Developing economies and international investors. Do investment promotion agencies bring them together?
Many countries spend significant resources on investment promotion agencies (IPAs) in the hope of attracting inflows of foreign direct investment (FDI). Despite the importance of this question for public policy choices, little is known about the effectiveness of investment promotion efforts. This study uses newly collected data on national IPAs in 109 countries to examine the effects of investment promotion on FDI inflows. The empirical analysis follows two approaches. First, we test whether sectors explicitly targeted by IPAs receive more FDI in the post-targeting period relative to the pre-targeting period and non-targeted sectors. Second, we examine whether the existence of an IPA is correlated with higher FDI inflows. Results from both approaches point to the same conclusion. Investment promotion efforts appear to increase FDI inflows to developing countries. Moreover, agency characteristics, such as its legal status and reporting structure, affect the effectiveness of investment promotion. There is also evidence of FDI diversion due to investment incentives offered by other countries in the same geographic region.
|Date of creation:||Sep 2007|
|Date of revision:|
|Contact details of provider:|| Postal: P.O.Box 8131 Dep, N-0033 Oslo, Norway|
Phone: (+47) 21 09 00 00
Fax: (+47) 21 09 49 73
Web page: http://www.ssb.no/en/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Cletus C. Coughlin & Eran Segev, 1997.
"Location determinants of new foreign-owned manufacturing plants,"
1997-018, Federal Reserve Bank of St. Louis.
- Cletus C. Coughlin & Eran Segev, 2000. "Location Determinants of New Foreign-Owned Manufacturing Plants," Journal of Regional Science, Wiley Blackwell, vol. 40(2), pages 323-351.
- Holger Görg & Michael Henry & Eric Strobl, 2008.
"Grant Support and Exporting Activity,"
The Review of Economics and Statistics,
MIT Press, vol. 90(1), pages 168-174, February.
- Görg, Holger & Henry, Michael & Strobl, Eric, 2008. "Grant support and exporting activity," Open Access Publications from Kiel Institute for the World Economy 4288, Kiel Institute for the World Economy (IfW).
- Görg, Holger & Henry, Michael & Strobl, Eric, 2007. "Grant Support and Exporting Activity," CEPR Discussion Papers 6054, C.E.P.R. Discussion Papers.
- Lederman, Daniel & Olarreaga, Marcelo & Payton, Lucy, 2006.
"Export promotion agencies : what works and what doesn't,"
Policy Research Working Paper Series
4044, The World Bank.
- Lederman, Daniel & Olarreaga, Marcelo & Payton, Lucy, 2006. "Export Promotion Agencies: What Works and What Doesn't," CEPR Discussion Papers 5810, C.E.P.R. Discussion Papers.
- Wheeler, David & Mody, Ashoka, 1992. "International investment location decisions : The case of U.S. firms," Journal of International Economics, Elsevier, vol. 33(1-2), pages 57-76, August.
- Görg, Holger & Greenaway, David, 2003.
"Much Ado About Nothing? Do Domestic Firms Really Benefit from Foreign Direct Investment?,"
IZA Discussion Papers
944, Institute for the Study of Labor (IZA).
- Holger Görg & David Greenaway, 2004. "Much Ado about Nothing? Do Domestic Firms Really Benefit from Foreign Direct Investment?," World Bank Research Observer, World Bank Group, vol. 19(2), pages 171-197.
- Eichengreen, Barry & Tong, Hui, 2007.
"Is China's FDI coming at the expense of other countries?,"
Journal of the Japanese and International Economies,
Elsevier, vol. 21(2), pages 153-172, June.
- Barry Eichengreen & Hui Tong, 2005. "Is China's FDI Coming at the Expense of Other Countries?," NBER Working Papers 11335, National Bureau of Economic Research, Inc.
- Smarzynska, Beata K., 2002.
"The composition of foreign direct investment and protection of intellectual property rights : evidence from transition economies,"
Policy Research Working Paper Series
2786, The World Bank.
- Smarzynska Javorcik, Beata, 2004. "The composition of foreign direct investment and protection of intellectual property rights: Evidence from transition economies," European Economic Review, Elsevier, vol. 48(1), pages 39-62, February.
- Beata Javorcik & Mariana Spatareanu, 2006.
"To Share or Not To Share: Does Local Participation Matter for Spillovers from Foreign Direct Investment?,"
Working Papers Rutgers University, Newark
2006-001, Department of Economics, Rutgers University, Newark.
- Javorcik, Beata Smarzynska & Spatareanu, Mariana, 2008. "To share or not to share: Does local participation matter for spillovers from foreign direct investment?," Journal of Development Economics, Elsevier, vol. 85(1-2), pages 194-217, February.
- Beata Smarzynska Javorcik & Mariana Spatareanu, 2003. "To share or not to share : does local participation matter for spillovers from foreign direct investment?," Policy Research Working Paper Series 3118, The World Bank.
- Gustavo J. Bobonis & Howard J. Shatz, 2007. "Agglomeration, Adjustment, and State Policies in the Location of Foreign Direct Investment in the United States," The Review of Economics and Statistics, MIT Press, vol. 89(1), pages 30-43, February.
- Bruce A. Blonigen & Miao Wang, 2004.
"Inappropriate Pooling of Wealthy and Poor Countries in Empirical FDI Studies,"
Working Papers and Research
0903, Marquette University, Center for Global and Economic Studies and Department of Economics.
- Bruce A. Blonigen & Miao Wang, 2004. "Inappropriate Pooling of Wealthy and Poor Countries in Empirical FDI Studies," NBER Working Papers 10378, National Bureau of Economic Research, Inc.
- Robert E. Lipsey, 2007. "Defining and Measuring the Location of FDI Output," NBER Working Papers 12996, National Bureau of Economic Research, Inc.
- Blalock, Garrick & Gertler, Paul J., 2008. "Welfare gains from Foreign Direct Investment through technology transfer to local suppliers," Journal of International Economics, Elsevier, vol. 74(2), pages 402-421, March.
- Bruce C. Greenwald & Joseph E. Stiglitz, 1986. "Externalities in Economies with Imperfect Information and Incomplete Markets," The Quarterly Journal of Economics, Oxford University Press, vol. 101(2), pages 229-264.
- Gordon H. HANSON, 2001. "Should Countries Promote Foreign Direct Investment?," G-24 Discussion Papers 9, United Nations Conference on Trade and Development.
- Jacques Morisset & Kelly Andrews-Johnson, 2004. "The Effectiveness of Promotion Agencies at Attracting Foreign Direct Investment," World Bank Publications, The World Bank, number 15073, April.
- Andrew Charlton, 2003. "Incentive Bidding for Mobile Investment: Economic Consequences and Potential Responses," OECD Development Centre Working Papers 203, OECD Publishing.
When requesting a correction, please mention this item's handle: RePEc:ssb:dispap:513. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (J Bruusgaard)
If references are entirely missing, you can add them using this form.