Global Investment Promotion

Best Practices (GIPB 2012)

Robert Whyte

Global Specialist, Investment PromotionInvestment Climate Department, World Bank Group

Contents

Difficult Market for FDI

Conclusions and Implications for IPIs

GIPB Results for Europe and Central Asia

2012 Was a Difficult Year for FDI ……. Not clear that 2013 will be much better

Global FDI inflows, average 2005–2007, 2007–2014(Trillions of US dollars)

Source: UNCTAD.* Revised, ** Estimates, *** Forecast.

Investment Sectors in ECA Region

Source: fDiMarkets.com, Crossborder Investment Monitor

No. of Announcedprojects % change since 2008

Contents

Difficult Market for FDI

Conclusions and Implications for IPIs

GIPB Results for Europe and Central Asia

What is GIPB?

What does GIPB measure?The ability of IPIs to meet investors’ information needs through–Web sites–Handling investor inquiries

What does GIPB NOT measure?Economies’ overall FDI competitiveness Economies’ business climatesIPIs’ effectiveness in other functions

Reducing investors’

perceptions of risk

Affecting investors’

preconceptions about your

locationEncouraging investors to look at new

opportunities

Affecting investors’

perceptions of your IPI

The Information Gap

GIPB Mirrors Companies’ Site Selection Process

Stepping into the shoes of two companies (tourism and agribusiness) a site location consultant assessed:

– IPI Web sites: The extent to which IPIs offer country and sector information suitable to assist potential investors in their location search

– Investor inquiry handling: A mystery shopper approach tested each IPI’s ability to interact with and manage two distinct investment inquiries, provide relevant information and make a business case for investment.

A 2011 survey of 3,600 US large companies ($25m+) conducted by DCI Consulting reveals that:

47% of respondents would use the IPI website in their next location search

Only 17% of respondents say they would not contact the IPI during the investment decision process

Site location consultants are more likely to use the IPI services for information in the screening process

Information drives investors’ location decisionsInformation drives investors’ location decisions

Countries are Missing Investment Projects and Jobs

GIPB 2012 Regional Results: Web Site & Inquiry Handling

When foreign companies come knocking, most IPIs fail even to respond.

♦ Many IPIs achieved weaker scores in GIPB 2012 compared to GIPB 2009.

♦ Overall, Web sites improved from 59% to 61%.

♦ Average inquiry-handling dropped from an already weak 28% to 22%.

♦ Only MENA showed significant progress.

♦ ECA (-7%) and OECD (-5%) high-income had the biggest declines between the 2009 and 2012.

GIPB 2012 – Web Site Results

Worldwide, there was an improvement of 3% from GIPB 2009, but this masks a lack of improvement in actual Content provision.

Most regions scored strongly in Architecture and Design, with some general improvement in Promotional Effectiveness.

Implying that more IPIs now understand that their site is a valuable marketing tool with the technical side well covered.

0 – 91%

0 – 81%

68 – 97%

22 – 91%

12 – 91%

31 – 83%

22 – 82%

WideSpread

World Average

GIPB (61%)

ECA and OECD Web Performance Result ………. content remains the weakest element

ECAECA

OECDOECDOECD IPIs provide more quality content for investors ….

GIPB 2012 – Inquiry Handling Results

World performance deteriorated from GIPB 2009 by 6 percentage points.

Most IPIs still struggle to respond to investors’ information needs - just over one third of IPIs provided responses in both sectors

Only two IPIs (from Nicaragua and Hungary) scored at best practice levels (80%+), a further 8 IPIs gained a ‘good’ score (60-79%)

Two other non OECD High-Income economies were also in the top 6: Cyprus and Hong Kong SAR, China.

Although the majority of IPIs were easily contactable, only 21% provided a response to both inquiries, and the quality of response was highly variable.

In most cases, the lead was not followed up after the response was submitted, with only 16% of those who responded following up.

World Average

GIPB (22%)

Is Anybody There? Few IPIs are Ready to Answer When Investors Come Knocking.

ECA Inquiry Handling Performance Result:Overall Average = 23%

OECD (High-Income) Inquiry Handling Performance Result:Overall Average = 43%

Inquiry handling Response RatesInquiry handling Response Rates

All IPAsAll IPAs IPAs with Agribusinessas priority

IPAs with Agribusinessas priority

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

No. = 189

World

No. = 189

32%

62responded 48%

11responded

No. = 23

WorldECA

No. = 118

32%

38responded

No. = 17No. = 10

58%

10responded

World ECA

Sector prioritization does not seem to make much difference …. Agribusiness

Inquiry handling Response RatesInquiry handling Response Rates

All IPAsAll IPAs IPAs with Tourismas priority

IPAs with Tourismas priority

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

No. = 189

World

No. = 189

35%

68responded

30%

7responded

No. = 23

WorldECA

No. = 107

39%

42responded

No. = 14No. = 10

43%

6responded

World ECA

Sector prioritization does not seem to make much difference …. Tourism

Ending on a high note …. Where are the World’s Best practices

1. PRONicaragua (Nicaragua)

2. Hungarian Investment and Trade Development Agency

3. Invest in Greece

4. Invest in Finland

5. Cyprus IPA

6. InvestHK (Hong Kong)

7. ABA – Invest in Austria

8. Invest in Sweden Agency

9. aicep Portugal Global

10. Invest in Denmark

1. ABA–Invest in Austria

2. CzechInvest (Czech Republic)

3. Austrade (Australia)

4. Germany Trade and Invest

5. Invest in Denmark

6. Invest in Spain

7. Investment Support and Promotion Agency of Turkey

8. PRONicaragua (Nicaragua)

9. Department of Investment Services (Taiwan, China)

10. Hungarian Investment and Trade Development Agency

Top 10 IPIs at Inquiry-HandlingTop 10 IPIs at Inquiry-Handling

Top 10 IPI Web sitesTop 10 IPI Web sites

Difficult Market for FDI

Conclusions and Implications for IPIs

GIPB Results

Contents

18

Conclusions

GIPB 2012 has identified inquiry handling as the main weakness in the ECA region

The ultimate “weakness” for an IPI is failing to respond to an investor’s contact

Need to respond to all valid investor inquiries

Be serious! Investors expect IPIs to mean what they say – if a sector is really a priority then

act on it.

Improve understanding of your selected sectors

What is your competitive advantage?

Do you have sufficient information on your priority sectors

Build sufficient resources and partnerships to develop sector-specific knowledge

Build contacts with other bodies in your priority sectors

Sector content is critical – even for those IPIs that responded

IPIs performed better on contactability in Investor Inquiry Handling. But providing relevant investor information is the most fundamental function of an IPI, and this is

where IPIs across GIPB 2012 are most weak. IPIs need to carry out detailed research or information gathering – investors come to the IPI for information they cannot easily source themselves.

AvailabilityAnd

contactability

Responsiveness And

handlingCustomer

care

Response

Quality of responses were poor ….. Better in OECD IPIs

Thank you.

Questions?