Emerging Business Practices and Policy Making

that include investment promotion consulting for national or subnational investment promotion agencies and ‘’lead generation” for organizations seeking to attract inward investment. The potential for conflicts of interest is muted by the importance of reputation for these intermediaries.

TARGETING “HIGH-QUALITY” AND “HIGH-VISIBILITY” FOREIGN CAPITAL

All capital is not of the same caliber (Harding and Javorcik 2013). Governments could target firms that have characteristics such as likely long-term country engagement, higher technology diffusion, greater likelihood of engaging with local firms, and the creation of spillovers from sustainability initiatives. For example, Sri Lankan apparel firms with strong reputations for women’s empowerment and environmentally friendly business practices have had positive impacts on local communities, particularly in Andhra Pradesh, India. It may also be useful to target “anchor” investors, that is, firms that are well connected and have high visibility—likely to generate follower firms’ interest—and thus could help draw in investment from their suppliers or other global competitors. If these firms are large, they can potentially enhance national comparative advantage, as in the case of Samsung in Vietnam.

OVERCOMING “STICKY” GLOBAL VALUE CHAINS AND STATUS QUO BIAS MAY REQUIRE GREATER-THAN-USUAL EFFORTS

Late-entrant countries into the FDI game may need to signal the country’s determination to attract and retain value chain leaders through sustained efforts, including courtship of investors by the highest levels of government.

REDUCING THE FIXED ENTRY COSTS OF INWARD INVESTMENT

Government initiatives in investment facilitation could be viewed through the lens of reducing entry costs, both directly and in accessing information about procedures. Thus, initiatives such as faster and one-stop clearance, simplification of administrative procedures, and greater use of information and communication technology could enhance capital inflows. Beyond entry, there has been increasing recognition of the importance of investment retention and the development of relationships with established investors to foster smooth business conduct and investment expansion. Countries should build on the digitization initiatives relating to investment approvals and facilitation that began during the COVID-19 pandemic.

Government policy making will benefit from an understanding that economies have a skewed distribution of firms, with a cluster of large, high-performing firms driving cross-border activity and domestic production. The importance of large firms