TAILIEUCHUNG - Embedding foreign direct investment

This paper seeks to explain why it is important to increase the embedding of FDI in regional economies, describe what sorts of policies regional governments and development agencies can use to assist embedding and make recommendations on how such policies can be most effective. The paper also briefly outlines work currently underway at the OECD to analyse and compare policies for embedding FDI in case study cities and regions. | OECD EMBEDDING FOREIGN DIRECT INVESTMENT JONATHAN POTTER Leed Programme Directorate of Employment Labour and Social Affairs OECD 1. Introduction The attraction of Foreign Direct Investment FDI is one of the principal economic development activities of regional governments and development agencies which make extensive use of marketing and promotion and investment incentives to influence foreign investor location decisions. Success in attracting FDI can potentially release many local development benefits. As well as the direct additional employment and output in the foreign affiliates themselves there are multiplier effects associated with local purchasing of materials and services and local spending of wages and salaries and a series of wider effects including technology transfer upgrading the efficiency of local suppliers competitors and customers contributions to local infrastructure improved labour force skills and so on. However these local development benefits will not come about automatically. Indeed foreign investment policies have often been strongly criticised for having relatively few spin-off benefits for local businesses or the local competitive environment because of the truncated or branch plant nature of much of the investment attracted. Thus it is often argued that compared to operations in the home country foreign affiliates attracted through marketing and investment incentives are associated with financial leakage have relatively few technology spin-offs local purchasing or sales linkages or strategic collaborations and are relatively vulnerable to closure decisions made by headquarters overseas. This is why a number of pioneering economic development agencies in OECD Member countries have been developing programmes to better embed foreign investors in regional economies. One part of the effort to better embed foreign investors involves attempts to attract higher quality investment by targeting operations that are more knowledge-intensive have .

• Kinh tế học
• Embedding foreign direct investment
• FDI in regional economies
• Regional economies
• Make recommendations
• Embedding FDI