A framework for FDI promotion

  • Loewendahl H
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PDF en compu (Multinational companies/ ) Attracting foreign direct investment has become a central component of industrial policy in developed and developing countries across the world. There is a large volume of literature identifying why firms engage in international investment, the economic and political determinants of investment location and the impact of foreign direct investment on economic development. However, there is minimal research examining the role of investment promotion in attracting foreign direct investment. This is a major caveat, as most countries, and many regions within countries, have established investment promotion agencies with the specific objective to attract inward investment. In this article, a detailed analysis of investment promotion is provided, and a framework that investment promotion agencies can use to improve their effectiveness in attracting foreign direct investment and maximize the benefits for their local economies is developed. Based on case-study evidence, it is argued that the most successful investment promotion agencies have developed an integrated investment promotion strategy that combines marketing and company targeting with after-care and product development. Introduction Image, brand awareness, and perceptions are major factors influencing the location of foreign direct investment (FDI). Companies make investment location decisions on the basis of their information pool and understanding of an area’s location “offer”. Investment promotion is therefore an essential component of attracting inward investment, and there has been a rapid growth in the number of investment promotion agencies (IPAs) across the world. However, there is relatively little research on the role of investment promotion in attracting FDI. In this article, the reasons why investment promotion is important and how it affects investment location are outlined. A practical framework for the establishment and effective operation of IPAs is then developed, using case studies to provide practical insights into the different elements of successful investment promotion, from setting up an agency to marketing activities, company targeting, after-care and product development. Case studies presented draw in particular on the experience of the mature inward investment agencies in Europe, but also look at examples of investment promotion in developing countries. The framework developed here is aimed at both national and regional IPAs, as the relationship between investment promotion at the national and regional levels varies markedly between countries.

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  • Henry Loewendahl

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  • H Loewendahl

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