Investment Promotion and FDI Inflows: Quality Matters
AbstractInformation asymmetries constitute a significant obstacle to capital flows across international borders, and in particular to flows of foreign investment (FDI) to emerging markets.� Many governments aim to reduce information barriers by emerging in investment promotion activities.� Despite potentially large benefits of FDI and popularity of investment promotion intermediaries (IPIs), relatively little is known about their effectiveness.� This study uses data collected through the Global Investment Promotion Benchmarking (GIPB) exercise to examine whether higher quality of IPI services translates into higher FDI inflows.� The analysis, based on information on 156 countries, suggests that countries with IPIs able to handle investor inquiries in a more professional manner and IPIs possessing higher quality Web sites tend to attract greater volume of FDI.� These results are robust to using sector-level data and instrumental variable approach.
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Bibliographic InfoPaper provided by University of Oxford, Department of Economics in its series Economics Series Working Papers with number 612.
Date of creation: 01 Jun 2012
Date of revision:
Foreign direct investment; Investment promotion; Emerging markets; Information asymmetries; Red tape; Performance of public institutions;
Other versions of this item:
- Torfinn Harding & Beata S. Javorcik, 2013. "Investment Promotion and FDI Inflows: Quality Matters," CESifo Economic Studies, CESifo, vol. 59(2), pages 337-359, June.
- F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
- F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
- H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
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