Does a Country Need a Promotion Agency to Attract Foreign Direct Investment : A Small Analytical Model Applied to 58 Countries
Establishing an investment promotion agency has become a central part of most countries' development strategies. Today there are more than 150 investment promotion agencies worldwide. Yet very little is known about what these agencies have bee...
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
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World Bank, Washington, DC
2014
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| Online Access: | http://documents.worldbank.org/curated/en/2003/04/2329622/country-need-promotion-agency-attract-foreign-direct-investment-small-analytical-model-applied-58-countries http://hdl.handle.net/10986/18230 |
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okr-10986-182302021-04-23T14:03:42Z Does a Country Need a Promotion Agency to Attract Foreign Direct Investment : A Small Analytical Model Applied to 58 Countries Morisset, Jacques CONCEPTUAL FRAMEWORK CONDITIONALITY DEBT DEVELOPMENT STRATEGIES DIMINISHING MARGINAL UTILITY ECONOMIC DEVELOPMENT ECONOMIES OF SCALE ELASTICITY EMPIRICAL ANALYSIS EQUILIBRIUM EXCHANGE RATE EXPENDITURES EXPORTS FDI FIXED COSTS FOREIGN DIRECT INVESTMENT FOREIGN INVESTMENT FOREIGN INVESTORS FUTURE RESEARCH GDP GDP PER CAPITA GENERAL EQUILIBRIUM MODEL GOOD INVESTMENT CLIMATE HOST COUNTRY INCOME INDUSTRIAL COUNTRIES INTERNATIONAL INVESTMENT INTERNATIONAL INVESTORS INVENTORIES INVESTMENT CLIMATE INVESTMENT DECISIONS INVESTMENT PROMOTION INVESTMENT PROMOTION AGENCIES INVESTMENT PROMOTION AGENCY IPA IPAS LABOR COSTS LDCS MACROECONOMIC CONDITIONS MARKET SIZE MERGERS MIDDLE INCOME COUNTRIES POLICY ENVIRONMENT POLICY MAKERS POTENTIAL INVESTORS PRIVATE SECTOR PRODUCTIVITY PRODUCTIVITY GROWTH PROGRAMS PUBLIC GOOD REGRESSION ANALYSIS TAXATION TECHNOLOGY TRANSFERS UNEMPLOYMENT UTILITY FUNCTION FOREIGN DIRECT INVESTMENTS INVESTMENT PROMOTION BUSINESS ENVIRONMENT INVESTMENT ENVIRONMENT DOMESTIC INVESTMENT GOVERNMENT COMMITMENTS UTILITY FUNCTION Establishing an investment promotion agency has become a central part of most countries' development strategies. Today there are more than 150 investment promotion agencies worldwide. Yet very little is known about what these agencies have been really doing, notably in emerging countries, and whether they have been effective in influencing investors' decisions. Using data from a new survey on 58 countries, Morisset shows that greater investment promotion is associated with higher cross-country foreign direct investment (FDI) flows, on top of the influence of the country's investment climate and market size. But this result has to be qualified on several counts. First, the effectiveness of the agency depends on the country's environment in which it operates. An agency in a poor investment climate is less effective at attracting investment. Second, the scope of activities that an agency undertakes influences its performance. Morisset's empirical analysis indicates that agencies devoting more resources on policy advocacy are more effective because such activity is not only beneficial to foreign investors but also to domestic investors. In contrast, investment generation or targeting strategies appear expensive and risky, especially in countries with poor investment climates. Finally, certain internal characteristics of the agencies are associated with greater effectiveness. The agencies that have established reporting mechanisms to the country's highest policymakers (the president or prime minister) or to the private sector have been systematically more efficient at attracting foreign direct investment. Such institutional links are crucial because they contribute to strengthen the government's commitment as well as reinforce the agency's credibility and visibility in the business community. 2014-05-09T19:55:08Z 2014-05-09T19:55:08Z 2003-04 http://documents.worldbank.org/curated/en/2003/04/2329622/country-need-promotion-agency-attract-foreign-direct-investment-small-analytical-model-applied-58-countries http://hdl.handle.net/10986/18230 English en_US Policy Research Working Paper;No. 3028 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research |
| repository_type |
Digital Repository |
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Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English en_US |
| topic |
CONCEPTUAL FRAMEWORK CONDITIONALITY DEBT DEVELOPMENT STRATEGIES DIMINISHING MARGINAL UTILITY ECONOMIC DEVELOPMENT ECONOMIES OF SCALE ELASTICITY EMPIRICAL ANALYSIS EQUILIBRIUM EXCHANGE RATE EXPENDITURES EXPORTS FDI FIXED COSTS FOREIGN DIRECT INVESTMENT FOREIGN INVESTMENT FOREIGN INVESTORS FUTURE RESEARCH GDP GDP PER CAPITA GENERAL EQUILIBRIUM MODEL GOOD INVESTMENT CLIMATE HOST COUNTRY INCOME INDUSTRIAL COUNTRIES INTERNATIONAL INVESTMENT INTERNATIONAL INVESTORS INVENTORIES INVESTMENT CLIMATE INVESTMENT DECISIONS INVESTMENT PROMOTION INVESTMENT PROMOTION AGENCIES INVESTMENT PROMOTION AGENCY IPA IPAS LABOR COSTS LDCS MACROECONOMIC CONDITIONS MARKET SIZE MERGERS MIDDLE INCOME COUNTRIES POLICY ENVIRONMENT POLICY MAKERS POTENTIAL INVESTORS PRIVATE SECTOR PRODUCTIVITY PRODUCTIVITY GROWTH PROGRAMS PUBLIC GOOD REGRESSION ANALYSIS TAXATION TECHNOLOGY TRANSFERS UNEMPLOYMENT UTILITY FUNCTION FOREIGN DIRECT INVESTMENTS INVESTMENT PROMOTION BUSINESS ENVIRONMENT INVESTMENT ENVIRONMENT DOMESTIC INVESTMENT GOVERNMENT COMMITMENTS UTILITY FUNCTION |
| spellingShingle |
CONCEPTUAL FRAMEWORK CONDITIONALITY DEBT DEVELOPMENT STRATEGIES DIMINISHING MARGINAL UTILITY ECONOMIC DEVELOPMENT ECONOMIES OF SCALE ELASTICITY EMPIRICAL ANALYSIS EQUILIBRIUM EXCHANGE RATE EXPENDITURES EXPORTS FDI FIXED COSTS FOREIGN DIRECT INVESTMENT FOREIGN INVESTMENT FOREIGN INVESTORS FUTURE RESEARCH GDP GDP PER CAPITA GENERAL EQUILIBRIUM MODEL GOOD INVESTMENT CLIMATE HOST COUNTRY INCOME INDUSTRIAL COUNTRIES INTERNATIONAL INVESTMENT INTERNATIONAL INVESTORS INVENTORIES INVESTMENT CLIMATE INVESTMENT DECISIONS INVESTMENT PROMOTION INVESTMENT PROMOTION AGENCIES INVESTMENT PROMOTION AGENCY IPA IPAS LABOR COSTS LDCS MACROECONOMIC CONDITIONS MARKET SIZE MERGERS MIDDLE INCOME COUNTRIES POLICY ENVIRONMENT POLICY MAKERS POTENTIAL INVESTORS PRIVATE SECTOR PRODUCTIVITY PRODUCTIVITY GROWTH PROGRAMS PUBLIC GOOD REGRESSION ANALYSIS TAXATION TECHNOLOGY TRANSFERS UNEMPLOYMENT UTILITY FUNCTION FOREIGN DIRECT INVESTMENTS INVESTMENT PROMOTION BUSINESS ENVIRONMENT INVESTMENT ENVIRONMENT DOMESTIC INVESTMENT GOVERNMENT COMMITMENTS UTILITY FUNCTION Morisset, Jacques Does a Country Need a Promotion Agency to Attract Foreign Direct Investment : A Small Analytical Model Applied to 58 Countries |
| relation |
Policy Research Working Paper;No. 3028 |
| description |
Establishing an investment promotion
agency has become a central part of most countries'
development strategies. Today there are more than 150
investment promotion agencies worldwide. Yet very little is
known about what these agencies have been really doing,
notably in emerging countries, and whether they have been
effective in influencing investors' decisions. Using
data from a new survey on 58 countries, Morisset shows that
greater investment promotion is associated with higher
cross-country foreign direct investment (FDI) flows, on top
of the influence of the country's investment climate
and market size. But this result has to be qualified on
several counts. First, the effectiveness of the agency
depends on the country's environment in which it
operates. An agency in a poor investment climate is less
effective at attracting investment. Second, the scope of
activities that an agency undertakes influences its
performance. Morisset's empirical analysis indicates
that agencies devoting more resources on policy advocacy are
more effective because such activity is not only beneficial
to foreign investors but also to domestic investors. In
contrast, investment generation or targeting strategies
appear expensive and risky, especially in countries with
poor investment climates. Finally, certain internal
characteristics of the agencies are associated with greater
effectiveness. The agencies that have established reporting
mechanisms to the country's highest policymakers (the
president or prime minister) or to the private sector have
been systematically more efficient at attracting foreign
direct investment. Such institutional links are crucial
because they contribute to strengthen the government's
commitment as well as reinforce the agency's
credibility and visibility in the business community. |
| format |
Publications & Research :: Policy Research Working Paper |
| author |
Morisset, Jacques |
| author_facet |
Morisset, Jacques |
| author_sort |
Morisset, Jacques |
| title |
Does a Country Need a Promotion Agency to Attract Foreign Direct Investment : A Small Analytical Model Applied to 58 Countries |
| title_short |
Does a Country Need a Promotion Agency to Attract Foreign Direct Investment : A Small Analytical Model Applied to 58 Countries |
| title_full |
Does a Country Need a Promotion Agency to Attract Foreign Direct Investment : A Small Analytical Model Applied to 58 Countries |
| title_fullStr |
Does a Country Need a Promotion Agency to Attract Foreign Direct Investment : A Small Analytical Model Applied to 58 Countries |
| title_full_unstemmed |
Does a Country Need a Promotion Agency to Attract Foreign Direct Investment : A Small Analytical Model Applied to 58 Countries |
| title_sort |
does a country need a promotion agency to attract foreign direct investment : a small analytical model applied to 58 countries |
| publisher |
World Bank, Washington, DC |
| publishDate |
2014 |
| url |
http://documents.worldbank.org/curated/en/2003/04/2329622/country-need-promotion-agency-attract-foreign-direct-investment-small-analytical-model-applied-58-countries http://hdl.handle.net/10986/18230 |
| _version_ |
1764439437034389504 |