Investment Promotion Agencies Research Articles

Is FDI from China Goodfor Labour Productivity in Sub-Saharan Africa? A Panel Cointegration

China’s political and economic engagement in Africa has increased over the last two decades, resulting in a significant increase in Chinese foreign direct investment (CFDI) into the region. In this study, the link between CFDI and the productivity of labour is investigated in 22 sub-Saharan African countries from 2003 to 2020. The study utilised panel cointegration techniques that are suitable in the absence of cross-sectional dependence and take stationarity and long-run relationships into consideration. The findings from the panel dynamic ordinary least squares (OLS) and the fully modified OLS revealed that CFDI is important for driving labour productivity in the long run. In the short run, however, the study finds no significant influence of CFDI on labour productivity. Further findings reveal that CFDI Granger causes labour productivity. Additionally, the study finds that capital per labour is a necessity for boosting the productivity of labour in the region. The study recommends that African countries strengthen investment promotion agencies that actively facilitate CFDI and also negotiate favourable trade and investment agreements with China that promote technology transfer and skills development. JEL Codes: C23, F21, J24

Conceptualisation of Nation Brands to Attract Foreign Direct Investment: An Integrated Model

A nation brand is defined as a brand of a country. Nations are not only political and sovereign entities, but also business entities that conduct foreign trade, promote talent and innovation, create knowledge, levy taxes and enact laws. As a whole, nations accumulate wealth, power and status and leverage their brand identities to further their strategic interests. This article looks at the theories of nation branding and its implications on attracting foreign direct investment (FDI). FDI inflow has been studied by various researchers. The impact of nation branding on FDI has not been studied from an integrated perspective. This article analyses all the papers published in the field from 1969 when the genre of research was first mentioned in management literature and the factors presented by various researchers and place brand practitioners up to 2022 and combines them all into one integrated statistically testable model. The article analyses the factors from three perspectives—that of the governments and investment promotion agencies, external brand analysts and ranking consultancies as well as that of the investors.

Resilience of Foreign Direct Investment

Facing a world of continuous, overlapping disruptions, countries are recognizing resilience as the imperative condition for securing a sustainable and inclusive future. For developing countries, such as Costa Rica, Foreign Direct Investment (FDI) has had a positive impact specifically on economic growth, total exports, and the number of people employed. Costa Rica has undergone an important structural transformation in the last three decades, having gone from an import substitution model to a development model oriented to the promotion of exports and attraction of foreign direct investment (FDI). The efforts made to achieve greater international insertion of its economy have allowed the country to diversify its exportable offer, position itself as an attractive destination for investment in search of efficiency, and integrate its exports into global value chains.; ultimately becoming more resilient to external shocks. During the pandemic of COVID-19 Costa Rica’s Investment Promotion Agency (CINDE) reached record numbers in investment projects and job creation, the paper focuses on the years 2020-2021 and the attraction of FDI to the Costa Rica.

Guidelines to enhance the apexbrasil export qualification program for service and digital businesses

The Brazilian Trade and Investment Promotion Agency (ApexBrasil) is crucial in promoting Brazilian products globally and attracting foreign investments. ApexBrasil's Export Qualification Program (PEIEX) guides SMEs in internationalization, offering specialized training and export plan assistance. PEIEX promotes an export-oriented culture and enhances global market capabilities. The article analyses the implementation of the PEIEX program for service and digital business companies in Rio Grande do Norte. The study concentrates on three key components: The Work Plan, Support Material, and Export Plan Template. Its objective is to propose strategies for improving the program's structure and practical application. The study uses an exploratory, qualitative design with document analysis and a panel of specialists. Following the organizational learning model, it progresses through four stages: identifying service company issues, comparing export plans, exploring themes, and critically evaluating perceived strengths, gaps and recommendations to optimize PEIEX for service and digital businesses. The findings revealed that the Work Plan, Support Material, and Export Plan Model exhibited certain gaps concerning relevant technologies and processes associated with the digital transition and internationalization. However, these structures could be expanded and adapted to address these gaps. The recommendations include deploying specialized extensionist technicians in digital business and services, forming strategic collaborations with digital organizations, integrating new skills into the work plan for enhanced digital success, and refining targets to focus assistance on specific companies. These measures aim to notably amplify the program's impact, contributing to a more tailored support system for businesses in these sectors.

Impact of Foreign Direct Investment on Poverty Reduction and Economic Development

Purpose: The aim of the study was to investigate the impact of foreign direct investment on poverty reduction and economic development
 Methodology: This study adopted a desk methodology. A desk study research design is commonly known as secondary data collection. This is basically collecting data from existing resources preferably because of its low cost advantage as compared to a field research. Our current study looked into already published studies and reports as the data was easily accessed through online journals and libraries.
 Findings: The study revealed that FDI significantly contributes to poverty reduction and economic development. FDI is linked to higher economic growth rates, driven by its infusion of capital, technology, and market access. This influx of investment creates jobs in host countries, particularly in labor-intensive sectors, effectively reducing unemployment and improving living standards. Additionally, FDI promotes technology transfer and innovation, enhancing the competitiveness of domestic industries. Furthermore, FDI's positive spillover effects extend to human capital development through skill training and improved employability, leading to higher wages and overall poverty reduction. These findings underscore FDI's multifaceted role in fostering sustainable economic growth and social progress.
 Unique Contribution to Theory, Practice and Policy: Dependency Theory and Resource-Based may be used to anchor future studies on Foreign Direct Investment. Investment Promotion Agencies should establish effective investment promotion agencies to attract quality FDI, offering incentives, streamlined regulations, and investor support services. Stringent environmental regulations should be enforced to prevent FDI from causing negative environmental externalities and promote sustainable development practices.

Performance of domestic investment in Tanzania: an empirical analysis over the 1980 – 2020 period

Domestic investment is a key component of the economic growth of any country. In recent years, the growth of domestic investment has not been optimistic. This study aims at analyzing the factors affecting domestic investment in Tanzania. Time-series data of the 1980- 2020 period is used to empirically analyse the performance of the domestic investment. The study applies the Error Correction Model (ECM) to estimate the parameters. Factors affecting domestic investment in Tanzania are critically analysed. The factors influencing domestic investment includes money supply, interest rate, savings rate, and government expenditure. The regression results of this study show that government expenditure is insignificant in influencing domestic investment while money supply, interest rate, and savings rate are statistically significant. To this end, measures that influence domestic investment are indeed called for, implying a need for policies that can control interest rates, savings rates, and money supply . This paper recommends putting in place a conducive environment that could accelerate financial intermediation and domestic savings mobilization in order to improve domestic investment. Furthermore, the study suggests the encouragement of investment incentives and the establishment of vibrant investment promotion agencies.

Awareness of Investment Promotion for the Start-ups Eco-system: A Study on Odisha

When a company is in its early stage in business sector then they need investments to group or funding source. Want to start a business then funding is very important. That’s when we come across the word investment promotion agencies or investment promotion. The purpose of this study is to understand the need of investment promotion for Start-ups and whether it is necessary or not. This study specially targets start-up businesses, and this report shall point out the need, importance and awareness of investment promotion and investment promotion agencies. Using the data gathered from questionnaire and the information available on internet, we shall answer how the need of investment promotion and its agencies will be helpful for start-ups. The survey conducted was limited to specific area to attain the true and fair view or facts. Overall, the report shall present a new approach to the people or start-ups about the need, importance, and awareness of investment promotion and investment promotion agencies.

Strengthening Inter-Agency Cooperation and Coordination in the Implementation of the Strategic Trade Management Act With a View to Enhancing Trade Facilitation: A Philippine Customs Perspective

This paper provides insights into the state of play of inter-agency cooperation and coordination among government agencies in the Philippines involved in the implementation of the Strategic Trade Management Act, such as the Philippine Bureau of Customs, the Strategic Trade Management Office, and Investment Promotion Agencies (IPAs), which exercise control and supervision over registered enterprises in the freeport and economic zones in the Philippines. It will identify the challenges faced by customs officers in the facilitation of exports of potentially strategic goods requiring referral to the licensing agency for technical reachback, the complexity of commodity identification, which impacts frontline officers’ ability to identify strategic goods, and the non-integration of export declaration systems utilised by exporters in the freeport and economic zones with customs’ export declaration system. The paper also outlines recommendations and solutions to the challenges that confront Customs in the Philippines in effectively implementing strategic trade controls and facilitating legitimate trade in a timely manner.

Domestic Investment Laws and International Economic Law in the Liberal International Order

AbstractInternational Economic Law (IEL) has largely regulated cross-border trade and investment in the post-WWII world. IEL has become an important part of the Liberal International Order that prescribes a set of rule-based relationships for international cooperation based on political liberalism, economic liberalism, and liberal internationalism. However, economic globalization has witnessed a relative decline, especially after the 2008 global financial crisis and the COVID-19 pandemic. This form of ‘de-globalization’ challenges the assumptions upon which modern IEL is premised. This introductory article to the special issue on ‘Domestic Investment Laws and International Economic Law in the Liberal International Order’ explains how domestic law has started playing an increasingly important role in regulating foreign investment. Often overlooked instruments such as Domestic Investment Laws, Investment Screening Mechanisms, and Investment Promotion Agencies are now important tools in promoting or restricting foreign investment flows. Expanding on this premise, the article examines the transition from international to domestic in the Liberal International Order with a focus on Domestic Investment Laws. The move to domestic law does not signal a new era of economic isolation for States. Instead, it presents an effort to achieve similar ends of attracting foreign investors using different means while exercising more control over foreign investment.

Factors Affecting the Sustainability of the Medical Technology FDI Company Base in Ireland

This research study is a timely exploration into the factors affecting the sustainability of the Medical Technology FDI Company base in Ireland, delving into the reasons why FDI chooses to locate and remain in a location. The Medical Technology sector was specifically chosen as it is an important sector for Ireland both in terms of employment and exports and is of primary interest to the authors. Primary and secondary research has been undertaken in executing this investigation with the authors following a qualitative methodology. Following a review of the available literature examining the context of FDI and the issues surrounding sustainability, the authors undertook a series of semi-structured depth interviews with existing FDI Medical Technology based companies. These were further complemented by additional interviews with industry stakeholders and a focus group consisting of Medical Technology team members from the FDI investment promotion agency, IDA Ireland. The results of the research proved interesting in demonstrating that whilst Ireland remains a good place for Medical Technology investment, especially in the higher value areas of manufacturing and R&D for example, there are at least nine potential factors that could affect the sustainability of the FDI base in the country’s Medical Technology sector. Of these factors, cost competitiveness and corporate tax retention proved to be of prime importance. The research has also shown that the sector is looking to Government and the IDA to assist in retention strategies, primarily through broader incentive programmes and support.

A research agenda proposal on the influence of ApexBrasil on export, internationalisation and foreign trade

Objective: The present technical report aimed at presenting a research agenda regarding the influence of the Brazilian Trade and Investment Promotion Agency (ApexBrasil) on academic research about export, internationalisation, and foreign trade for academia, policymakers, practitioners, and other stakeholders. Method: We pursued a case study approach divided in a two-stage process. Firstly, we systematically reviewed 35 articles related to ApexBrasil’s influence on scientific research. Secondly, we analysed official documents and conferences, besides consulting a panel of specialists from ApexBrasil, in order to propose the research agenda. Main Results: Firstly, the results suggested that the knowledge about ApexBrasil’s influence on scientific research is scattered in different journals, researchers, and themes; furthermore, many studies do not have an impact on the international academy. Secondly, based on the data analysed, we propose a research agenda that might narrow the gap between ApexBrasil, academia, and other stakeholders. Relevance / Originality: The findings suggest unique insights about how and to what extent ApexBrasil’s influence is reported by scientific research and show which themes for future investigations are aligned with the agency’s interests, as well as the interests of its stakeholders in a scenario affected by the COVID-19 pandemic. Theoretical / Methodological Contributions: Our main contributions consist in a research agenda proposal based on theoretical and practical perspectives developed as a technical report. By doing so, we seek to raise awareness of academia, practitioners, and policymakers about ApexBrasil’s influence and potential relevance for international business studies, whilst pointing out important research gaps in the literature and potential new research avenues.

The Guinean Economy amidst the Covid-19 Health Crisis: Impacts and Eradication Strategies

The Covid-19 global pandemic has been the greatest threat to the world’s economy as a whole since the Great Economic Depression of 1929. The Guinean economy, like other countries around the world, has not escaped the clutches of this coronavirus-19 health crisis since its appearance until its advent in Guinea in March 2020. The objective of this paper is to not only provide a general overview of the impact of this health crisis on the country's economy but also to examine restrictive measures put in place by the government to ease the health, human and socio-economic impact of the pandemic, through case study methodology and review of data and reports from the National Agency for Health Security-Guinea (ANSS), the Central Bank of Guinea, the Ministry of Health of Guinea, The Private Investment Promotion Agency (APIP-Guinea), the World Health Organization (WHO). The results show us that the Guinean economy has registered in the face of COVID-19, this by the government's many devices and the immediate adoption of technological tools by some entrepreneurs. On this side, there are some entrepreneurs who have closed their businesses because of non-state assistance.

Improving investment promotion agencies performance in attracting foreign direct investment

PurposeThis study aims to investigate how investment promotion agencies (IPAs) attract funds effectively from emerging to established countries.Design/methodology/approachA qualitative action research (AR) study with data collected from focus groups and semi-structured interviews, observation and journaling. Comparative case studies are also presented to provide an external perspective to the researchers’ internal action researcher positions.FindingsThe research identifies four main factors that impact IPAs’ effectiveness in seeking a strategic asset in the UK from a developing country, China. The factors are policy advocacy, targeting industry, regional strategy and cultural adaption, which provide positive and significant influences on IPAs’ effectiveness.Research limitations/implicationsLittle research has been published about the roles of IPAs in attracting foreign direct investment (FDI) from a developing to a developed country. The study uses an AR approach and case studies, which have not previously been used to investigate IPAs’ performance. The study extends the sparse extant research and provides insights into what influences the performance of IPAs, thus contributing to knowledge and practice.Practical implicationsThe findings provide insights into the ways in which IPAs influence FDI flows. The research contributes to discipline knowledge and practice by identifying factors influencing funding in a non-traditional manner, that is from a developing to a developed country.Originality/valueLittle research has been published about the roles of IPAs in attracting FDI from a developing to a developed country. The study uses an AR approach and case study, which have not previously been used to investigate IPAs’ performance. The study extends the sparse extant research and provides insights into what influences the performance of IPAs, thus contributing to knowledge and practice.

Effects of learning style and learning source preferences on organizational learning capability

PurposeThe purpose of this research is the modeling of the relationship of Learning Style and Learning Source Preferences to Organizational Learning Capability (OLC).Design/methodology/approachA survey questionnaire gave us data from 274 employees in the hotel industry in Cyprus, which was chosen because it is a labor-intensive industry with big economic impact on the National Domestic Product (as per Cyprus Investment Promotion Agency this is more than 20%). SPSS and AMOS were used to analyse the proposed model.FindingsThe findings provided evidence to support the position that the proposed model demonstrates that OLC is affected by the Individual Learning Preferences (ILP) which are the learning style preference and the learning source preference of individual workers.Research limitations/implicationsThe study did not consider the effect of learning style and learning source preferences on the different departments of a hotel. Further, a longitudinal study with more organizations within the hotel sector, or other economic sectors, was outside the scope of this study.Practical implicationsThe proposed model can be used by organizations to reflect on how learning source and learning style preferences can affect the OLC.Originality/valueWhat relevant research did not explore enough, is the learning preferences of individuals in their work environment and not as often seen, the learning styles or learning (dis)abilities of students in a school environment. Therefore, this research fulfills the need to study learning preferences in the business context and examines their effects on OLC.

FDI inflows in Europe: Does investment promotion work?

Can active investment promotion efforts attract FDI towards areas and sectors that would not otherwise be targeted? This paper leverages an ad hoc survey on national and sub-national Investment Promotion Agencies (IPAs) in Europe and applies state-of-the-art policy evaluation methods to estimate the impact of IPAs on FDI attraction. The results show that FDI responds to IPAs even in advanced economies. Sub-national IPAs, operating in closer proximity to investors' operations, attract FDI in particular towards less developed areas where market and institutional failures are stronger. IPAs influence FDI over and above other policies targeting the general economic improvement of the host economies. Impacts are concentrated in knowledge-intensive sectors where collaborative systemic conditions are more relevant. IPAs work best for less experienced companies - ‘occasional’ investors - more likely to suffer from institutional failures. Finally, IPAs are equally effective in attracting companies from both outside and inside the EU Single Market even if the latter are less likely to suffer from regulatory or information asymmetries. Overall, this evidence sheds new light on the role of sub-national IPAs as local ‘institutional plumbers’ in support of foreign investors and their operations.

Subnational Investment Promotion Agencies and Foreign Direct Investment in South Korea: A District-Level Analysis

A growing number of governments around the world at both national and subnational levels have shored up their efforts at attracting foreign direct investment (FDI) by setting up an investment promotion agency (IPA). A newly emerging literature has sought to ascertain if and how such agencies have fulfilled their missions. In this article, we seek to move it forward by making two contributions. First, taking advantage of the Foreign-Business Friendliness Index (FBFI) data that cover all district-level local governments in South Korea, we are able to conduct a comprehensive study of local IPAs within a single country. Second, the detailed information in the data also enables us to examine precisely which organizational structures and activities of the IPAs are most responsible for the enhanced FDI performance. Key findings suggest that the way IPA s internal organizational structure is set up matters. Specifically, we show that IPAs that have an IP committee in conjunction with a designated IP department significantly outperform those that do not have both at the same time.

Explaining deference: why and when do policymakers think FDI needs tax incentives?

Why do governments compete for investment through tax incentives when there is strong evidence that such packages are inconsequential to the locational decisions of foreign firms? Previous scholarship has attributed pro-business policies such as investment incentives to factors including the structural power of business in an era of international capital mobility, fiscal competition generated through political decentralization or electoral pandering by political leaders. However, there is currently little understanding about how individuals, in their role as decision-makers within government agencies, form beliefs over how to best attract investment. Building on insights from the bureaucratic politics and behavioral economics literatures, we anticipate investment promotion professionals are more likely to view investment incentives as effective attraction tools when they have limited previous experience in the private sector, when they work for investment promotion agencies that are more integrated into the national bureaucracy, and when employee performance is evaluated based on deals closed. We test these expectations with a conjoint survey experiment of investment promotion professionals designed to uncover respondents’ beliefs over the relative importance of different components of the investment environment to firms’ locational decisions, and find substantial support for our expectations.

The distinct contribution of investment promotion agencies’ branch offices in bringing Chinese multinationals to Europe

This study uncovers the distinct contribution of investment promotion agencies’ (IPAs) overseas branch offices in advancing and even creating foreign direct investment. It offers a novel categorisation of IPAs depending on location and headquarter/branch status, and conceptually connects the known functions of IPAs with the advantages set out by the OLI paradigm. Empirical examination of longitudinal data from 29 European IPAs finds that the activities of their branches in China instilled greater awareness and confidence in Chinese multinational enterprises about their ownership- and European location-specific advantages. This contribution of IPA branches is especially salient in emerging economies with newcomer investors.

Information Frictions, Investment Promotion, and Multinational Production: Firm-Level Evidence

While countries make use of a wide range of policies to attract multinational firms, identifying the effect of such policies is difficult. Combining firm-level data on both the location of these firms’ foreign affiliates and detailed service-specific information from Costa Rica’s investment promotion agency (IPA) over time, we find that IPA support significantly increases the probability that a multinational firm establishes its first affiliate in the country, but has generally no impact on the expansion of its presence thereafter. We then show that this effect is primarily driven by the resolution of information asymmetries. It is stronger for IPA information services and on multinational firms from countries and in sectors facing more severe information frictions.

POLICY RESPONSE OF ASIAN ECONOMIES TO COVID-2019 PANDEMIC: CHINA, THE REPUBLIC OF KOREA, JAPAN

The countries of Northeast Asia were the first countries in the world, which faced the threat of the COVID-19 pandemic, the epicenter of which was the city of Wuhan in the Chinese province of Hubei. As of the end of March, the spread of the pandemic has been brought under control. Compared to other sub-regions in Asia and the Pacific, Northeast Asia was relatively well prepared for COVID-19 in terms of health systems, access to basic services and connectivity. The national response to COVID-19 was quick and varied. The governments have adopted numerous policies to contain the spread of the virus, as well as to address growing socio-economic challenges and mitigate the impact of the COVID-19 pandemic. To respond to the COVID-19 pandemic, the governments of China, the Republic of Korea and Japan have leveraged an existing memorandum of cooperation and a joint action plan to implement joint responses to pandemic influenza and new and re-emerging infectious diseases. However, the COVID-19 pandemic and the necessary containment measures have resulted in a sharp decline in economic activity, widespread loss of jobs and livelihoods and disruptions in the provision of basic services. In 2020, the countries in the region experienced a marked economic decline. After a significant drop in domestic demand and trade disruptions in the first half of 2020, the second half of 2020 was characterized by a gradual recovery in exports, there are currently signs of a recovery. The aim of current research was to investigate the practices of the three Asian countries – China, the Republic of Korea and Japan – in supporting businesses and citizens who found themselves in a difficult life situation due to the coronavirus, in order to identify optimal examples of economic policy during pandemic. The most effective measures to support the economy of China during the COVID-19 pandemic were food supply; control over the increase in the production; online services launched by the government. The most effective measures to support the economy of the Republic of Korea were: the Bank of Korea has cut its key rate to a record low benchmark; the Bank of Korea has provided the loans to the country’s commercial banks; the country’s government has allocated considerable funds to support South Korean SMEs; Korea Trade and Investment Promotion Agency has actively developed a global online trading platform; consumption taxes in case of car purchases have been reduced significantly to support the market; the enterprises with an annual turnover of less than Korean WON 60 million won have been provided with VAT exemptions. The most effective measures which have been taken by the government of Japan to were: there have been allocated USD 4.1 billion to support Japanese SMEs; there has been announced the development of a package of large-scale measures to support the country’s economy; there have been introduced special conditions for lending to SMEs; the activities of the companies involved in the fight against the pandemic have been subsidized; there has been introduced a simplified license renewal procedure for import/export and tariff quota certificates; the Bank of Japan has doubled up to USD 112 billion the exchange-traded fund (ETF) buyback program; a payment has been provided for the citizens who cannot work; a consulting service has been organized to support SMEs; for SMEs which were forced to send part of their employees on vacation or training, the state would cover the costs of forced leave in the amount of 4/5 during 100 days.