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Investment promotion and FDI inflows: quality matters
journal contribution
posted on 2023-06-08, 12:52 authored by Torfinn Harding, Beata S JavorcikInformation asymmetries constitute a significant obstacle to capital flows across international borders, and in particular to flows of foreign direct investment (FDI) to emerging markets. Many governments aim to reduce information barriers by engaging in investment promotion activities. Despite potentially large benefits of FDI and popularity of investment promotion intermediaries (IPIs), relatively little is known about their effectiveness. This study uses data collected through the Global Investment Promotion Benchmarking (GIPB) exercise to examine whether higher quality of IPI services translates into higher FDI inflows. The analysis, based on information on 156 countries, suggests that countries with IPIs able to handle investor inquiries in a more professional manner and IPIs possessing higher quality Web sites tend to attract greater volume of FDI. These results are robust to using sector level data and instrumental variable approach.
History
Publication status
- Published
Journal
CESifo Economic StudiesISSN
1612-7501Publisher
Oxford JournalsExternal DOI
Issue
2Volume
59Page range
337-359Department affiliated with
- Economics Publications
Full text available
- No
Peer reviewed?
- Yes
Legacy Posted Date
2012-10-29Usage metrics
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