Does a Country Need a Promotion Agency to Attract Foreign Direct Investment : A Small Analytical Model Applied to 58 Countries

Morisset, Jacques

World Bank, Washington, DC

关键词: CONCEPTUAL FRAMEWORK;    CONDITIONALITY;    DEBT;    DEVELOPMENT STRATEGIES;    DIMINISHING MARGINAL UTILITY;   

DOI  :  10.1596/1813-9450-3028
RP-ID  :  WPS3028

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

Establishing an investment promotionagency has become a central part of most countries'development strategies. Today there are more than 150investment promotion agencies worldwide. Yet very little isknown about what these agencies have been really doing,notably in emerging countries, and whether they have beeneffective in influencing investors' decisions. Usingdata from a new survey on 58 countries, Morisset shows thatgreater investment promotion is associated with highercross-country foreign direct investment (FDI) flows, on topof the influence of the country's investment climateand market size. But this result has to be qualified onseveral counts. First, the effectiveness of the agencydepends on the country's environment in which itoperates. An agency in a poor investment climate is lesseffective at attracting investment. Second, the scope ofactivities that an agency undertakes influences itsperformance. Morisset's empirical analysis indicatesthat agencies devoting more resources on policy advocacy aremore effective because such activity is not only beneficialto foreign investors but also to domestic investors. Incontrast, investment generation or targeting strategiesappear expensive and risky, especially in countries withpoor investment climates. Finally, certain internalcharacteristics of the agencies are associated with greatereffectiveness. The agencies that have established reportingmechanisms to the country's highest policymakers (thepresident or prime minister) or to the private sector havebeen systematically more efficient at attracting foreigndirect investment. Such institutional links are crucialbecause they contribute to strengthen the government'scommitment as well as reinforce the agency'scredibility and visibility in the business community.