From Quantity to Quality: Challenges for Investment Promotion Agencies
Sergey Filippov & José Guimón
#2009-057
Most investment promotion agencies worldwide are now placing a higher
emphasis on attracting high ‘quality’ FDI, including R&D centers and
headquarter functions as well as knowledgeintensive industries such as
information and communication technologies, biotechnology or
nanotechnology. We argue that this requires a different approach than
policies focused on the ‘quantity’ of FDI inflows, leading to changes in
the policy mix and in the approach to performance measurement. Targeting
quality entails a shift from a mindset that prioritizes attraction of
greenfield investments towards one where the focus is on subsidiary
development. Another implication is that the interplay between FDI
policies and innovation policies becomes more relevant and needs to be
further nurtured. We focus on the management challenges that investment
promotion agencies face in this transition from quantity to quality,
drawing attention to the consequences for their human capital,
structural capital and relational capital strategies.
Keywords: Aftercare, FDI, intellectual capital, investment promotion,
R&D, subsidiary development
JEL codes: E61, F23, H83, O38