAL STATUS LOCAL FIRMS LOCAL MARKET MARKET FAILURE MARKET SIZE MEDIA NATIONAL POLICIES NATURAL RESOURCES POTENTIAL INVESTORS PRIVATE INVESTMENT PRIVATE SECTOR PRIVATE SECTOR INVOLVEMENT PROFESSIONAL STAFF PROGRAMS PUBLIC SECTOR REGIONAL AGREEMENT SUBSIDIARY RIGHTS TAX INCENTIVES TAXATION TECHNICAL ASSISTANCE TECHNOLOGY TRANSFERS Morisset, Jacques Andrews-Johnson, Kelly The Effectiveness of Promotion Agencies at Attracting Foreign Direct Investment |
| relation |
FIAS Occasional Paper;No. 16 |
| description |
A perplexing question has become
increasingly important: Does investment promotion really
work? The authors hereby made a major step in providing a
convincing answer to this question. Because many countries
were not yet trying to promote investment, the authors could
conduct a very simple test: compare foreign direct
investment (FDI) flows into countries that had promotion
activities in the United States, with the flows into
countries that didn't. The study provided some crude
support for the idea that promotion worked and, with some
assumptions, the costs of attracting an investor, or its
trade-off seemed to favor promotion. But more recent data
from this survey provided the authors a more sophisticated
methodology; as a result, their study is more convincing,
and addresses many more questions than earlier work. They
find the median expenditure on investment by developing
countries to be smaller than expected. However, the study
shows that expenditures below a certain annual level yield
few, if any returns. Where the investment climate is bad,
efforts to improve policy seem sensible; but in fact, in
countries with very poor investment climates, returns to
expenditures on other promotion activities are likely to be
especially low. Similarly, it is likely that promotion has
more impact on certain kinds of investors than on others.
The research stipulates important factors about
organizational issues, and, results show that agencies with
some kind of participation from the private sector, do
better than those that are purely governmental. It also
provides evidence to suggest that, at least for many
countries, a dollar spent on investment promotion yields a
better return than a dollar provided as a subsidy or given
up through a tax incentive program. |
| format |
Publications & Research :: Publication |
| author |
Morisset, Jacques Andrews-Johnson, Kelly |
| author_facet |
Morisset, Jacques Andrews-Johnson, Kelly |
| author_sort |
Morisset, Jacques |
| title |
The Effectiveness of Promotion Agencies at Attracting Foreign Direct Investment |
| title_short |
The Effectiveness of Promotion Agencies at Attracting Foreign Direct Investment |
| title_full |
The Effectiveness of Promotion Agencies at Attracting Foreign Direct Investment |
| title_fullStr |
The Effectiveness of Promotion Agencies at Attracting Foreign Direct Investment |
| title_full_unstemmed |
The Effectiveness of Promotion Agencies at Attracting Foreign Direct Investment |
| title_sort |
effectiveness of promotion agencies at attracting foreign direct investment |
| publisher |
Washington, DC: World Bank |
| publishDate |
2013 |
| url |
http://documents.worldbank.org/curated/en/2003/10/2809356/effectiveness-promotion-agencies-attracting-foreign-direct-investment http://hdl.handle.net/10986/15073 |
| _version_ |
1764425524119076864 |