Global

Suppliers to Multinationals (September 1996)

Foreign direct investment in developing countries has increased dramatically in the last ten years. As a result many developing countries have begun to search for ways to increase the benefits from such investment. One of the ways is through increased backward linkages between foreign controlled companies and local firms. In the process, many countries have recognized that protectionist policies and local content programs previously used to force foreign companies to buy local inputs do not work well in the changed international environment. This study examines and compares the recent experiences of a number of developing countries in encouraging backward linkages. It argues that: 1) economic liberalization helps rather than hurts domestic suppliers, including small and medium enterprises; 2) institutional support focusing on upgrading the capabilities of domestic suppliers is critical; and 3) promotional programs combining public and private resources can accelerate linkage development.

Programs in Industrial Countries to Promote Foreign Direct Investment in Developing Countries (August 1992)

For many years industrial countries have encouraged domestic firms to make direct investments in developing countries. These direct promotion programs, some of which have existed for several decades, provide the focus of this paper. However, support by industrial country governments has sometimes been ambiguous, many governments have faced serious opposition from domestic interest groups. Many developing countries also have been ambivalent about encouraging inflows of foreign direct investment. These attitudes are now changing on both sides. In this changing environment, this paper surveys the existing bilateral programs of fourteen member countries of the Organization for Economic Cooperation and Development (OECD) and the programs of several multilateral institutions. Chapter 2 gives an overview of the organizations involved in investment promotion, while Chapter 3 outlines the trends of several of the most important bilateral and multilateral investment promotion programs. The underlying principles and practices of both bilateral and multilateral programs are evaluated in Chapter 4 in light of the changing environment, and also of what is now known about effective investment promotion tecniques. Changes in both content and organization of present programs would improve their effectiveness; some of these changes are outlined in Chapter 5.

Facilitating Foreign Investment (October 1991)

A large number of developing countries have begun to change their policies toward foreign direct investment. Many countries have shifted from restrictive policies that reflect skepticism about the advantages of such investment to policies that seek to attract increasingly larger amounts of foreign investment. The changes in attitudes toward foreign investment have been accompanied by changes in the institutional arrangements by which governments manage their relations with foreign investors. With trade liberalization becoming increasingly popular and new attitudes toward foreign investment taking hold across much of the world, the approaches governments use to attract, screen, service, and monitor foreign investment are undergoing rapid change--and not always for the better. The structure a country develops to manage foreign investment screening should permit the rejection of "bad" projects while minimizing the likelihood that "good" projects will be discouraged. The one-stop investment shops created by so many countries are designed with these objectives in mind. Tensions exist between various groups that have an interest in this process. Those eager to attract foreign investment will promote a simple, quick, and transparent screening process. In contrast, government subunits will measure investment against cumbersome criteria in their more traditional role as "protectors of the national interest". Reform of the management of foreign investment is not an easy task.

Marketing a Country (April 1990)

This study is about the promotional techniques and structures that countries employ in their competition to attract foreign direct investment. On the basis of the evidence collected by the authors, it is argued that : 1) different combinations of promotional techniques are useful at different phases of a promotion program; 2) the type of organization responsible for promotion makes a difference in effectiveness; 3) there are various useful ways to evaluate a promotion program; 4) investment promotion appears to have a statistically significant influence on foreign investment flows; and 5) investment promotion programs have proved effective in attracting only certain kinds of investors. Promotional techniques consist of : a) providing information to potential investors; b) creating an attractive image of the country as a place to invest; and c) providing services to prospective investors. However, promotion is only one of several tools available to countries eager to attract foreign investment. Governments can : i) provide tax incentives and grants; ii) provide industrial estates, export processing zones, and other infrastructure; iii) attempt to simplify the bureaucratic procedures facing potential investors; iv) negotiate bilateral tax, trade and investment treaties; and v) attempt to create a favorable environment by guaranteeing repatriation of profits, assuring access to imported components, and promising not to expropriate property without compensation.