Investment Promotion Agencies: Investment Attraction, Policy Role, and Response to Crises
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According to the World Bank, Investment Promotion Agencies (IPAs) can be considered a country’s best tool for attracting, establishing, retaining, expanding, and linking private foreign direct investment (FDI). But the ability of a country to attract investment goes well beyond proactive attraction efforts: market size, availability of natural and human resources, physical and digital connectivity, participation in global value chains, and having the right domestic and international policies are some of the factors that have the largest impact on the way investors see a host country. Hence, IPAs are increasingly undertaking a policy advocacy role, in order to improve the country’s investment climate, to the advantage of foreign and domestic investors alike. This advocacy role becomes especially relevant in moments of crises, such as the one presented by the SARS-CoV-2 pandemic (the COVID-19 pandemic) and its subsequent economic recession, as countries need to find innovative ways to attract foreign capital in times of global economic distress, including a continuous improvement of their domestic investment climate. But turbulent times also come with additional considerations with regard to free flows of FDI, including domestic review and/or restrictions on acquisition of sensitive assets by foreign entities (“screening mechanisms”).
KeywordsCOVID-19 Promotion Facilitation Screening mechanisms IPA
Foreign direct investment (FDI) has increased substantially over the last four decades. When measured as a share of GDP, global FDI inward stocks grew from around 8% to almost 25.7% between 1990 and 2019.1 Moreover, the benefits of FDI for an economy are widely recognized: producing a positive impact on productivity, competitiveness, and sustainability, through technology and knowledge transfer, diversification of production, and access to new markets. Increased competition with local players, vertical linkages created with domestic firms, further insertion into global value chains, and, especially, creation of jobs (many times for high-skilled workers) are other positive externalities of the arrival of foreign capital into an economy.2 The latter is particularly relevant in a COVID-19 scenario, as OECD stated that decline in greenfield FDI in early 2020 reduced potential job creation by nearly 50%, implying that up to 500,000 FDI-related expected jobs never materialized in the first 5 months of 2020.3 Developing countries have been especially affected by this, as hard-hit sectors such as infrastructure, automotive, consumer electronics, and textiles lose steam.
Furthermore, the benefits of FDI can be limited by prevailing trade and investment costs, being one important component of them information barriers. And even when those barriers have been bridged, FDI may be curtailed by other hurdles – including domestic regulations and permitting processes – which investors face when seeking to establish into a foreign country.4
Recognizing these positive effects – and also the need to attract and support foreign investors, especially at the early stages of their projects – governments around the world have resorted to different policies to attract FDI: creating incentives (subsidies, tax breaks, free trade zones, tariff reductions or exemptions, etc.), and also to establishing foreign investment promotion agencies (IPAs). These agencies intend to create awareness for foreign capital of existing investment opportunities, attract investors that can foster job creation and productivity growth, and facilitate their establishment and expansion in the local economy.5
IPAs are normally part of a country’s wider national foreign investment promotion policy, which in time is an integral part of a country’s growth and development policy/plan. In the end, an IPA’s end goals are nothing but economic development goals, which are sought through the attraction of FDI, namely: accelerated and sustained economic growth; sustainable economic development; and, more equitable economic development.6 But in order to contribute to these “higher” goals, objectives specific to FDI need to be achieved: maintaining high levels of FDI (in constant growth); increasing the quality and economic impact of those investments; diversifying the destination and use of those investments; and, diversifying the geographical sources of FDI, seeking an increased participation of countries which are relevant capital-exporters globally, but which are not yet relevantly present in the host country. The advantage of having diversified sources of foreign trade and investment has been made even more evident by the recent COVID-19 pandemic.
Simultaneously, national economic development policies and instruments should also support FDI attraction policies, in order to foster FDI, innovation, and entrepreneurship, providing instruments such as incentives and other tools to attract investment, including continuous formation of advanced IT and human capital, which should be readily available for foreign investors interested to develop value-added projects in a specific country. The relevance of a host country having readily available adequate human capital for FDI projects should not be underestimated, as foreign workers confront both regulatory (visas) and economic (costs) barriers, and many times also additional cultural challenges.
Nonetheless, evidently there are many other factors that play into a country’s ability to attract FDI: geographical location, availability of natural resources, again human capital, a country’s branding, its safety and security, insertion into global value chains, the role of tax policies, its investment treaties, and also national security considerations, are some of many factors that investors take into account before making an investment decision.
In this regard, it is worth noting that the OECD’s policy Framework for Investment (PFI) looks at 12 different policy areas affecting investment: investment policy, investment promotion and facilitation, competition, trade, taxation, corporate governance, finance, infrastructure, developing human resources, policies to promote responsible business conduct and investment in support of green growth, and broader issues of public governance.7
More than diving into all these factors – and explaining the mechanics of investment promotion in detail – the current chapter seeks to develop certain specific subjects at the crossroads of foreign investment promotion and international investment law and policy, particularly investment policy advocacy. It also does not strive to give a comprehensive account on the structure of IPAs, which is readily available in recent literature.8
To this extent, the chapter presents a brief overview of the work of IPAs, with a deep dive into their policy role, also highlighting their role during crises (such as the COVID-19 pandemic) and the relationship between their work and national security-based FDI restrictions.
Overview of the Work of IPAS
An investment promotion agency (IPA) is generally a government agency tasked with attracting overseas investments into a country, state, region, or city. Although developed countries pioneered the establishment of IPAs, nowadays most countries have at least one national agency or public service tasked with fostering FDI (every OECD country has at least one), and in many cases a number of sub-national FDI promotion agencies. IPAs are normally funded by fiscal budgets, and have a political line of report, although they increasingly include forms of civil society and business community participation. In the majority of the cases they are autonomous public entities, although a relevant number of them are also housed within a specific Ministry. According to the OECD and the Inter-American Development Bank (IDB), the median IPA has an annual total budget of US$7 million, and an annual budget for investment promotion of US$3 million.9
They often have a multiyear strategy on investment attraction, prioritizing fostering investment into specific sectors, with an increased influence from the Sustainable Development Goals (SDGs).10 An average IPA has 11 priority sectors,11 such as renewable energy, agriculture, IT services, and construction. As one of their core functions, IPAs are normally prepared to provide expert advice and solutions to foreign investors interested in entering these sectors, and to connect them to the local ecosystem.
According to a recent survey by the World Bank and the World Association of Investment Promotion Agencies (WAIPA),12 IPAs are still providing more services at the attraction stage, followed by information and assistance services at the entry and establishment stage. In about 65% of the cases, they organize and systematize their work through a customer relationship manager (CRM) software,13 a number which is increasingly growing as IPAs further professionalize. Cost-benefit assessments should also be increased, as over 50% of promotion agencies still do not quantify for the benefits and costs of their work today,14 not even economically; evidently, a comprehensive policy measure on this should look beyond economic-only factors, also taking account environmental, social, and political variables. More advanced IPAs are increasingly using more digital tools and instruments such as social media to find investment leads, supported by a digital marketing strategy.
IPAs are usually tasked with operationalizing government FDI goals via providing services for foreign investors, often labeled as “investment promotion.” Although all IPAs main mandate is to attract inward FDI, they increasingly feature additional tasks related to improve the investment environment, and a few are even mandated to support a country’s Outward Foreign Direct Investment (OFDI), that is domestic firms’ investments overseas. An interesting example is the Thai Overseas Investment Plan, which was approved by the national IPA (Board of Investment – BOI). OFDI was identified in Thailand as a national priority and it was specified by the BOI that its aim, with regard to the promotion of Thai overseas investment, was to “enhance the nation’s competitiveness, to overcome the middle-income trap and to achieve sustainable growth.”15
Therefore, most IPAs have four essential functions: foreign investment generation, image building (of the territory they are promoting), “landing” support for investors (as they develop their projects), and “aftercare” services for established foreign investors.
Some IPAs also have an additional policy advocacy function, a topic which will be developed in detail in this chapter.
The functions presented above can be grouped also in different manners: for example, the World Bank presented in 2020, within its novel “WBG Framework for Investment Promotion,” the “Comprehensive Investment Services Framework” (CISF), which considers four categories of services – marketing, information, assistance, and advocacy – across the four stages of the investment life cycle. In doing so, “the CISF helps IPAs ensure that they offer all relevant services and establish long-term relationships with investors.”16
But not all blueprints are holistic, as developing countries could also start to spin-out non-promotion functions of IPAs to separate agencies. At the moment, most IPAs serve various functions as described above, such as regulatory, incentive management and investment facilitation. Although some may argue it could be better for countries to create specialized IPAs with focus on promotion only, we believe that such a holistic approach to investment promotion, with IPAs harnessing all promotion and policy functions, is more cost-efficient.
In any case, beyond these functions, there are many additional factors that determine an investment site selection. Hence, a key role for IPAs is to be “incremental”17 in influencing an investor’s decision to locate in a specific country. In the end, the IPAs role is to increase the possibility for an investor to select the Agencies’ territory, as in very few cases it will be responsible for the whole decision. According to the OECD,18 there are five determinants for investors to select a project’s location: market size and growth; natural and human resource endowments (the availability and cost of natural and human resources); physical, financial, and technological infrastructure (the quality and availability of backbone services); openness to international trade and investment; and the policy and institutional framework of the host territory: a fair, transparent and predictable regulatory and administrative framework for investment, with efficient institutions, affects MNEs’ decisions in both their initial investments and potential reinvestments or expansions.19
Hence, in order to become “incremental” in influencing the investor’s decision, in general IPAs follow a thorough “commercial process” for FDI attraction. Since this is not the focus of this chapter, we will limit ourselves to list its main components and variables: an IPA’s commercial process includes managing potential investors through a pipeline of projects, using tools such as direct promotion, business intelligence, inbound (digital) marketing and leveraging a country’s overseas infrastructure (normally embassies, consulates, trade, and investment commissioners). And beyond harnessing new investors, aftercare services for already established investors are becoming essential, particularly in times of economic crises. Some countries not only feature an external network (embassies, commissioners, etc.) supporting the IPA, but also a domestic one through sub-national investment promotion agencies or units. In order to improve processes and increase their networks, in many occasions IPAs also profit from experiences acquired through international IPA networks, such as the ones hosted at UNCTAD, OECD, WAIPA, the World Bank, and others. Details about the investment promotion process are broadly available in the literature, including recent papers by the World Bank, UNCTAD, and the OECD.20
Background and Rationale
As previously mentioned, traditional functions that have been systematically associated with IPAs are investment generation, image building, investment facilitation (landing), and investment retention (aftercare).21 However, IPAs increasingly are being given a mandate of policy advocacy. In this section, we will solely focus on this function. As we delve into its core features and main goals, it is important to delineate the rationale and how the institutional structure of an IPA might affect the manner in which the policy advocacy function is performed.
Then, we will dive into the advocacy process and key features that relate to the enhancement of a country’s overall investment environment. And finally, we will briefly touch base on new priorities for IPAs on policy advocacy due to the COVID-19 pandemic.
Policy Advocacy consists of actions conducted by the IPA, related to: i) monitor the investment climate and identify existing bottlenecks; and ii) channel these concerns, often jointly with recommendations, to relevant policy makers, either formally or informally.22 The immediate goal of this advocacy is to shape a climate conducive to attracting and benefiting from FDI, where the ultimate goal is to make FDI work for the socioeconomic development of the host country, while building national competitiveness in a global economy.23 Needless to say, a successful advocacy policy will not only benefit foreign investors but also the whole investment ecosystem of a country, including for domestic investment players and local service providers, conferring a positive externality to this role which benefits the country’s economy as a whole.
Furthermore, it has the effect of enhancing dialogue and policy reviews with stakeholders, including the foreign investor community, thereby contributing to the predictability and transparency of the investment environment, and the avoidance of application of dispute resolution mechanisms.
For the World Bank Group,24 advocacy in investment promotion “is about (a) understanding the issues investors face; (b) advocating on their behalf; and, (c) influencing stakeholders to improve the investment ecosystem so investors can operate more efficiently and smoothly.” The Bank rightly notes that “as an indirect service, IPA advocacy helps many investors – and the location – achieve key reforms needed for their investments,”25 and that “an effective IPA has an advantageous perspective of the investment projects its economy has won and lost, and has access to both investors and policymakers.”26 Particularly this last feature place IPAs in an ideal position to articulate regulatory and administrative reform.
Policy advocacy is therefore at the crossroads of investment policy and facilitation, and presumes that these disciplines are complementary. But it also acknowledges that IPAs are not policymakers or regulators themselves, but simply advocates and facilitators. Nonetheless, their exclusive position that permits them to regularly interact with a country’s business community – and key regulators – makes them particularly well placed to identify norms and practices that hamper the investment environment, passing on these concerns to relevant policy or decision makers, and ultimately influencing policy and regulations. This privileged position allows IPAs to develop a public-sector-driven agenda, aiming at generating economic and social benefit, while also supporting private companies in developing their businesses.27
But regardless of this clear function, IPAs operate within a governmental and business network where different mandate and activities are not clearly delineated. This of course can be problematic, as lack of clarity can be a source of broad challenges, specifically considering that the advocacy process may overlap with the mandates of other governmental entities, which are competent for specific policy design and decision-making. An IPA’s ability to drive a public agenda could be contingent on the willingness of the relevant policymaker, whereas an IPA’s relationship with private companies could also alienate them from sectorial regulators or governmental entities less intertwined with business players.
Organizational and Strategic Choices
There are several factors that will determine how and with what intensity an IPA will perform policy advocacy activities. These factors relate mainly to organizational and strategic choices, which affect how IPAs approach policy advocacy.
Primarily, as with many of the traditional functions associated with IPAs, the fact that there isn’t specific staff dedicated to policy advocacy does not mean that the IPA is not involved in policy advocacy activities. With this regard, OECD IPAs perform on average 72% of the policy advocacy activities listed in a survey conducted by the OECD and the IDB.28
An IPA’s size, though it can affect budget and resource allocation, does not seem to be a relevant factor. It is more important to focus on an IPA’s mandate, because there is a direct correlation of policy advocacy activities that IPAs tend to perform, and the number of official mandates under its responsibility.29 Beyond inward foreign direct investment promotion, there are governments that have extended the scope of IPAs toward export promotion and innovation promotion, which will naturally expand an IPA’s line of policy advocacy beyond investments, and toward a wide range of issues associated with a country’s whole business environment.30 Consequently, an expanded mandate will also broaden the interaction with different business and government stakeholders, making it easier for an IPA to directly influence in a wider range of policy areas, all of which will normally be related.
An IPA’s governance, primarily its legal status, will determine its autonomy vis-à-vis the government. IPAs that are part of government will have a closer relationship with decision makers; hence, this proximity should be a significant enabler toward effectively getting a particular message across the table. Additionally, the IPA’s legal status seems to have a role in the decision to formally dedicate staff to the policy advocacy function. Ninety percent of governmental IPAs formally dedicate staff to policy advocacy, while only 63% of autonomous public agencies do. In terms of resource allocation, on average, governmental IPAs allocate 10% of their financial resources to policy advocacy, versus 4% for autonomous agencies and 3% for joint public-private agencies.31
Finally, the decision on the key interactions with stakeholders can be a relevant factor for IPAs to determine the amount of policy advocacy activities they perform. Interactions can vary from communications to more formal manners of collaboration. There is a negative correlation between the number of institutional partners and the policy activities performed, i.e., the more interactions an IPA has with external partners (either public or private), the less advocacy activities it conducts. One possible reason for this trend is that when an IPA has the appropriate mandate to perform policy advocacy it will not require strong interactions with specific partners. Alternatively, it could be possible that the institutional partners with whom an IPA interacts, could have their own mandate to perform policy advocacy activities, thus the more activities that are handled by agencies and ministries themselves, the less they need to be performed by the IPAs.32
As expressed before, an IPA’s policy advocacy mandate doesn’t make them either policymakers or regulators of specific areas of government. This is why the effectiveness of IPA’s policy advocacy activities is not always clear, and it cannot be measured simply (as a matter of fact, this seems to be a challenge across all functions of IPAs).
IPAs require having active and extensive interactions with external partners in order to reach their goals. On one side, it is paramount to have a close relationship with the business community to identify the problems that could be dealt through a policy advocacy process, and on the other, to channel that feedback, together with the suitable recommendations, to the ministries or government agencies (i.e., policymakers and regulators) that can effectively take the necessary actions to solve the identified problems.
This specific position is an important asset to help identify and formulate concrete responses to enhance a country’s business environment, but it can also pose certain challenges. It is not always clear if IPAs voices are heard within governmental structures, and how the efficiency and impact of their policy advocacy activities can be measured.
In terms of effectively measuring policy advocacy activities, the challenge is twofold: a) measuring the policy advocacy’s output, i.e., assessing the efficiency of the IPA in conducting its related activities; and, b) evaluating its policy advocacy outcomes, i.e., ensuring that the IPA’s voice is heard in government and that there is an impact in regulatory/administrative procedures.33
With regard to output, OECD IPAs rarely track their related policy advocacy activities in their customer relationships’ management (CRM) systems.34 This could be explained by the often informal or horizontal nature of these activities, making it difficult for IPAs to measure their performance as advocates. This is also why IPAs often rely on examples of the outcome of successful reforms to illustrate the relationship between their policy advocacy activities and the improvement of the country’s investment climate.35
Another challenge for IPAs arises from being at the crossroads of serving public and private interests. In this sense, the difference between policy advocacy and lobbying for private companies can be blurred, especially when an IPA deems convenient to defend a specific interest.
IPAs have a public sector-driven agenda to generate economic and social benefit and, at the same time, provide services to private companies and serve their interests in their advocacy activities. Certain interest groups might be tempted to use IPAs to lobby reforms that would not necessarily benefit all stakeholders. In order to avoid lobbying for a selected interest (as opposed of serving all business, regardless of their size and nationality), IPAs should carefully scrutinize a priori the impact of a proposed policy reform and, if implemented, its actual impact should be monitored a posteriori as well. At the same time, while conducting this evaluation, IPAs must keep in mind that their policy advocacy function should be associated with broader socioeconomic outcome indicators, to ensure that policy proposals are consistent with the country’s public interests.36
The Policy Advocacy Process
IPAs sit at a unique position that permits them to access and comprehend political and business stakeholders. This combination allows them to effectively act as drivers of change for economic growth and development. But in order to achieve such effectiveness, there must be a complete understanding of the cyclical nature of the policy advocacy process, alongside well-established goals and priorities before starting its first step. Those priorities should be established explicitly at the onset, considering all of the IPAs goals in accordance to preset priorities and feasibilities for advocating better policies, and then formulate strategies to achieve as many as possible.
Even though, setting goals and priorities might seem a straightforward process, long-term priorities are not necessarily in line with the political changes introduced by new administrations. Maneuvering through these changes, while at the same time trying to keep an unwavering and coherent strategy, is the first step of a process. Consequently, in order to remain effective, IPAs should always aim for the continuous application of their long-term strategies, regardless of changes in political administration.
Problem identification/agenda setting
Developing the most effective policy remedy
Advocating the policy
Monitoring and evaluation
The last step then becomes a new input for the first one, making this process cyclical. But the key is that those new inputs should fall within the scope of a pre-established agenda that encompasses all the goals and priorities established by the IPA. Because without consciously and explicitly addressing goals other than FDI attraction, such as achieving employment, technology transfer, or development impact, they will tend to be neglected.38 By the same token, IPAs must make sure that the goals that delineate the advocated policies, which seem to give preference to foreign investors, should be justifiable in terms of a national interest and economic progress.
Problem Identification/Agenda Setting
Identifying problems require first and foremost determining what counts as a problem. This decision should be based on the IPA’s goals and the information gathered from clients (foreign investors and related stakeholders) and other business sources. The manner in which information is gathered is fundamental to determine whether there will be a proactive or reactive focus in the process of problem identification.
An effective IPA’s organization and distribution should be conducive to a “two-pronged” approach (proactive and reactive). IPAs should react to complaints of existing investors and advocate changes that lead them to reinvest, which will in turn help toward building the country’s positive investment climate. Nonetheless, IPAs should also conduct a proactive process of information gathering aiming to identify additional long to medium term problems that hamper the investment climate.39
This dual role will require that IPA dedicate specific staff that has closer relationship with investors to work side-by-side with those involved in intelligence gathering and data analysis. In addition, to fulfill this two-pronged approach, IPAs should use their main sources of information and influence in a complementary manner. And, they should take special advantage of their position between business and government. In this regard, the major influences for establishing an agenda will be: i) existing investors; ii) potential investors; and, iii) benchmarking against the investment climate of other countries. 40
The weight that an IPA gives to each one of these sources will probably determine whether there will be a proactive or reactive focus. Logically, if existing investor’s problems serve as the main source, the IPA will tend to privilege a reactive approach. Whereas a proactive approach will be more focused on potential investors and on the investment climate of other countries, especially those that are perceived as direct competitors.
On the other hand, the next three influencers in an IPA’s agenda are: i) government officials and legislators; ii) national goals such as growth and development; and, iii) internal research.41 It is important that an IPA – concerned with benefiting from FDI and not just attracting it – takes cognizance and gives the appropriate weight to those opinions that tend to focus on long-term goals for benefitting the country. Investors’ complaints or opinions, many times do not tend to paint the complete picture of a particular obstacle, thus a comprehensive in-depth research will help the IPA understand the industry as an insider, getting a more nuanced and effective assessment on the table. This will help justify and legitimize domestically what would otherwise tend to be perceived as policies that solely benefit foreign investors. Likewise, taking into account these sources will help the IPA set a more balanced target, where they should evenly consider the “two-pronged” approach.
Alongside information gathering begins a process of determining who in government will be best equipped to deal with the issue (commonly a group of authorities or entities), and who will be the likely supporters and opponents. Then, the likelihood and costs of policy reform should be balanced with the capacity of the relevant authorities to effectively implement them.42
Correspondingly, once a particular set of problems has been identified; priorities need to be established based on the impact and likelihood of reaching a desired modification. Through a rough analytical assessment, which could be applied to most policy environments, an IPA should consider: i) how many people are impacted by the problem (scope); ii) the intensity of the problem (impact); iii) the cost of advocating, implementing, and maintaining the changes (financial assessment); and, iv) the adequate backing needed by key decision makers and stakeholders to understand, accept, and adopt the proposed changes (political assessment).43 As the identified problems are analyzed considering these factors, the combinations that could be projected as the ones with the highest likelihood of change should be prioritized.
Finally, those issues that affect the investment environment and have been categorized and prioritized as important and actionable, should be explicitly and narrowly defined, and included into the IPA’s policy advocacy agenda.
Though this is the ideal agenda construction process, as explained before, it will not necessarily match with the priorities of the relevant ministries and decision makers. Consequently, IPAs should allocate an important part of its resources building their position of influence within governmental structures, in order to push these evidence-based issues. In addition, a policy advocacy agenda built upon these objective criteria should be sufficiently flexible to adjust to the common changes in political priorities, but without forfeiting its main features.
Developing the Most Effective Policy Remedy
Developing a policy remedy consists of selecting evaluative criteria, formulating alternatives, projecting outcomes, and choosing the best proposal to advocate. This specific process must take into account the IPA’s mission, mandate, and the national development goals of a country. Then, by assigning relative weight to these factors, the IPA should evaluate its several draft proposals against these criteria and select the one that appears to serve its mission, mandate, and goals most fully.44
Projecting outcomes: It should be a common trend that each alternative proposal will generate different ones, in terms of FDI attraction, positive spillovers for the economy, and job creation, but it will also probably affect certain stakeholders, require certain budgetary considerations, and create some unintended consequences. The potential positive effects of the proposals must outweigh the negative and unintended consequences, aiming for the most effective (most likelihood of change) policy or combination of policies.
This exercise of projecting outcomes should aim at minimizing the unanticipated and unintended consequences that may create negative effects that reduce or outweigh the benefits of the changed policy. Accordingly, this exercise helps the IPA to keep various goals in mind rather than focusing completely on getting any type of FDI as the end goal itself.45
Choosing the best proposal to advocate does not always need to come from the IPA itself. Business France has established a model where government-led proposals are then prioritized by investors themselves. Interestingly, a combined panel of private law firms and CEOs of foreign affiliates is consulted on their opinion on the level of priority to be given to the various recommendations.46
Finally, while drafting, evaluating, and projecting the effects of a proposal, IPAs must also consider possible changes in circumstances. With these changes, effective policies might turn into ineffective ones. However, while projecting an outcome it might be difficult to predict the end result, thus the continuous policy advocacy process requires constant monitoring and evaluation (last step of the process).
Advocating the Policy
A comprehensive approach to policy advocacy has five elements: (i) preparations; (ii) persuasion, (iii) publicity, (iv) mobilization, and (v) consensus building.47
Like the initial research and information gathering for the creation of a policy agenda, preparing an effective strategy to convince others of a certain position requires drafting specific and concrete policy proposals, communication materials, and evidentiary support for the proposal. In this sense, 84% of OECD IPAs produce policy advocacy reports or position papers, some of which are discussed with the private sector before concrete reforms are envisaged or executed.48
In terms of persuasion, IPAs have to operate in a complex network of stakeholders at the crossroads of policy and business.49 Interactions with external partners, whether private sector representatives, civil society, or governmental entities is a key aspect to identify and target, not only the most relevant decision makers, but also those with influence over decision makers, regardless if they are supporters or potential opponents of the advocated policy.
Publicity can help to establish a positive frame for public discourse. It is quite common in countries – developing and developed – to find certain skepticism toward FDI. This phenomenon can be preempted through regular meetings, public speeches, or articles aimed at educating stakeholders.50 It is of particular importance, the weight that political leaders give to public opinion and particularly to their constituencies; thus, negative public perception toward a particular advocated proposal could outweigh any evidentiary support put forward by the IPAs, making the advocacy process completely ineffective. To avoid these potentially negative outcomes, IPAs can also have a proactive approach by trying to frame future debates and improve long-term openness to FDI via constant, low-key media messages.51
Constant interactions with external partners and supporters are a key aspect toward building relationships that will allow an IPA to get its message conveyed consistently, repeatedly, and from multiple sources. Mobilizing a group of different supporters is crucial because a message is much more influential when it comes from multiple sources. In addition, establishing an institutionalized mobilization, in terms of regular participation of stakeholders and common interest groups, is an element that guaranties effective results.52
The density of the IPA’s networks illustrates the importance of the interactions with external partners. On average IPAs interact with 25 different organizations, where 9 out of 10 IPA relationships considered as most strategic are with the public sector.53 This indicates the priority of keeping close coordination with their institutional environments, which gives the IPA the upper hand when advocating for enhancement of the investment climate.
Finally, the means of consensus building will vary in accordance to the nature of the relationship between a particular advocate and the party he or she is trying to convince, as well as their particular interests and beliefs. However, as with mobilization, consensus is better maintained over time through institutionalized cooperation than built anew with each specific problem. In this regard, considering that transparency and accountability are fundamental pillars in the relationship of an authority and the concerned stakeholders, if there is a formal framework where an authority can participate, the authority will be more inclined to show real progress toward approving policy changes on such meetings, rather than continuously arriving empty-handed.54
Monitoring and Evaluation
Policy advocacy does not end with the adoption of a particular policy, this process is result-oriented, and hence requires that advocates continuously monitor them to confirm that the advocacy is in line with the pre-established goals. It is perfectly normal that an adopted policy may have been implemented less than fully or with unintended consequences.55
Monitoring should not only be applied to the product itself but also to the process. The cyclical nature requires that this final step of the process provide essential feedback and inputs for future problem identification and agenda setting. But, regrettably, accurate monitoring is not a normal trend among IPAs. For instance, OECD’s IPAs only track 12% of their policy advocacy activities in their customer relationship management systems, which make it difficult for officials to measure their performance and to prioritize their actions accordingly. In the end, demonstrating a systematic relationship between policy advocacy activities and investment climate improvements can be quite a challenge for IPAs.56
New Post-Pandemic Priorities on Policy Advocacy
Although less known than their marketing/promotion functions, policy advocacy is a key function of IPAs. On average, agencies that focus their activities on promotion, whether investment generation or image building, are less involved in policy advocacy than they are facilitators.57 This reinforces the idea that investment facilitation, investment retention, and policy advocacy go hand in hand for business climate improvements.58 And due to the COVID-19 pandemic, the enhancement of the business and investment environment will probably be one of the most relevant objectives for IPAs, as countries look to minimize the negative effects of the pandemic during these times of economic recession and restrictions.
Logistical and travel restrictions that we have encountered during 2020, which are likely to continue well into 2021, will make it difficult for IPAs to perform their activities – especially promotion – in the manner they were used to, through roadshows and direct contacts with foreign investors overseas. Accordingly, IPAs should take advantage of this context by redirecting their efforts toward the enhancement (or establishment) of their policy advocacy processes, alongside budget reallocation toward activities associated with them.
Beyond advocacy, the sharp decrease of investment flows and the somber economic forecast should make IPAs focus their efforts on investment retention and facilitation, as it is most likely that fewer new projects will be developed in the short-to-medium term. It is fundamental that those investors that had already decided to invest remain committed to their projects, and that those already established in the country maintain a desire for reinvestment in those economies. In other words, IPAs should also put a strong focus on aftercare, not only to spur reinvestments but also to avoid FDI divestments.
The Role of IPAS During Crises
Investment Flows in Times of COVID-19
The SARS-CoV-2 pandemic, source of the COVID-19 disease, has posed a particularly difficult challenge for investment promotion agencies. Besides the major downfall in investment flows – the United Nations Conference on Trade and Development (UNCTAD) predicted a drop in FDI flows up to 40% during 2020–2021, reaching its lowest level of the past two decades59 – the pandemic is a direct hit to a very relevant part of an IPAs core business, which is physically connecting with investors around the world, and also having foreign investors materially scoping projects in their countries.
In May 2020, the OECD outlined a number of scenarios for success of public health and economic support policy measures taken by governments to address the COVID-19 pandemic, and the forthcoming recession.60 Even under the most optimistic scenario, the Organization predicted FDI flows to shrink in at least 30%, attuned with the previous analysis made by UNCTAD. To make matters even more complicated, this decrease is only accentuating and accelerating the already steady decline of FDI flows observed in the past 5 years.61 And then the news for developing countries were even worse, as they rely on sectors which have been more severely impacted by the pandemic, including the primary and the manufacturing sectors, as previously noted in this chapter.62
Beyond immediate closure of operations, in the long-term the pandemic may also lead to a change in allocation of companies’ foreign affiliates, with the subsequent loss of economic activity for host countries (and gains to where operations reallocate, as companies no longer look only for efficiency through off-shoring but also for certainty and supply-chain security through “near-shoring”). Chances are many of these affiliates will move toward territories which companies can deem as “value-chain secure,” even in times of crises. What companies will likely look for, is territorial diversification to reduce risks which are location-specific, such as border closures, lockdowns, and other events resulting in disruptions of their value chains. IPAs should keep this very much in mind when working not only on investment attraction, but also on investment retention.
Divestments – a change in the firm ownership and business structure, involving a partial or full disposal of an asset or a business unit63 – post- COVID-19 are likely to have an additional impact on FDI flows. Even in normal times, divestments are a natural feature of global supply chains and international investment: A study by the OECD found that one in every five foreign-owned firms is divested every 5 years.64,65 But this trend may be heavily accentuated post-COVID, including not only sell-offs of foreign affiliates to domestic players, but also liquidations, bringing a direct and immediate loss of jobs and economic activity for the host country.
Following the 2008 financial crisis, “foreign divestments increased in OECD and G20 countries in 2008, exceeding foreign acquisitions in terms of number and value. These divestments were followed by a wave of foreign acquisitions a year later, as some firms that remained in the market were able to buy assets at attractive prices.” However, on this occasion – at least until the time this book went to print – MNEs seemed to be more reluctant to let go of their international assets and foreign affiliates at wholesale prices, hoping for a prompt recovery. Only time will tell how sustainable this behavior will be, and if a large wave of divestments will accompany the projected downfall in new FDI flows.
In either case, the silver lining lies in acknowledging that, as in other crises, FDI could also play a key role in supporting host economies during the recovery. The OECD recalls that evidence from past crises has shown that “foreign-owned affiliates, including small and medium enterprises, can show greater resilience during crises thanks to their linkages with, and access to, the financial resources of their parent companies.66,67 FDI could be particularly important for emerging and developing economies given that other sources of international financing, including portfolio investment, have fled these economies.”68
The OECD also acknowledges that FDI contributions to recovery can go beyond financing, stressing that MNEs are generally “larger, more research and development (R&D) intensive, and more productive than purely domestic firms.”69 As such, foreign companies are likely to help governments deal with the pernicious effects of the pandemic, providing the opportunity for IPAs to liaise between foreign affiliates and its local clients and partners, looking to facilitate business collaborations that build momentum toward recovery (e.g., finding ways to resume production and exports while protecting worker’s health).70
Investment Policies and Investment Promotion Agencies in Times of COVID-19
As a reaction to the crisis, for now governments have relaxed policies across the board, easing monetary policy, boosting USD and hard currency liquidity, introducing large (and many times subsequent) fiscal stimulus packages, offering credit guarantees and relaxing prudential policies.71 Some of these policies have obvious consequences on FDI, and countries like China, Peru, and India have even come to ease measures on FDI inflows, including on cross-border borrowing and on foreign portfolio investment.72
The other side of the coin – with regard to FDI – are governments reviewing or preventing acquisition of sensitive assets, for example, through the implementation or refinement of foreign investment, the so-called “screening mechanisms.” Although some countries have had these in place for decades, the current crisis acts as an additional incentive for jurisdictions to consider the implementation of these mechanisms. The last section of this chapter refers to these government measures pertaining national security objectives.
Investment treaties are also expected to be further resorted to because of the pandemic. As treaties prohibit discrimination and uncompensated direct or indirect expropriation, and in many cases the obligation to provide “fair and equitable treatment” to foreign investors, it is likely that their dispute settlement mechanisms are triggered. To prevent this, “extraordinary restrictive measures to address the health crisis should be targeted, proportionate, transparent and temporary. […] As emphasized in the 2020 G20 Ministerial statement, these distortionary measures should remain temporary as needed to mitigate the crisis, and not permanent fixtures in the world trade system.”.73
For IPAs, the COVID-19 crisis also poses major challenges. As public budgets are increasingly under pressure, they will be forced to “do more with less.” Although in the near future less expenses in travel and international roadshows may balance their budget, in the long-term most likely their financial means will shrink. Hence, it is particularly important for IPAs to pass on the message that FDI promotion, attraction, and retention are part of the solution.
In the short term – during the pandemic – companies will aim to reduce costs of operations and reassure liquidity. Therefore, IPAs should not immediately focus on attraction per se, as they should adapt to a new way of doing business, concentrating their focus on aftercare (including providing timely information to investors and foreign affiliates about support policies and government actions), and policy advocacy in order to improve the investment climate. Aftercare and policy advocacy will play a critical role in minimizing the effects of the pandemic, and ensuring retention of the existing investors. Then in the medium to long term, these retentions should turn into expansions and re-investments.74
OECD IPAs “have been particularly active in providing rapid, regular and up-to-date information on COVID-19 related developments and government support programmes,” with agencies like InvestChile having prepared a comprehensive report on the Impact of COVID-19 on the Economy and FDI, while Business Sweden established a taskforce to help foreign companies supply chain relationships.75 IPAs are in general focusing their efforts first on the health sector, and second on hardest hit activities.
COVID-19 responses have also drastically accelerated the trend toward digitization of IPAs, with robust Customer Relationship Manager softwares (CRMs) becoming increasingly more important in order to “do more with less.” Exchange of best practices within IPAs in confronting the pandemic has become a valuable tool, with forums such as the OECD IPA network,76 and discussions propelled by UNCTAD, the World Bank and WAIPA, and the Inter-American Development Bank serving similar purposes. In the end, IPAs need to remain ready to adapt to new realities and in particular boost their analytical capabilities toward supporting “FDI policies, including FDI restrictions and national security screening mechanisms, FDI qualities indicators, and broader business climate reforms […].”77
Finally, IPAs need to be instrumental in preparing an inclusive, fair, and resilient recovery.78 The opportunity to “build back better” has gathered horizontal support, but if this will be finally possible will be more a question of execution than strategy. Pressing economic needs (and the temptation for quick wins) may derail increasing considerations of factors such as climate change effects of new investments. In accordance, OECD key considerations include “how investments can contribute greater resilience, what institutions and policies are needed to address problems of inequality, poverty and the climate crisis; and how all economies can benefit to the fullest extent from the opportunities of FDI.”79
In order to achieve this, advancements on IPA’s benchmarking seems essential. It will be very hard to assess how much are IPAs contributing to sustainable recovery, if solid figures of agencies’ performance and their incidence in attracting and retaining sustainable investments are not readily available, which is regrettably the case for the majority of IPAs.
Screening Mechanisms and National Security Concerns
An IPA’s primary policy advocacy role consists of monitoring the domestic investment climate, finding problems, and channeling them to relevant policy makers. In most cases enhancing the investment climate requires not only identifying and solving bottlenecks, but also strengthening the transparency and predictability of policy measures.
In this regard, it has been a common trend in the past few years – one only accentuated by the COVID-19 pandemic – for certain developed and emerging economies to impose or tighten mechanisms to protect their essential security interests against threats associated with foreign acquisitions of certain assets, especially for national security reasons.80 Most of these counties share two specific characteristics: (a) they are the main global destinations for foreign investment; and, (b) many of these economies share a high degree of openness toward foreign investment.
These “screening mechanisms” for the acquisition or ownership of certain assets have risen in the past few years81 because of the following reasons: concerns about investment originating in “less than transparent economies,” including an involvement of foreign state-controlled entities; concerns that foreign ownership could threaten a state’s security by limiting the diversity of suppliers of certain products or services (in addition to the more traditional risk of espionage and sabotage); technological changes and the growing sensitivity and quantity of sensitive data; and, the more assertive stance of some countries in global economic and strategic competition.82
The application of these mechanisms has been accompanied by several phenomena that affect the manner in which transactions are conducted. On this subject, we will explore on three specific dilemma situations that emerge from this policy practice: first, these mechanisms directly interact with domestic and international norms, which do not always coexist peacefully with these regimes; second, there can be concrete shifts on foreign investment flows related to the manner in which different countries apply these regimes; and finally, third, the effects of the rule-application on one country could easily spillover to other countries, thus international cooperation is a critical factor for the adequate and effective – non-protectionist – application of these regimes.83
It is an important challenge for IPAs to advocate for the consistency between legal regimes open to FDI, and screening mechanisms related to national security concerns. Although many times justified; they certainly make the equation more complicated. These mechanisms grant ample maneuvering space for governments to determine the risks associated with certain transactions, and the interplay of these regimes with a country’s international commitments it is not always clear. This is especially true with respect to high-ranking domestic law, in particular constitutional law, especially with respect to due process rules or civil liberties.
Such an interaction has been observed with constitutional law protections, especially in countries where these policies allow for divestment “orders.”84 An often-cited case is Ralls Corporation v CFIUS et al., where the United States District Court of Appeals of the District of Columbia concluded, “that the Presidential Order deprived Ralls of constitutionally protected interests without due process of law.”85 Even though this matter was ultimately settled, the Court of Appeals did acknowledge that a Presidential Order deprived the acquirer’s property interest from a constitutional protection. Although there have been few studies devoted to the issue in general, it is foreseeable that the application of these restrictive and discretionary policies should be subject to judicial review.
In terms of international commitments, most investment protection agreements include exceptions to the treaty’s obligations due to national security, preventing breaches of those obligations in case a Government decides to put in place or effectively use these mechanisms. Notwithstanding, as with Ralls, the absolute coverage of those exceptions is not clear, and neither is what would happen when tested against specific provisions that grant protection to investors, i.e., whether this could breach investors’ legitimate expectations. This lack of certainty poses an important obstacle for IPAs trying to perform their core roles, and in general for the construction of a country’s investment environment.
In a similar fashion, host-country governments have found other means apart from a formal interdiction to prevent a foreign takeover, or have allowed it only under the condition that the foreign ownership shares be reduced.86 Accordingly, the government of Germany in 2018 prevented the acquisition of a 20% minority share of “50Hertz” – a German grid operator with 18 million connected users – by the People Republic of China state-owned State Grid Corporation of China (SGID), as the planned transaction did not meet the screening threshold.87
On the other hand, a completely different scenario resulted from the acquisition of Chile’s third-largest distributor of electricity by the same company SGID a year after. This transaction was subject to approval by the Chilean anti-trust authority, but it was never subject to any review related to national or essential security matters.88 Even though these examples are not necessarily linked, it is noteworthy that economies open to foreign investment, which lack formal regulation to implement screening mechanisms, might be more attractive to certain kind of investors. It may have been possible (although we certainly do not know this for sure) that the available capital due to the failure of the SGID take-over in Germany perhaps opened the opportunity for the subsequent acquisition in Chile. This is an issue to remain attentive to, especially considering that there have been growing concerns regarding how overly broad interpretations of a country’s interests covered by these mechanisms could be creating new investment barriers.89 But at the same time, there are certainly legitimate reasons for which countries could prevent foreign acquisition to sensitive assets; the question here is where is the line drawn, and if this line will move due to the global economic recession prompted by COVID-19.
A third important phenomenon, related to these mechanisms, is the interdependence of a government’s decision in transactions that occur in other jurisdictions. A clear example is illustrated by the far-reaching regulation providing authority to the Committee on Foreign Investments in the United States (CFIUS). Its application has not only prevented transactions of US-based corporations (within the US territory), but it has also influenced decisions with regard to transactions that occur in other latitudes. This was the case with a transaction involving the digital map provider Navinfo Co. (China), which abandoned its proposal to acquire a 10% minority stake in the digital mapping services and software company HERE International BV (Netherlands) in Europe, following the opposition from CFIUS.90
In addition to this growing trend, as mentioned, the current pandemic has augmented the interest of countries to consider or even tighten these mechanisms. This can be explained by the pale economic forecast that will create a scenario of economic stress and the parallel price disruptions, where potentially problematic investors could more easily acquire certain sensitive domestic assets91 at wholesale prices. In this sense, the European Union published its guidance concerning foreign direct investment, emphasizing that with this emergency there could be a risk of attempts to acquire healthcare or related industries, highlighting the need to preserve such capacities within the single market ownership.92
The expansion of interests claimed by countries, in the name of national or essential security, makes it more challenging to draw a line between legitimate and illegitimate government interference; even more so, considering that these mechanisms can easily be used to impose foreign investment barriers or restrictions. Thus, in a world where companies are fully integrated in global supply chains, IPAs will require to pay close attention to specific measures that may affect investment flows and acquisitions, not only in their home markets, but also in those of the most prominent capital exporters.
As explained before, even the most sophisticated and open-to-investment markets have complex regulations that do not always peacefully coexist with the principle of due process, transparency, or predictability. In this post-COVID context, IPAs should advocate to keep the contours of national security objectives and its FDI limitations as narrow as possible.
But the question that will remain, in the short term, is how IPAs will interact with these regulations, in order to keep their countries as an attractive destination for foreign investment. At these crossroads, a solid policy advocacy process could help to strike a balance between safeguarding national interests and keeping open borders for FDI.
The role of FDI in contributing to recovery is of the essence. Beyond the regular promotion and attraction functions of IPAs, these agencies also serve a relevant policy advocacy role. Especially in times of crises, enhancing and improving the investment environment, easing regulations and bureaucracy, and allowing administrative procedures to adapt to the speed of global business, will be particularly important in competing for scarce post-pandemic FDI.
In that regard, IPAs should further streamline their policy advocacy processes toward improving their investment environments, for which this chapter presents a thorough step-by-step guide on advocacy implementation.
Particularly in a post-COVID scenario, investment promotion confronts huge challenges, for which other functions of IPAs beyond marketing are also essential. It has been noted than aftercare and investment retention has become even more relevant, due to the fall in FDI flows and risk of divestment by companies with a commercial presence in the host country.
Finally, a better understanding and more thorough systematization – including by IPAs – of national security-related FDI restrictions, will also play a relevant role for countries in promoting FDI in a cost-efficient manner in the near future.
UNCTAD (2020) World Investment Report, Table IV. 1 Evolution of International Production since 1990, p 124. IMF (April 2020). World Economic Outlook Database
See this Handbook, Reiter L, Bellak C Effects of BITs on FDI: the role of publication bias
OECD (2020) Mealy and Wermelinger, Investment and sustainable development: between the risk of collapse and opportunity to build back better. Discussion paper for the joint IC-DAC session at the 2020 Roundtable on Investment and Sustainable Development
OECD and IDB (2019), p XX
OECD (2018) Mapping of investment promotion agencies in OECD countries, p 3 www.oecd.org/investment/Mapping-of-Investment-Promotion-Agencies-in-OECD-Countries.pdf
See this Handbook, Sauvant K. Multinational enterprises and the global investment regime: toward balancing rights and responsibilities
OECD (2015) Policy framework for investment 2015 edition. OECD Publishing, Paris. https://doi.org/10.1787/9789264208667-en
As an example, see OECD (2018) Mapping of investment promotion agencies in OECD countries
OECD and IDB (2019), p XXIII
See this handbook, Gudrun ZAGEL, Achieving sustainable development objectives in international investment law
WAIPA-WBG (2020) State of investment promotion agencies: evidence from WAIPA-WBG’s joint global survey
UNESCAP (2020) Studies in trade, investment and innovation no. 93 – outward Foreign Direct Investment and Home Country Sustainable Development. p 54
World Bank Group (2020) Helibron A, Aranda-Larrey Y, “The Comprehensive Investor Services Framework”, p 3
Meaning increasing the possibility of an investor to select one’s country as its project destination
OECD (2018) Mapping of Investment Promotion Agencies in OECD Countries, p 14
Ibid., p 15
For recent publications on the issue, see for example World Bank Group and World Association of Investment Promotion Agencies (WAIPA) (2020) State of investment promotion agencies, evidence from WAIPA-WBG’s Joint Global Survey. In the report the Bank presents a novel “WBG Framework for Investment Promotion,” with three core pillars: (1) Corporate Planning and Sector Prioritization; (2) Institutional Framework for FDI; and, (3) Investor Services (based on CISF, later referred on this chapter)
Wells LT, Wint AG (2000) Marketing a country (Revised edition). World Bank FIAS Occasional Paper 13, Washington, DC
OECD (2019) Supporting investment climate reforms through policy advocacy, p 1
UNCTAD (2008) Investment promotion agencies as policy advocates, Investment advisory series, series A, number 2, pp 1 and 5
World Bank Group (2020) Helibron A, Aranda-Larrey Y, “The Comprehensive Investor Services Framework”, p 8
Ibid., p 9
Ibid., p 9
OECD (2019) Supporting investment climate reforms through policy advocacy, p 2
OECD (2019) Supporting investment climate reforms through policy advocacy, p 5 and OECD (2018) Mapping of investment promotion agencies in OECD countries, p 46
OECD (2019) Supporting investment climate reforms through policy advocacy, p 7
OECD (2018) Mapping…”, p 24
Ibid., p 47
OECD (2019) “Supporting…”, p 10
Ibid., p 16
OECD (2018) “Mapping…”, p 81
OECD (2018) “Supporting…”, p 16
OECD (2018) “Supporting…”, p 17
Adapted from Bardach E (2000) A practical guide for policy analysis: the eightfold path to more effective problem solving. Chatham House Publishers of Seven Bridges Press, New York; Kingdon J (1984) Agendas, Alternatives and Public Policies, 2edn. Little, Brown and Company, Boston/Toronto. In UNCTAD (2008) Investment promotion agencies as policy advocates, Investment advisory series, series A, number 2, p 6
UNCTAD (2008) Investment promotion agencies as policy advocates, Investment Advisory Series, series A, number 2, p 60
Ibid., p 14 and 15
Ibid., p 28
UNCTAD (2008) Ibid., p 31
Adapted from Gerston L (2004) Public policy making: process and principles. M.E. Sharpe, New York. In UNCTAD, p 37
UNCTAD (2008) “Investment Promotion Agencies as …,” p 40
Ibid., p 42 and 43
Business France’s policy advocacy process in OECD (2019) “Supporting…,” p 6
UNCTAD (2008) “Investment promotion agencies as …,” p 47
OECD (2018) “Mapping…,” p 48
OECD (2019) “Supporting…,” p 10
UNCTAD (2008) “Investment promotion agencies as …,” p 47
Ibid., p 54
Ibid., p 48
OECD-IDB (2017) Survey of investment promotion agencies, in OECD (2018) “Mapping…,” p 91
UNCTAD (2008) “Investment Promotion Agencies as …,” p 48
Ibid., p 57
OECD (2019) “Supporting…,” p 16
Facilitators are usually IPAs with strong aftercare teams, which are well placed to help identify recurring challenges and support the policy advocacy process. OECD (2019) “Supporting…,” p 13
OECD (2019) “Supporting…,” p 18
UNCTAD (2020) Investment trends monitor, “Impact of the Covid-19 Pandemic on Global FDI and GVCs”
OECD (2020) “Foreign direct investment flows in times of COVID-19,” p 1
OECD (2020) “OECD investment policy responses to COVID-19,” p 1
OECD (2020) “Foreign direct investment flows in times of COVID-19,” p 1
OECD (2020) Borga, Ibarlucea and Sztajerowska, Drivers of divestment decisions by multinational enterprises – a cross-country firm-level perspective. https://doi.org/10.1787/5a376df4-en
Borga, M., P. Ibarlucea Flores and M. Sztajerowska (2020), “Drivers of divestment decisions of multinational enterprises – A cross-country firm-level perspective”, OECD Working Papers on International Investment, No. 2019/03, OECD Publishing, Paris, https://doi.org/10.1787/5a376df4-en.
OECD (2020) “Foreign direct investment flows in times of COVID-19,” p 8
Alfaro, L. and M. Chen (2012), “Surviving the Global Financial Crisis: Foreign Ownership and Establishment Performance,” American Economic Journal: Economic Policy, 4(3):30–55.
Desai, Mihir, C. Fritz Foley, and Kristin J. Forbes (2008), “Financial Constraints and Growth: Multinational and Local Firm Responses to Currency Depreciation,” Review of Financial Studies, 21(6):2857–88.
Ibid., p 1
Ibid., p 2
Ibid., p 2
OECD (2020) “OECD investment policy responses to COVID-19,” p 3
Ibid., p 6
WAIPA (2020) “The impact of Covid-19 from the perspective of IPAS,” p 6–7
OECD (2020) “Investment promotion agencies in the time of COVID-19,” p 5
Ibid., p 9
Ibid., p 8
OECD (2020) “OECD investment policy…,” p 6
UNCTAD. Investment Policy Monitor “National Security-Related Screening Mechanisms for Foreign Investment.” p 3: “UNCTAD has identified 28 jurisdictions that have such mechanisms. These countries are: Australia, Austria, Belgium, Canada, China, Denmark Finland, France, Germany, Hungary, Iceland, India, Italy Japan, Latvia, Lithuania, Mexico, New Zealand, Norway, Poland, Portugal, the Republic of Korea, Romania, the Russian Federation, Spain, South Africa, the United Kingdom, and the United States. In addition to these 28 countries, an FDI Screening cooperation mechanism was also established by the European Union.”
See Chaisse J, Chakraborty D, Mukherjee J (2011) Sovereign wealth funds as corporations in the making – assessing the economic feasibility and regulatory strategies J World Trade 45(4):837–875
OECD (2020) Acquisition – and ownership-related policies to safeguard essential security interests, pp 1–2
See Chaisse J (2015) Demystifying public security exception and limitations on capital movement – hard law, soft law and sovereign investments in the EU internal market. Univ Pa J Int Law 37(2):583–646
OECD (2020) “Acquisition – and ownership-related policies to safeguard essential security interests,” p 37
758 F.3d 296 (D.C. Cir. 2014) United States Court of appeals for the district of Columbia. Ralls Corporation v CFIUS et al., p 47
UNCTAD, Investment Policy Monitor, “National Security-Related Mechanisms for Foreign Investment,” p 2
Ibid., p 3
UNCTAD, Investment Policy Monitor, “National Security-Related Mechanisms for Foreign Investment,” p 12
UNCTAD, Investment Policy Monitor, “National security-related mechanisms for foreign investment,” Annex I – FDI screening: foreign takeovers over $50 million blocked or abandoned for national security reasons, 2016-september 2019, p 1
OECD (2020) Investment policy responses to COVID-19
European Commission. Communication from the Commission – Guidance to the Member States concerning foreign direct investment and free movement of capital from third countries, and the protection of Europe’s strategic assets, ahead of the application of Regulation (EU) 2019/452 (FDI Screening Regulation)