MIGA Pilots Global Investment Promotion Survey
Competing for Foreign Direct Investment: World Bank's Agency Pilots Global Investment Promotion Survey
GENEVA, March 10, 2005—The Multilateral Investment Guarantee Agency, MIGA, a member of the World Bank Group, said today that investment promotion agencies in developing countries need to notch up the quality of their services in order to compete effectively for highly contested foreign direct investment. The findings were announced at the 10th annual meeting of the World Association of Investment Promotion Agencies being held this week in Geneva.
The findings are the result of a recent performance benchmarking survey conducted by MIGA and the London-based consulting firm GDP Global Development. The survey examined 188 mostly national agencies, 86 from developed countries and 102 from the developing world, against predetermined benchmarking criteria.
Investment promotion agencies promote foreign investment through a combination of activities, with the goal of generating economic growth and creating jobs. They attract investors to specific locations using a host of promotion tools; serve existing investors, for example, helping them solve potential problems encountered while operating within a country; conduct policy advocacy, encouraging governments to make changes to increase a country's attractiveness as an investment destination; and help to anchor investments to the domestic economy through supply and sourcing relationships.
"We conducted this survey to give investment promotion agencies in developing countries a greater edge in what is becoming a fast-growing and increasingly competitive field," says Tessie San Martin, MIGA's Director of Operations. The number of investment promotion agencies around the world has quintupled in the past 20 years. "The investment promotion agency that understands investors and can serve them with excellence introduces a much-needed differentiating factor into the marketing mix."
Economic and policy reforms in the developing world—such as laws protecting investor rights, special economic zones, and free trade agreements—are helping to level the field of competition for developing countries, San Martin says. As a result, the success of investment promotion agencies in bringing in and keeping new business is becoming ever more dependent on how well they do their jobs.
"We believe that objective feedback on performance, benchmarked against that of the world's leading agencies, can help countries identify weaknesses in their work and gives them a chance to learn the best practices in the field," she adds.
The survey was conducted using a "mystery investor" approach, to reflect as much as possible the level of service an investor might receive at any given time under normal circumstances. "Investor" requests ranged from questions about the country's general investment conditions to its competitive advantages for specific types of projects.
The survey identified benchmarking elements grouped into three performance categories: marketing, service, and content. Initial stumbling blocks included language problems and wrong contact information on websites. The survey also gauged issues such as response times to investor queries, the quality of information, customization of documents, and branding.
"We believe this survey has the potential to become a source of innovation that can raise the level of performance and become a roadmap for helping agencies improve their skills," says John Hanna, Chief Executive of GDP Global Development, the consulting firm that pioneered the application of this mystery shopper approach to evaluating investment promotion agencies.
Another initiative being introduced by MIGA in Geneva is its Investing in Development publications. The first report in the series, "Competing for FDI," features case studies of successful investment promotion agencies in developing countries, to help others see not only how they stack up against the competition, but to learn from best practices gleaned from their peers. The report identifies best practice by focusing on the operations and lessons learned by four investment promotion agencies:
CzechInvest—The agency evolved from a start-up marketing office to multi-service development agency in ten years, taking an active role in investment climate issues, and listening to the needs of investors to build a competitive product.
Uganda Investment Authority—With strong leadership, the agency was able to engineer a "turnaround," effectively streamlining operations, reducing staff size, and engaging in proactive promotion and client support. The foundation of the success was solid and broad support in the business community.
FIPA Tunisia—The investment promotion strategy of Tunisia's Foreign Investment Promotion Agency focused on realizing the benefits of increased EU market access. In this newly liberalized environment, FIPA moved quickly to define opportunities for sector-specific exports and worked to help investors understand how to make their businesses work in Tunisia.
PROESA, El Salvador—In the early 1990s, the agency launched the "El Salvador Works" image-building campaign, with the goal of recasting El Salvador in the eyes of the investment community from post-conflict to center of productivity. The campaign followed up on significant improvements in the policy environment and positioned El Salvador as a regional leader for export manufacturing.
MIGA, together with the Foreign Investment Advisory Service (FIAS), collaborated on the report to capture this regional cross-section of agencies that have become successful in different ways. The case studies include background information, exhibits and questions for discussion, and are intended to be used as a training tool to help developing country practitioners draw on the global experience in investment promotion.
(Visit http://www.ipanet.net for more information.)
For information
Angela Gentile, agentile@worldbank.org, t. 202.473.3509