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The Effectiveness of Promotion Agencies at Attracting Foreign Investment

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With many millions of dollars being spent annually by governments on promotion to attract foreign investors to various countries, a perplexing question has become increasingly important: Does investment promotion really work? Jacques Morisset and Kelly Andrews-Johnson have made a major step in providing a convincing answer to this and associated questions.

Since 1985, the Foreign Investment Advisory Service has assisted more than 100 countries around the world in their efforts to attract more and better foreign direct investment. A close relationship with investment promotion agencies has been developed as part of this effort. This study aims at providing some guidance to policymakers and managers of these agencies that are interested in understanding the conditions—both external and internal to these agencies—that may make them more effective in influencing the location decision of multinational firms.

We are especially grateful to Professor Louis Wells from the Harvard Business School, who was essential at various stages of this project. Professor Wells has not only contributed to our knowledge of the role of promotion agencies around the world, but he has also provided us with continuous encouragement. We also benefited from the comments of Joseph Battat, Frank Sader, Neil Roger, Joel Bergsman, Dale Weigel, David Bridgman, Simeon Djankov, Teresa Andaya, and participants at the Annual Conference of the World Association of Investment Promotion Agencies (WAIPA) in Geneva on January 22–23, 2003.
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