Many countries are convinced thatForeign Direct Investment (FDI) should be an importantcomponent of their growth strategy. To encourage FDI, theyhave improved their business climates, developed variousguarantees for investors, and offered incentives. In thereal world, Investment Promotion Intermediaries (IPIs) facetight budget and human resource constraints. Allocatingscarce resources among the various possible activities is amajor component of developing an effective promotionstrategy. Research, including that covered in this report,suggests that many IPIs are failing to devote enoughattention to the most basic-and least costly-promotionfunction, one that, if it fails, undermines all otherpromotion activities. Provision of services to potentialinvestors-and particularly the provision of information-isbasic to all promotion. Image-building efforts can be hugelyexpensive. Similarly, targeted missions and personal sellingare costly in terms of both time and effort. FDI offers theprospects of growth and jobs to host countries, butattracting it requires a good deal of effort. Effectiveinvestment promotion is not only less costly than adding onmore incentives for investors; reform and incentives areunlikely to accomplish their goals without promotion.Promotion efforts will, however, fail to attract desiredinvestment if IPIs are not skilled at the most basicfunction: collecting and providing to potential investorsrelevant and timely information. Ensuring that this functionworks well should be the top priority in the promotionstrategy and in the development of management systems.
PDF
download
878987797
028-85220240
