FDIREG2 module 2 by Ceddet

TOWARD THE NEXT GENERATION OF IPAS

MODULE 2

STRATEGIC INWARD INVESTMENT ATTRACTION

Toward the Next Generation of IPAs

Module 2

Course author Inter-American Development Bank (IDB) (www.iadb.org), through its Integration and Trade Sector (INT). Course coordinator Inter-American Development Bank (IDB) (www.iadb.org), through its Integration and Trade Sector (INT), the Institute for the Integration of Latin America and the Caribbean (INTAL) (www.iadb.org/en/intal) and the Inter-American Institute for Economic and Social Development (INDES) (www.indes.org). Module author Patrick Daly Pedagogical and editorial coordination The Inter-American Institute for Economic and Social Development (INDES) (www.indes.org) in collaboration with CEDDET Foundation (Economic and Technological Development Distance Learning Centre Foundation) (www.ceddet.org).

Copyright © 2017 Inter-American Development Bank. This work is licensed under a Creative Commons IGO 3.0 Attribution-NonCommercial-NoDerivatives (CC-IGO BY-NC-ND 3.0 IGO) license (http://creativecommons.org/licenses/by-nc-nd/3.0/igo/legalcode) and may be reproduced with attribution to the IDB and for any non-commercial purpose. No derivative work is allowed. Any dispute related to the use of the works of the IDB that cannot be settled amicably shall be submitted to arbitration pursuant to the UNCITRAL rules. The use of the IDB’s name for any purpose other than for attribution, and the use of IDB’s logo shall be subject to a separate written license agreement between the IDB and the user and is not authorized as part of this CC-IGO license. Note that link provided above includes additional terms and conditions of the license. The opinions expressed in this publication are those of the authors and do not necessarily reflect the views of the Inter-American Development Bank, its Board of Directors, or the countries they represent.

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Table of Contents List of Boxes .................................................................................................................... 5 List of Figures .................................................................................................................. 5 Glossary ........................................................................................................................... 6 Module Introduction ....................................................................................................... 6 General Objectives of the Module.................................................................................. 7 Learning-Oriented Questions ......................................................................................... 7 UNIT I. HOW TO DEVELOP AN INVESTMENT PROMOTIONAL STRATEGY .................. 9 Learning Objectives ........................................................................................................ 9 I.1. Identify National and IPA Objectives ...................................................................... 10 I.1.1. National or Regional Objectives ................................................................... 11 I.1.2. IPA Objectives ............................................................................................... 12 I.2. Sector Prioritization .................................................................................................14 I.3. How to Identify Sectors for Promotional Effort ..................................................... 15 I.4. How to Set Short- & Long-term Priorities for Promotional Effort ........................ 20 I.5. How to Identify Regions for Promotional Effort .................................................... 21 I.6. How to Approach Prospective Investors ............................................................... 23 SYNTHESIS OF THE UNIT .............................................................................................. 26 UNIT II. THE ROLE OF INFRASTRUCTURE IN ATTRACTING INWARD INVESTMENT . 27 Learning Objectives ...................................................................................................... 27 II.1. How Infrastructure Is Used to Attract FDI ............................................................ 27 II.1.1. Investor Motivation ................................................................................... 27 II.1.2. Infrastructural Deficits ............................................................................... 28 II.1.3. Infrastructure-Clusters ............................................................................... 29 II.1.4. Infrastructure-Special Economic Zones (SEZ) .......................................... 35 II.1.5. Infrastructure-Industrial Parks................................................................... 37 SYNTHESIS OF THE UNIT .............................................................................................. 40 UNIT III. THE ROLE OF INCENTIVES IN ATTRACTING INWARD INVESTMENT ............41 Learning Objectives .......................................................................................................41 III.1. Introduction ............................................................................................................41 3

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III.2. Types of Incentives ............................................................................................... 42 SYNTHESIS OF THE UNIT .............................................................................................. 44 UNIT IV. BEST PRACTICE AND INNOVATIVE APPROACHES TO INVESTMENT PROMOTION .................................................................................... 45 Learning Objectives ...................................................................................................... 45 IV.1. Introduction ........................................................................................................... 45 IV.2. Best Practices in Investment Promotion ............................................................. 47 IV.3. Innovative Approaches ......................................................................................... 49 IV.4. Regional Initiatives ............................................................................................... 52 SYNTHESIS OF THE UNIT .............................................................................................. 55

Bibliography .................................................................................................................. 56

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List of Boxes Box 1. Questions to be asked when reviewing National or Regional Development Plans ........................................................................................................ 12 Box 2. Example of IPA objectives .................................................................................. 13 Box 3. Reasons for prioritization ................................................................................... 15 Box 4. Possible criteria to judge sectors ...................................................................... 16 Box 5. Exercise on prioritizing sectors .......................................................................... 17 Box 6. Plotting sectors against criteria ........................................................................ 18 Box 7. Identifying regions for promotional efforts ..................................................... 22 Box 8. How to approach prospective investors .......................................................... 25 Box 9. Infrastructural deficits—Example: Intel in Costa Rica ..................................... 28 Box 10. Infrastructural deficits—Example: Malaysia ................................................... 29 Box 11. Some critical success factors in clusters ........................................................... 31 Box 12. Examples of clusters worldwide ...................................................................... 32 Box 13. Priority elements to the creation of a SEZ ...................................................... 36 Box 14. Criteria to be examined before establishing an industrial park ..................... 38 Box 15. Examples of industrial parks ............................................................................ 39 Box 16. Incentives—Important points ......................................................................... 43 Box 17. Strategic sequencing—best practice .............................................................. 47 Box 18. Failure in investment promotion strategies.................................................... 49 Box 19. Innovative approaches—Connect Ireland ...................................................... 52 Box 20. Example of a high tech cluster ........................................................................ 53 Box 21. Regional promotional initiatives ...................................................................... 54

List of Figures Figure 1. The Wine Cluster in California ........................................................................ 33 Figure 2. The Pharma/Bio Cluster Ireland ..................................................................... 34 Figure 3. The Boston Life Sciences Cluster .................................................................. 34

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Glossary n BPO: Business Process Outsourcing. n FDI: Foreign Direct Investment. n FIAS: Foreign Investment Advisory Service—a member of the World Bank

Group. n IFC: International Finance Corporation—a subsidiary of the World Bank. n IPA: Investment Promotion Agency. n OECD: Organisation of Economic Cooperation and Development. n SEZ: Special Economic Zone. n SWOT: Strengths, Weaknesses, Opportunities, Threats. n UNCTAD: United Nations Conference on Trade and Development. n VAT: Value Added Tax (Sales Tax). n WB: World Bank.

Module Introduction Successful IPAs worldwide have a clear investment promotion strategy which is based on an understanding of their country or region’s needs and potential. Their marketing strategy is used to determine what types of investors should be the focus of their promotional efforts and what types of promotional activities should be undertaken and where the activity should take place. A successful investment promotion strategy answers the basic question “What to sell and to whom”.

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The primary goal of this module is to help participants to build an FDI promotional strategy for their country or region, to understand the importance of sector prioritization, and to determine where to undertake the promotional and marketing effort. The module will also look at the importance of infrastructure in promoting FDI and the role of incentives in attracting investment. Finally, it will look at several models of international best practice and regional cooperation.

General Objective of the Module The objective of this module is to give participants the tools to build a successful promotional strategy and to expose them to international best practice. There are four units to this module as follows: n How to build an FDI investment promotion strategy for a country or region,

while understanding the importance of sector prioritization and determining the main regions for marketing effort. n Acquire an understanding of the role infrastructure, clusters, special eco-

nomic zones and industrial parks play in attracting inward investment. n Acquire an understanding of the types of incentives used by countries and

regions in attracting inward investment. n Examine best international practice and innovative promotional strategies;

describe some examples of regional promotional efforts and acquire the tools to build individual promotional strategies.

Learning-Oriented Questions n How does one decide an FDI promotional strategyâ&#x20AC;&#x201D;what sectors; what

short- and long-term objectives should one have and where should one concentrate the promotional and marketing effort? 7

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n What types of incentives and infrastructural models are used in attracting

inward investment? n What can one learn from international best practices, innovative strategies

and regional cooperative efforts?

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UNIT I HOW TO DEVELOP AN INVESTMENT PROMOTIONAL STRATEGY

Learning Objectives n Acquire an understanding of how a strategy is built up. n Understand the importance of sector prioritization. n How to set long- and short-term objectives. n How to select priority sectors. n How to determine the main regions for promotional and marketing effort. n How to approach prospective investors.

In order to build an investment promotion strategy, it is necessary to understand what that strategy is designed to achieve. A promotional strategy can only be designed when there are clearly articulated objectives, for example, the number of jobs to be created; the value of investment in dollar terms; or the attraction of strategic infrastructural investment. Objectives are often set by governments or regional authorities, but should be clearly stated and ideally the objectives to be met by FDI specified.

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To meet those objectives, particularly with limited resources, the IPA will need to prioritize its marketing and promotional activities and this means deciding on priority sectors and regions for its promotional efforts. This unit will show how the IPA can determine its key objectives if they are not already well described and agreed. When the key objectives are agreed, they can be met by a strategy of sector prioritization and by prioritizing the regions where promotion will take place.

I.1. Identify National and IPA Objectives The investment promotion strategy is an operational plan for the IPA which sets out what the IPA will promote and where. However, many IPAs attempt to formulate a strategy without first having specified the objective of the promotional strategy. The question is: “What does the IPA want to achieve by attracting foreign investment, and what kinds of investment will best serve those needs?” Possible answers might be: n “We want to create one hundred jobs in a one year period”—or n “We want to attract $100 million worth of foreign investment in a two year

period” or n “We want to attract a company to build an electricity generating plant.”

Of course, these are very broad objectives and the IPA will need to be more specific. It should specify what kind of jobs are targeted, where will they be located in the country or region (main town/cities or rural locations), whether investment is sought for existing industries or new industries for example.1

A note of caution; many governments adopt a policy of spreading investment throughout the country, however it is important to understand that investors are looking at many countries in a region and unless there are particular incentives, to, for example, a non-central location, their desire to locate in the main city should be facilitated.

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I.1.1. National or Regional Objectives The first task is to coordinate the IPA’s objectives with those of the National or Regional Development Plan. The IPA is not seeking FDI just because other locations are doing so. It is seeking investment because it will bring associated benefits that will help the country or region achieve certain development goals — for example, to expand the employment or technological base of the location, or increase foreign exchange earnings through the export of goods or services. These objectives establish the framework for the strategy. If the IPA has objectives which are closely linked to those of the National Development Plan, then its promotional efforts will produce better returns for the location. Aligning the IPA’s objectives with the National and Regional Development Plan’s objectives will provide a justification for the IPA’s funding and activities, and make the task of monitoring and evaluation much simpler. In locations where there is a detailed National Plan, the context in which the IPA will operate is much easier, as the plan often specifies the goals to be achieved over a specified time period. For example, if the government aims to increase exports by 25% over three years, then it is clear that attracting export-oriented investment will help achieve that goal. This will then indicate the types of industries which the IPA will target, the geographic location of those industries and the methods it uses in promotion. In the same way, if expanded employment is a goal, then the IPA will look for sources of labor-intensive investment, or if economic self-sufficiency is a goal, it might target import-substitution sectors2. Whatever the National Development Plan’s objectives are, they will have a direct impact on the formulation of the IPA’s promotional strategy.

In some cases a specific investment is required, for example, small and medium electricity-generating plants to take advantage of unused hydroelectric capacity is a priority in the Kyrgyz Republic in Central Asia (see invest.gov.kg).

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Box 1 Questions to be asked when reviewing National Development Plans Is FDI a stated key priority for the government or regional authority? Is there a mandate for the IPA in the National Plan and what activities are the IPA’s responsibility and what are the responsibility of the government? Does the IPA have a countrywide mandate, and does its mandate cover all types of investment and programs supporting investment (e.g. Investment in tourism or extractive industries—mining & oil & gas—and a “citizenship by investment” program)? Have objectives been set for the IPA in the National Plan?

I.1.2. IPA Objectives Once the IPA has reviewed the National Development Plan, it must then establish which of the many objectives can be furthered by the promotion of FDI by the IPA. Clearly where an increase in exports is a national goal, then the IPA might develop a goal which says “One quarter of the 25% of growth in exports that the government aims to develop over the next five years will come from newly established FDI” or “15% of new jobs created over the next five years will come from FDI”. Setting objectives, followed by the development of a strategy to achieve these objectives is not something which is done at a point of time and never revised, however, and these objectives will need to be revised regularly. The important point is that without setting measurable objectives it will not be possible to monitor or evaluate the work of the IPA and improve its operations in the future.

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As a start, the IPA should clearly state what its objectives are, in terms of jobs created, value of investments or strategic investments, and these should be stated on an annual basis and preferably over a longer period—preferably three to five years. FDI promotion is not a short-term activity, and it will take time for results to be achieved. It should also be understood by the IPA, and by its government or regional authority that FDI conditions, both internationally and internally are continually changing, which will require flexibility in the implementation of any strategy. It is also clear, that setting objectives without adequate expertise or resources is not realistic, and the setting of these objectives will therefore require negotiation with the relevant ministries and other stakeholders to provide the necessary resources in personnel and budget. Additionally, investment promotion is a team effort, and there is considerable value in a coordinated effort by all stakeholders, both from other ministries and government institutions, but also from academia and the private sector. Box 2 Example of IPA objectives IDA Ireland is the state IPA for the Republic of Ireland (population 4.6 million). It was established in 1949, and currently has a staff of approximately one hundred persons in offices both in Ireland and overseas. In 2015, a new five year strategy was published with the following key objectives: •

80,000 new jobs

•

900 new investments

•

€3 billion in Research & Development investments

Source: IDA Ireland

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Review Process National Develop-

Regional Objectives

IPA Objectives

ment Objectives

These may be gen-

May not be relevant,

Only objectives

eral, or vague, or ir-

but should be re-

which can be

relevant to IPA

viewed

achieved by FDI

I.2. Sector Prioritization The next task in the development of a promotional strategy is to choose which sectors the IPA will target for promotion, and the key to success is to prioritize. Why prioritize sectors for priority promotion? International best practice and experience is that those IPAs which prioritize are considerably more successful than those which do not.3 There are two main reasons which are the rationale for prioritization or targeting: A) Sector prioritization focuses scarce IPA resources on industries where the country has a competitive advantage, and B) Sector prioritization is used to improve the quality of FDI by diversifying the economic base, introducing new skills or technologies to the country. International evidence shows that there is a substantial growth in FDI by targeting sectors for promotion, and that the growth in those targeted sectors is also substantial. It is also evident that targeting encourages higher quality FDI.

See Oxford Investment Research Working Papers.

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Box 3 Reasons for prioritization n Most countries are not strong in all sectors. n Too many sectors (10+) means no priorities—a lack of focus leads to

less than optimal results. n Sector characteristics may differ significantly from one country to an-

other. n Sector success depends on competitive advantages of each sector com-

pared to its competitor locations.

I.3. How to Identify Sectors for Promotional Effort The following is a suggested methodology to narrow down and thus prioritize sectors for promotion: Step 1—Define the right criteria by which to judge sectors (Box 4). Define the top four to six criteria which any sector must meet in order to achieve “priority” status. These criteria usually vary from one country or region to another, but with the right criteria in place, high priority sectors become more evident.4

In the case of Ireland, an island nation, with two sea crossings to the main markets of mainland Europe, a high value to weight ratio has been critical. Thus sectors such as medical devices, pharmaceuticals and software, which have high value but low weight have been targeted for FDI.

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Box 4 Possible criteria to judge sectors (These will of course vary with country & region) n The sector should contribute to the developmental objectives outlined

in the National or Regional Plan, both short and long term. n It should have significant added value, or bring better technology which

will command higher prices and thus generate more income. n It should have a high value to weight ratio—the products should be less

sensitive to transport costs and can be transported economically. n If the location has a low rate of corporation tax, the sector chosen should

have high profit margins to take advantage of the low tax. n It should have access to good raw material locally—or good natural

advantages (for example, tourism sector). n If the location has invested in high quality telecom infrastructure, it

should be telecom intensive. n Can the location supply the sector’s labour needs? n Is there a high local or close regional demand for the sector’s products? n Are sector companies already investing in the region?

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Step 2â&#x20AC;&#x201D;List potential sectors for your region and assign them a letter (Box 5). Box 5 Prioritising sectors List potential sectors for your region and assign them a letter: For example: Investment in tourism facilities Food production BPO Financial services

A B C D and so on.

Step 3â&#x20AC;&#x201D;Then plot them against the chosen criteria using a percentage measure (How much do they fulfil the criteria?); (for simplicity use 0%, 25%, 50% 75% and 100%). For example: percentage match 1 Contributes to the National Plan objectives % 2 Significant added value % 3 High value to weight ratio % 4 Has access to raw materials locally % 5 High profit margins % 6 Telecom intensive % and so on.

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Box 6 Plotting sectors against criteria Step 4—Plot sectors against the criteria.

Criteria

Sector A

Sector B

Sector C

Sector D

Sector 5

Other Sectors

100

Total

450

325

425

475

In this theoretical example, “financial services” (sector D) has a higher total score than “tourism investment” and “food production”, but clearly other factors such as legislation and availability of trained and experienced workers would be key if that sector was chosen.

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This is just a first exercise and the exercise will both prompt debate and discussion, as the criteria chosen will be questioned as part of the exercise. Additionally, the sectors chosen above are very broad, and the exercise will have to be repeated to determine sub-sectors. For example: Tourism could be further broken down to: Eco-Tourism; Health & Wellness; Adventure Tourism; Cultural tourism; etc.5 The total weighting will give a good indication of which sectors and sub sectors should be prioritized.

Review Process Define criteria rele-

List possible sectors

Plot sectors

vant to IPA objec-

for promotion

against criteria

What is the invest-

Start with a wide defi-

Give each sector

ment expected to

nition, then redo ex-

a weighting then

contribute to the

ercise with sub-sec-

review sub-sec-

country

tors

tors.

tives

Promotional material such as the website will specify for investors the sub-sectors which are most attractive in a location. For example, the Accommodation and Health & Wellness sub-sectors are highlighted on the Invest Dominica website (www.investdominica.com).

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I.4. How to Set Short- & Long-term Priorities for Promotional Effort Why should the IPA set short- and long-term priorities? It is again necessary to refer to the National Development Plan if this is clearly written and expressed. In the National Plan, a government usually sets out short- and longterm objectives and as before it should be possible to align the objectives of the IPA with the National objectives. For example, the government may have as a short-term objective, an increase of employment of a certain number, in which case the IPA may have as its short- term objective the attraction of significant employment creating industries. However, most governments also have longer term ambitions “to become the Business Process Outsourcing (BPO) hub of the Caribbean”, for example. The IPA will then have to accommodate this ambition in its objectives by deciding what steps are necessary to achieve it, and what part FDI can play6. Another important aspect is that the political reality is that the IPA may need to demonstrate some short-term success in attracting FDI in order to justify its funding and government support. It may be able to do so by focusing on “low hanging fruit”—sectors or sub-sectors which can produce a short-term result. It is important, however, that longer term objectives be adopted by the IPA, as this will inform the policy changes and infrastructural deficits which need to be rectified in order to reach those objectives. For example, if the government object is “to become the BPO hub of the Caribbean” then high quality telecommunications, an educated workforce with language skills and suitable buildings need to be in place, which may take time to install. Additionally, there may be legal and administrative changes needed before this ambition can be realized.

One of the key functions of an IPA is policy advice to the government. Through its interaction with established and potential investors it will learn what facilities and incentives are required to attract and develop investment, and what can be achieved in the short and long term.

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The short- and long-term objectives will therefore inform how the short- and longterm strategy is constructed, and the criteria used to determine priority sectors for promotion.

I.5. How to Identify Regions for Promotional Effort How does the IPA determine where to concentrate its promotional effort? If the IPA undertakes an exercise to identify the priority sectors for promotion, this will greatly help in identifying those regions where it should concentrate its promotional effort. This will take considerable research effort as it will need to identify regions where there is a number of significant â&#x20AC;&#x153;playersâ&#x20AC;? in that particular sector.

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Box 7 Identifying regions for promotional efforts A number of questions need to be asked: n Is the promotional strategy aimed at “first-mover” companies or at

smaller sector companies? n Do companies from that region already invest in the local region or

competitor locations? n Where are the companies with the best technology located? n Where are companies selling into the local region located? n Where do existing FDI companies in the IPA’s location come from? n Where does the IPA region have language, cultural or historical links? n Where does it have a diaspora which could provide information and

access to investing companies? n Does the region have existing transport links with particular export

markets? n Does the IPA’s country have existing marketing channels it could use in

particular regions—embassies, consulates, tourist offices, bi lateral trade organisations?

Again, when the research is completed it will be necessary to decide what resources are required and how the marketing can take place. (Module 4)

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Review process Define type of

Where do investors

What links does

companies to ap-

to country/region

your country

proach

come from?

have with promotional region?

Size/technology?

Technology leaders

Are there good exam-

Culture/lan-

or smaller compa-

ples from that region

guage/history or

nies?

in your country?

diaspora.

I.6. How to Approach Prospective Investors Having identified priority sectors and clearly articulated the advantages of the IPA’s location over competitor locations and decided the regions where it wants to concentrate its promotional effort, it will need to decide how it is going to approach prospective investors and what its message will be. Before doing that it will need to have a number of things in place: A) Research sector and main “players”: (Module 4) n Does the IPA and its key marketing executives have up-to-date knowledge

of the sector, main trends, issues and companies? n Have the main companies been researched—annual reports, press releases

stock market announcements etc.? n Are there sector companies in the local region, and what is the investment

history of these sector companies in the IPA’s region? Are they successful and what problems have they faced and how have they solved these problems?

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n Does the IPA have information on the main input costs for the target sec-

torâ&#x20AC;&#x201D;labor availability and rates, premises, transport, utilities etc.? n Does the IPA have a list of the decision makers in target companies?

B) Investor tracking system/CRM system: (Module 6) n Does the IPA have an investor tracking system/CRM system which is easy to

operate and accessible to all IPA executives who may have client contact? C) Well-crafted marketing message: (Module 4) n Has a well informed and sector-specific marketing message been formu-

lated? n Has a company-specific marketing message been formulated? n Has the IPA up to date marketing material, website, brochures, fact sheets

etc.? D) Lead generation: (Module 4) n Will the IPA develop its own leads or will it use diplomatic/diaspora or com-

mercial companies to generate leads? n Who will be responsible within the IPA for lead generation and/or coordina-

tion of leads? E) Decisions on media to be used: (Module 4) n Has a decision been made on whether the IPA will employ a proactive mar-

keting approach to the target sector and market? n Will the IPA use face-to-face meetings, conferences & exhibitions, social me-

dia, email, traditional mail or phone calls as a first approach? F) Budget and resources: n What is the budget for investment promotion? n Are there sufficient funds for outreach campaigns, travel and conference

fees? n Does the IPA have sufficient personnel dedicated to the chosen marketing

strategyâ&#x20AC;&#x201D;are they full or part-time? n Does the IPA have funds for research, telecoms and marketing material?

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NIT 28 Box How to approach prospective investors Some comments and tips Research is critical, both to develop a knowledge of the priority sector and to develop leads within this sector. It is also crucial to build credibility with potential investors. If the IPA does not know the issues, what drives the business, who the competitors are and what the competitor locations can offer the investor, it will not have a strong marketing message. The marketing executives should have a knowledge of the priority sectors, ideally through their educational background and experience, but that can be developed given resources, time and access to outside sector expertise. It is important to understand that all sectors change and up to date knowledge of the sector is crucial. Proactive marketing based on priority sectors and regions is shown internationally to be the most effective promotional strategy for FDI. It is far more effective than a passive strategy based on websites, mailshots, advertising or stands at exhibitions. It is possible to use commercial lead generation companies, but they tend to be expensive and the information can also be very general, and if research by the IPA and its staff is undertaken on priority sectors and priority regions, then that research will educate the IPA and its executives, increase credibility, and may also give leads which can be used. The key piece of marketing material today is the website, (Module 6), and resources and time should be aimed at this rather than expensive brochures or videos which can become dated and are often redundant. Advertising, if used at all, should be focused and aimed at priority sectors and regions, rather than general international media. An advertisement in a regional trade journal focused at the priority sector is more effective than an advertisement in an international journal or newspaper.

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SYNTHESIS OF THE UNIT The main purpose of this unit is to show some of the steps and tools which can be used by an IPA to develop an investment promotion strategy. It shows the importance of expressing objectives and how they can be developed before developing a strategy. The importance of sector prioritization is emphasized, and how sectors and regions for investment promotion can be selected, as well as methods to approach potential investors.

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UNIT II THE ROLE OF INFRASTRUCTURE IN ATTRACTING INWARD INVESTMENT

Learning Objectives n Understand how infrastructural deficits can be overcome. n Understand how clusters form, are created and supported. n Understand how special economic zones (SEZs) and industrial parks are

used to encourage FDI.

II.1. How Infrastructure Is Used to Attract FDI II.1.1. Investor Motivation It is worth revising the main motivations for investors when they move to a new location: 1. They are Asset Seeking: they want to purchase an existing operation, either private or public (a manufacturing plant; an electricity generating plant, etc.). 2. They are Resource Seeking: they wish to take advantage of a local resource or raw material (oil; gas; metal ore; agricultural products, etc.).

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3. They are Market Seeking: they wish to take advantage of the location to sell to local or regional markets (they may wish to enter behind tariff barriers— for example, US companies in Ireland wishing to sell in the European Union). 4. They are Cost-Efficiency Seeking (lower labor, transport, power, facilities, etc.). Although we need to be aware of the motivation for the investor, we may not be able to influence many of the factors which motivate him.

II.1.2. Infrastructural Deficits When a sector is prioritized certain infrastructural deficits may be identified which can be barriers to the attraction of FDI. No matter what the motivation of the investor is, some of these deficits can be overcome by using a range of infrastructural methods. Box 9 Infrastructural deficits—Example: Intel in Costa Rica How imperfections in the local infrastructure were a barrier to a potential investment The campaign to persuade Intel to construct a semiconductor plant in Costa Rica is well known. When negotiations finally began, it was clear that Intel had concerns about the smooth integration of a Costa Rican plant into Intel’s international supply chains. Fearing that there might be problems with the electrical power infrastructure, the government undertook to build a new dedicated electrical sub-station on the network for Intel. Likewise, fears of difficulties with freight transportation lead to a government commitment to modernize the freight handling services at the national airport.

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Box 10 Infrastructural deficits—Example: Malaysia How land & business ownership rules were a barrier to foreign investment In the early 1970s, Malaysia, seeing the success of neighboring Singapore in attracting foreign investors, sought to imitate this success by the creation of Special Economic Zones. These zones were free of the ownership requirements which favored local owners for industry in the rest of the country. The first buildings were constructed around Penang airport, and from 1972 through to the mid 1980’s US, Japanese and European firms built plants to produce low skill intensive electronic components and finished goods.

II.1.3. Infrastructure-Clusters Michael Porter (1998) defines clusters as “Geographic concentrations of connected companies and institutions in a particular field with related government, academic and private sector stakeholders”. These can be broadly defined as a group of companies or individuals in the same sector. Clusters can evolve on their own or be actively promoted by governments, private companies and the global community and they can be a powerful tool to attract investment by companies which may act as sub-suppliers, partners or parallel suppliers to regional markets. In some cases, the formation of a cluster can be promoted by FDI into a target sector (see Box 11). Naturally occurring clusters would be Champagne manufacturers in the North of France, or oil producers in Saudi Arabia. Clusters which have grown organically because of an accident of history are the movie industry in Hollywood because there

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was more sunlight than New York, or a strong pull factor as happened in Silicon Valley because of the proximity of Stanford University and its research facilities. Clusters facilitate the rapid transmission of ideas and resources, both by cooperation and by competition. They can help the access to research and development facilities, attract skilled workers and services of certification and quality control. For global corporations, the close proximity of suppliers and service providers may be more efficient than global outsourcing or vertical integration. How did they grow? Government procurement lead: In the United States, government procurement and support helped form clusters concentrated on the defense and aeronautics industry. Organic evolution of previous industrial history: in Boston a long industrial tradition evolved into a cluster of precision engineering and medical devices companies due to the support and coordinated efforts of private sector companies, academic institutions (MIT, Harvard etc.) and government research projects. New skills formation after evolution of older production activity: The Silicon Valley cluster in California grew from a combination of older production skills in electrical and electronics manufacturing and new academic research (particularly in Stanford University). Innovation lead: government investment in research lead to a growth in new companies in Finland. FDI lead: Ireland had little industrial history but a focus on attracting FDI in life sciences has resulted in a large cluster in this sector in the country focused mainly on European markets (see Box 11). Clusters, however, although they may arise spontaneously, their development is not automatic as companies in clusters change their behaviors and adopt new roles.

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The artificial creation of clusters is difficult—it can, however, sometimes happen where a dominant or influential company in an industry sector is able to attract suppliers and complementary companies to a location. In other cases, the closure of a large sector company can provide the impetus for a creation of a cluster of new companies or spin-outs as happened in Finland after the collapse of Nokia’s mobile phone business or in Ireland after the closure of Digital Equipment Corporation on the West Coast. In both these cases, substantial government and academic support was required to support the growth of a new cluster of companies. Box 11 Some critical success factors in clusters n Large flagship projects in related industries. n Strong science base—academic institutions. n Corporate sponsored Research & Development. n Political vision and drive-supportive policies. n Excellent quality of life—attracts key people. n Availability of finance—access to venture capital. n Effective business networks. n Start-ups and spin-outs—existence of an entrepreneurial culture. n Skilled local workforce. n Good marketing and market access.

Clusters can be strengthened by the promotional efforts of the local IPA if that sector and industry is in line with the objectives and goals of the agency and the relevant government or local authority. 31

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Box 12 Examples of clusters worldwide The Wine Cluster in California: Fourth largest wine exporter in the world, supplying 90% of US wine. Benefits from good climate and soil, port and road transportation, finance and a large labor force. Biopharma Cluster in Ireland: seventy-five pharmaceutical companies and three hundred biopharmaceutical companies employ 25,000 people directly. Ireland has seven of the world’s top pharmaceutical companies and is the world’s seventh largest exporter of pharmaceutical products. The IPA has followed a policy of targeting leading sector companies and expansions. Boston Life Science Cluster: world’s largest life-science cluster with 450 companies employing 75,000 people. It has the advantage of leading R & D facilities and universities and access to venture capital.

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Figure 1

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Figure 2

Source: Mr. Eamonn Sheehy, Communique International Dublin

Figure 3

Source: Mr. Eamonn Sheehy, Communique International Dublin

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II.1.4. Infrastructure-Special Economic Zones (SEZ) Special Economic Zones can be roughly defined as areas or regions which permit certain activities to be carried out with a different regulatory or taxation regime to other areas in a country. They are often established by countries to circumnavigate poor enabling environments, or where a government wishes to attract investment which is, for example, only focused on export activities. They have often been established near ports or airports, to attract exporting industry, or where they can be used to trial new economic models as in China.7 They need fairly complex policy instruments and there is a wide diversity of institutional approaches, incentive structures and operational models. They usually have a unique set of characteristics: n They are export-orientated. n They have streamlined customs procedures. n They permit the free import of raw materials and the export without tax of

finished products. The SEZ can act as a catalyst to the development of a more dynamic economic environment in a country by encouraging broader business environment reform, diversification of industry, technological and human upgrading and integration with the domestic economy through linkages and spin-offs. However, if a country does not tackle the underlying causes of a poor enabling environment it can lead to disappointing results.

Special Economic Zones were initially created along the Chinese border with Hong Kong to take advantage of low utility and labor costs on the mainland.

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Box 13 Priority elements to the creation of a SEZ 1. Regulatory framework: This is key to the successful operation of a SEZ, and as noted above, there is a wide range of models utilized. The model chosen will depend on the domestic environment in the country, competitor locations and the target sectors and activity. 2. Institutional effectiveness: •

There should be clear and balanced institutional structures from the beginning that empower the zone authority with sufficient control and autonomy.

•

There should be effective zone management that adopts a customer and results orientation, and

•

Ensuring financial planning and financing are undertaken in partnership with the private sector.

3. Physical features: •

Size will obviously depend on the sector, the range of activities and location.

•

Location and external structure. Access to transport, raw materials and labour and external infrastructure are key to success.

•

Site design, infrastructure and related services are also key to success, particularly utilities which are not available elsewhere in the country.

Source: FIAS, 2008

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II.1.5. Infrastructure-Industrial Parks An industrial park could be defined as an industrial estate with high quality infrastructure. It differs from a cluster which is a linked network with common interests and strategy. The advantage of industrial parks is that they provide a ready to go infrastructure, either buildings or serviced plots, which reduce the time to get going for a new industry or investor, where infrastructure in the rest of the country has deficits. In many cases they provide purpose-built space, and may have special incentives for that location. Most successful industrial parks provide a mix of options for residents or new industriesâ&#x20AC;&#x201D;rental, for purchase or lease, fully serviced sites for construction; office, warehouse and service buildings; central management and administration. Many industrial parks are aimed at specific sectors which have been identified and selected for promotion by the host country or region and this allows for the right mix of buildings and facilities to be provided. Parks aimed at the Business Process Outsourcing (BPO) sector, for example, would probably provide basic shell office/warehouse buildings with good telecommunications (including redundancy), good power for equipment & air conditioning and good access for staffâ&#x20AC;&#x201D;maybe even a bus service. A park aimed at the pharmaceutical sector, in contrast, may not need to provide buildings, but large plots, with good access roads, access to power, water and perhaps natural gas.

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Box 14 Criteria to be examined before establishing an industrial park n Is there a demand for an industrial park—either domestically or interna-

tionally? n Is land available and at a reasonable price, and is finance available? n Do the benefits exceed the cost of establishment and operation? n Is there long-term political support as returns may be slow to appear?

Possible facilities offered in an industrial park: n Affordable land and buildings for sale or lease. n Common specialized facilities—these will depend on the sector. For exam-

ple, if the park is aimed at food processing, then certification and cold storage may be appropriate. n Additional facilities such as training facilities or incubator units may be

added. n General facilities—these may include restaurants, cafes or retail outlets,

business services, crèches etc. In some cases, the IPA can be located in an industrial park—for example, regional offices of the Irish state IPA are located in purpose built offices in industrial parks.8 Financing. n Public financing: this can either be from central state or regional funds.

This provides an excellent promotional opportunity to show prospective investors the types of facilities available in the region.

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n Public-public co-financing: contributions from state, regional funds, foreign

donors and/or regional development/financial institutions (e.g. World Bank, IFC). n Private financing: by a local or foreign private investor who acts as the park

operator. n Private-private financing: this is where financing is provided by the park op-

erator and some or all of the resident park companies. n Public-private co-financing: part public financing and part private. Ideally

this could come from public financing of off-site infrastructure such as roads, and public private funding of on-site facilities. n Public guarantees: this is where government attract private financing to

build facilities by giving guarantees to developers on, for example, rent for a specified period (this model has been used in Ireland where developers were guaranteed a commercial rent by the government until the IPA was able to attract a private tenant). Box 15 Examples of industrial parks Alabuga Special Economic Zone (www.alabuga.ru) one of the largest industrial parks in Russia with 200,000 sqm of space. Tenants include Ford, Huhtamaki, 3M & Rockwool. Tanger Med Zones (www.tangermedzones.com) on the Mediterranean coast of Morocco is a 350 ha multi-site development closely anchored by the automotive sector (see section on clusters). It provides manufacturing, logistics and processing facilities and has a major port facilities on the Mediterranean. Ras Al Khaimah Free Trade Zone (www.uaefreezones.com) this is a complex of four distinct zones catering to manufacturing, services and heavy industry. It has access to both air and sea transportation hubs. Source: fDintelligence â&#x20AC;&#x153;Best Industrial Parks 2015â&#x20AC;?

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SYNTHESIS OF THE UNIT This unit describes some of the ways in which infrastructural deficits in a country or region can be overcome by the use of a number of initiatives. These infrastructural initiatives can be in the form of clusters, special economic zones or industrial parks and they are described in detail with some notes on their features and facilities.

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UNIT III THE ROLE OF INCENTIVES IN ATTRACTING INWARD INVESTMENT

Learning Objectives n Understand why incentives are used in FDI promotion. n Become familiar with different types of incentives.

III.1. Introduction Why use incentives? Traditionally in investment promotion incentives, both fiscal and non-fiscal incentives have been used as a major tool to attract investment. 1. Incentives may serve as a supplement to an already attractive environment. 2. They may act as compensation for proven market imperfections that cannot otherwise be addressed. There is a wide field of research which attempts to measure the effectiveness of incentives in attracting FDI and indeed, many researchers have found that fiscal incentives in particular are not key to attracting FDI.

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III.2. Types of Incentives There is a wide and constantly changing range of incentives used by governments and regions worldwide to attract investment, but there are three main categories: Regulatory: These could be described as a derogation or relaxing of national or subnational rules and regulations for approved FDI. A good example might be a â&#x20AC;&#x153;fast trackâ&#x20AC;? construction or environmental permit system for approved investments. There may be relaxation of the rules of local ownership of land or enterprises. Financial: A) Infrastructural subsidies; grants, either for the full or partial cost of buildings, equipment or utility connections. B) Job training subsidies; these could be paid directly to the company as a salary supplement while training takes place, or to an approved training institute9. C) Relocation grants for expatriates (can be augmented with streamlined work visa procedures). D) Administrative assistance by the IPA (for example, secondment of a staff member during the set-up phase). E) Temporary wage subsidies (for a limited period). F) Preferential credits or loans, from the government, local authority or accessed from donor sources. G) Low-cost or cheap real estate (could be buildings, either for purchase or lease, or the supply of building sites).

Training grants are becoming more popular as they have the advantage of being easier to administer, and additionally the skills acquired are not necessarily particular to one company and improve the general skill level of the population.

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H) Cost participation (an example could be where the government subsidizes the cost of an export manager or marketing initiatives for a new enterprise). I) Research and Development grants for approved activities. Fiscal incentives A) Reduced direct corporate tax (this could be a reduced rate of tax; a tax holiday for a period; reduced tax in special zones, or reduced tax on certain activities). B) Incentives for capital formation (accelerated equipment depreciation write offs; tax credits; reduced tax on reinvested profits; reduced or eliminated import tax on inputsâ&#x20AC;&#x201D;machinery etc.). C) Reduced impediments to cross border operations (reduced or eliminated withholding tax; elimination of foreign trade tax; reduced tax on expatriate salaries). D) Reduced VAT or sales tax on purchases; reduced property tax. Box 16 Incentivesâ&#x20AC;&#x201D;Important points 1) Incentives are not the deciding factor for most mobile FDI today. 2) Incentives should be structured to be appropriate to the target priority sector. 3) They are subject to competitive factors, either worldwide or regionally. 4) They should be transparent, easily understood and available to all approved investors equally. And finally, they come at a cost to the government, either directly if in the form of financial incentives or in the form of income lost in the case of many fiscal incentives (see Module 3 for Cost Benefit Analysis).

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SYNTHESIS OF THE UNIT Incentives are widely used as a tool to promote a region or country to foreign investors. The three broad categories are described in detail and there are some comments on the best practice use of incentives.

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UNIT IV BEST PRACTICE AND INNOVATIVE APPROACHES TO INVESTMENT PROMOTION

Learning Objectives n Revise best practice procedures. n See innovative approaches. n Regional approaches. n How to build your own strategy.

IV.1. Introduction Before we look at best practices in Investment Promotion, let us look back at the ten key principles underlying the strategy and structure of the most successful IPAs. Not all countries or regions exhibit all ten success factors, but every successful IPA exhibits most of them. 1. FDI is at the heart of National Policy: FDI should be prioritized in the National Plan, and ideally the role of the IPA acknowledged.

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2. Private sector involvement: this can be at different levels—private sector directors on IPA board; regular consultations with investors; advisors with specialized sector knowledge available. 3. Sustainability: state expenditure on investment promotion is shown in a cost benefit context and not just as a cost. The public (taxpayers) are updated regularly through awareness and image building of the tangible benefits of FDI. 4. Accountability: success and failure measurements of the investment promotion efforts are widely understood and accepted. There are annual targets for investment promotion and these are reviewed regularly. 5. Transparency: there is clarity in the objectives of the promotion program. There is simplicity in operating procedures and predictability on rules and regulations and their interpretation. 6. Autonomy: the IPA has a separate legal mandate with a management board drawn from both the public and private sectors. There is a clear mandate to operate without political interference, and it has the power and resources to hire industry professionals on competitive salaries and conditions. 7. Public sector funding: investment promotion is seen as a “public good” and is therefore a government responsibility, and is not funded by donors or the private sector. A well-funded IPA reflects the high degree of government support and level of priority. 8. Regular strategic studies: the IPA engages regularly in studies of the country’s comparative competitive advantages and disadvantages, and also does this on a sector basis. It then targets potential investors with this competitive knowledge and also surveys existing investors to document both positive and negative aspects of the investment climate. 9. Policy advocacy: the national IPA and regional IPAs are best placed to reflect investors’ concerns. There should be a high level political commitment that the IPA’s voice is listened to and acted upon on issues affecting country

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and sector competitiveness. The IPA’s credibility will be established through professional staff, and clarity about results and value for money. 10. Benchmarking: there should be a recognition that business is no longer local, regional, national but global. Investment Promotion is now a highly competitive business and benchmarking of the location and IPA against international best practice in FDI.

IV.2. Best Practices in Investment Promotion International Best Practice Box 17 Strategic sequencing—best practice

Mission Resources

Objectives

Strategy

Structure

Upskilling/Training

Monitoring & Evaluation. What are the critical elements for a successful investment promotion strategy? n The investment strategy is aligned with the National & Regional Develop-

ment strategies. n Clearly defined objectives have been agreed and adopted. n Staff have individual job descriptions and targets. n Staff have been given job-specific upskilling and training. n There is a pro-active demand driven focus by the IPA. n There is a “customer is king” culture in the IPA.

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n The IPA, through continuous research, is aware of regional and global FDI

trends. n The IPA has an awareness of competitor offerings. n A SWOT analysis has highlighted sectors and regions for promotional activ-

ity. n The IPA understands the importance of benchmarking. n There is a focus on a small number of sectors and countries for promotion. n There is a clear articulation of the Unique Selling Proposition of your area. n Extensive and up to date use of online media. n Use of networks to support promotion.

Other elements which should be included are: n There should be a clear definition of what is an FDI Projectâ&#x20AC;&#x201D;for example,

are mergers and acquisitions counted as FDI projects? n The IPA and its staff should clearly understand the difference between pro-

motion, facilitation and aftercare. n The IPA should understand policy advocacy. n The IPA should also understand the importance of teamworkâ&#x20AC;&#x201D;both within

the agency, but also with other official agencies and arms of government and the private sector. n The IPA should have detailed operational and marketing plans. n There should also be an understanding of the importance of monitoring and

evaluation.

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Box 18 Failure in Investment promotion strategies Unfortunately, sometimes strategies fail—so it’s worth pointing out some of the most common reasons for failure: •

Lack of adequate background research.

•

Lack of adequate time to implement the program.

•

Lack of political commitment to underpin implementation.

•

Lack of adequate resources from the budget.

•

Lack of consultation with stakeholders.

•

Lack of capacity to coordinate implementation with stakeholders.

•

Lack of capacity to monitor progress.

•

Lack of evaluation to assess impact.

IV.3. Innovative Approaches In a world with competing countries and regions all chasing FDI, innovative approaches to investment promotion are required to be successful in the reality of finite resources. As described above, the key determinant which drives innovative approaches is a focus on a small number of priority sectors or subsectors which will provide results in line with the objectives set out in the mandate of the IPA. Each year UNCTAD makes a series of awards to IPAs which highlight their achievements under various headings. Some past headings have included “web-based promotion of green FDI”, “Promoting FDI in sustainable development”, “Promoting FDI in export-orientated FDI”, “Promoting job and skills enhancing FDI”. What is common to all these IPAs is that they have prioritized and targeted certain sectors where there

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is a need in their country to fulfil national or regional objectives and where they have a competitive advantage. The key, therefore, to innovative approaches to investment promotion is to have a clear prioritized sector approach, based on clear objectives. Innovation then, is shown in how the location is marketed with an understanding of the profit maximization strategies of foreign investors. The reality, of course, is that an innovative approach must be appropriate to your resources. Innovation is possible at all stages of the investment promotion cycle. Image Building: n Image building: it is clear that if there are no budgetary restraints, large pro-

motional advertising campaigns can be undertaken. However, international experience shows that focused advertising, if undertaken at all, in sectorspecific publications and channels is much more effective. n Online media: (see Module 6) but it is clear that today, a first class and reg-

ularly updated website is key to an IPA’s success. Likewise, Facebook, Twitter and LinkedIn are useful methods of information for investors. Investment generation: n Adopt a proactive approach—not passive: use outreach campaigns to meet

investors. n Research: where are the sources of information on possible targets? The

sources must be current. n Sector knowledge: does the IPA have access to industry experts—in-house

or through networks?

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n Research: know the location, its good and bad features. Does the IPA have

locational information specific to the priority sectors and subsectors? n Research: does the IPA know what its competitors are doing? n Research: does the IPA know what the infrastructural deficits are for the

priority sectors in its location? What initiatives is the government or regional authority taking or could take to lessen the impact of those deficits? n Is the IPA clear about what will provide a winning profitable situation for

the targeted investor? n Can the IPA be innovative regarding reinvestment by existing investorsâ&#x20AC;&#x201D;

does the IPA know the decision makers in the foreign headquarters? n Networking: does the IPA have or can it develop networks to help promo-

tion? n Diaspora: has the IPA accessed the diaspora for help in promotion?

Policy Advocacy: n What policy changes will make a difference?

Servicing: n How does the IPA keep in contact with the investor? n Can you monitor problems?

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Box 19 Innovative approaches—Connect Ireland Ireland is very aware of its diaspora, despite being a small country of 4.6 million, it has, at some estimates, up to 70 million people worldwide with some Irish heritage. This diaspora has always been used to promote the country, not least by the IPA. A more recent private initiative has been “Connect Ireland” which is a worldwide network of people who are paid for introductions to investors. If the investment is successful, the introducer is paid a fee based on the number of jobs created. The initiative is aimed at gaining access to small companies and start-ups which the IPA does not prioritize. Since launching in 2012, 79,000 “connectors” from 147 countries have signed up to Connect Ireland and 79 FDI projects creating a total of 2200 jobs in Ireland have been announced.

IV.4. Regional Initiatives Regional initiatives in investment are widely spoken of and discussed, both by governments and also by international donors. The rational is that foreign investors first look at investments, for a number of reasons, at a regional level. Large international companies, for example, initially look at investing in Latin America, the Caribbean or North America, before refining their research into, for example, “Francophone Caribbean” or “countries with a large domestic market”, and only then will look at a range of individual countries. A main activity of regional initiatives is to brand a collection of countries as a location for investment. Additionally, regional cooperation can be particularly valuable for the promotion of investments in cross-border infrastructural development (particularly 52

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roads, electricity grids and water supply) and for the development of regional clusters of firms operating in relevant sectors. A number of cross-border regional clusters has been very successful, particularly in high tech sectors in developed countries, particularly in continental Europe. In high tech sectors, the presence of academic and research institutes has been key, as has a free movement of labor. In most cases, cooperation on investment promotion has come after cooperation on research and innovation as well as sub-supply of components and services. Box 20 Example of a high tech cluster Medicon Valley A high tech cluster focused on life sciences has been developed in the Ă&#x2DC;resund region of Denmark and Sweden. Although separated by the Ă&#x2DC;resund strait between the two countries, this technology sector takes in two major cities, Copenhagen and MalmĂ¸ and extends to the university town of Lund in Sweden. A number of factors contribute to the success of the cluster; free movement of labor, a new rail and road bridge between the two countries and common membership of the EU. The region is now branded and promoted as one region for investment.

While there are a number of successful bilateral investment promotional cooperations based on border regions, and on specific clusters, there are fewer regional initiatives involving sovereign countries.

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Box 21 Regional promotional initiatives Caribbean Association of Investment Promotion Agencies (CAIPA) CAIPA is an association of nineteen countries and territories in the Caribbean which spans a wide geographical and a wide diversity of sizes, from small islands to large countries. It was set up in 2007 and has been very successful in promoting a number of joint marketing initiatives, joint training and exchanges of information. West Balkans Investment Framework (WBIF) This is an initiative by the European Union, a number of financial institutions and donors and the respective West Balkans governments to finance a range of strategic investments in environment, energy, transport, social infrastructure and enterprise development. To date it has spent â&#x201A;Ź1.3 billion in technical assistance and investment grants to leverage investments worth â&#x201A;Ź13.5 billion. Redibero Launched in 1999 in Madrid, the Redibero network comprises thirty member organizations from Europe, Latin America and the Caribbean which provides a forum to share information and initiate projects which benefit all members. Its members meet four times a year and has commissioned projects to support a regional image campaign, improve exports and identify offshoring service projects for Latin America.

A key difficulty here is that in many cases the scope of cooperation is somewhat limited by the fact that the countries in a regional network are often in competition for FDI, and this limits the extent to which they will cooperate. In addition, while joint promotional efforts are useful, IPAs are very conscious that these initiatives use scarce resources in time, personnel and costs, and may take a decision to limit their participation. 54

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SYNTHESIS OF THE UNIT This unit revises the key principles of good investment promotion practices and the strategic sequence of how an investment promotion strategy is developed. It explains what the critical elements of success are, and some of the reasons for failure. Finally, it describes some innovative approaches and regional initiatives to investment promotion.

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“Intel, a Case Study of Foreign Direct Investment in Central America”. CID Working Paper 58. The Fellows of Harvard College.

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n James, S. (2005). “Tax and Non-Tax Incentives and Investment; Evidence

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ley.com n Moran, T. H., Freund, C. (2017). “Multinational Investors as Export Super-

stars; How Emerging Market Governments Can Reshape Comparative Advantage”. Peterson Institute for International Economics WP 17-1. Washington. n Moran, T. H. (2014). “Foreign Investment and Supply Chains in Emerging

Markets; Recurring Problems and Demonstrated Solutions”. Peterson Institute for International Economics. Washington. n Overesch, M., Wamser, G. (2008). “Who Cares About Corporate Taxation?

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freezones.com n Redibero: Network in Europe Latin America & Caribbean. www.redi-

bero.org

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n Spar, D. (1998). “Attracting High Technology Investment; Intel’s Costa Rican

Plant”. Foreign Investment Service Occasional Paper 11. Washington DC. World Bank. n Tanger Med Zone: Moroccan Industrial Zone. www.tangermedzones.com n West Balkans Investment Framework (WBIF): www.wbif.eu n World Bank (2012). “Global Investment Promotion Best Practices 2012”.

World Bank Group Washington.