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Investment promotion: towards best practices
FIAS Workshop to Discuss Preliminary IPA Census Results May 21, 2002
Anne Miroux and Kelly Andrews Johnson FIAS
IPA Research Project
Project objectives: describe the functions, activities and experiences of IPAs; and provide a limited analysis of IPAs’ internal efficiency and external effectiveness
Ultimate objective of this research is help identify best practices and benchmarks
Project carried out in three phases:
Phase I consists of a census of IPAs to provide an understanding of their experiences
Phase II consists of an analysis of IPA effectiveness
Phase III consists of detailed case studies and identification of benchmarks and best practices
Phase I - The FIAS/MIGA Census objective is to collect information • Census relevant to IPAs’: Institutional/organizational aspects Resources Functions and activities Performance indicators
• Tools developed:
Questionnaire instrument Database
• Output: Doing?
Descriptive Study--What Are IPAs
Investment Promotion Agencies in 2001
A descriptive analysis
The FIAS/MIGA Census The questionnaire Institutional data Financial and human resources Functions and activities Performance indicators
The population surveyed
IPAs, institutions or parts of ministries for which FDI promotion is a prime responsibility
Focus on national IPAs in developing countries and transition economies Sent to about 100 IPAs worldwide
The FIAS/MIGA Census Africa1
Asia 2
ECA3
LAC4
MENA5
West. Europe6
TOTAL
Quest. sent
24
17
17
22
12
22
114
Resp. rcvd
15
11
12
19
6
11
74
63
66
71
86
50
50
65
Answ. Rate (%)
1. Sub-Saharan Africa
4. Latin America and Caribbean
2. Asia and Pacific
5. Middle East and North Africa
3. Eastern Europe and Central Asia
6. Western Europe and Australia
Institutional Features Other
1. Modes of creation
Decree only Law
80 60 40
PE R O
A W .E U
M EN
C LA
EC A
AS IA
R IC A
20
AF
% of agencies
100
ALL
Institutional Features 2. Status 70 50 40 30 20
L AL
R O PE .E U
A W
M EN
C LA
EC A
AS IA
IC
A
10
AF R
% of agencies
60
Unit of ministry
Autonomous public body
Semi-autonomous agency
Joint public/private
Other
Private entity
Institutional Features 3. Reporting Mechanisms 80 60 40
L AL
R O PE
A W
.E U
M EN
C LA
EC A
IA AS
IC
A
20
AF R
% of agencies
100
Ministry
Board
Board only
Other mechanism
Mandate & Responsibilities About 60% of the IPAs surveyed in high income countries work exclusively on FDI promotion 11% of agencies in low income and middle income countries work exclusively on FDI promotion Most commonly, agencies combine FDI promotion with: Domestic investment promotion (50% of cases) Export promotion (30% of cases)
About 50% of agencies surveyed in low income and middle income countries deal with registration, licensing or investment incentives. Of this group, 30% have decision making power
Financial & Human Resources 1. Sources of funding (in %) Africa Asia Govt
ECA
LAC
MENA
West. Europe
ALL
73
96
70
63
100
85
76
1
0
0
14
0
3
3
Fees
8
2
0
6
0
0
4
Aid
17
0
28
12
0
9
14
Other
1
2
1
5
0
3
3
Priv.S. Contrib
Financial & Human Resources 2. Budget size 55 agencies for which information was available In 2001, two-thirds of the agencies had an FDI promotion budget below: $ 350 000 in Africa $ 450 000 in Asia $ 650 000 in Latin America and Caribbean $ 800 000 in Eastern Europe and Central Asia A wide dispersion of budget size between income groups as well as within regions
Financial & Human Resources (Mn $)
3. Budget size (averages)
5 4 3 2 1
Low Income
Lower Middle Income
Upper Middle Income
High Income
Financial & Human Resources 4. Staff Size and Profile Average number of professionals employed in FDI promotion Africa Asia
ECA
LAC
MENA
West. Europe
ALL
Mean
25(*)
13
9
7
14
33
16
Median
8
10
7
6
6
21
8
Stand. Deviat.
42
11
6
4
18
30
23
No. of agencies
9
9
8
14
5
7
52
(*) If one country is excluded, the mean is reduced to 10
Financial & Human Resources 4. Staff Size and Profile (cont’d) 70 % of the agencies surveyed employ staff as civil servants 20 % employ staff under private sector status only 38 % have salaries in line with public sector, and 41 % are competitive with those of the private sector 60 % of staff have private sector experience, with the highest percentage in Latin America and Caribbean
Functions and Activities
The core functions of investment promotion
The focus of IPA activities
Investment Promotion Functions Agency Focus
POLICY ADVOCACY
100%
80% 70% 60% 50% 40% 30% 20%
L AL
PE R O
A
W .E U
M EN
C LA
EC A
AS IA
10%
A
(based on budget allocation estimates)
% of activity
IMAGE BUILDING
90%
IC
INVESTMENT GENERATION
AF R
INVESTOR SERVICES
Image Building - Activity Focus 100% Promotional Materials Public Relations*
L AL
PE R O
A W .E U
C LA
A EC
* Participation in fairs and conferences, organization of seminars, e.g.
M EN
AF
AS IA
50%
R IC A
(based on budget allocation estimates)
% of activity
Advertising
Investment Generation Activity Focus Receiving missions, conducting studies, matchmaking
100%
Proactive Contacts
60%
40%
L AL
PE
R O
A W .E U
M EN
C LA
EC A
AS IA
R IC
A
20%
AF
(based on budget allocation estimates)
% of activity
80%
Functions & Activities (cont’d)
% of agencies
Agencies with targeting or other specific programs 100 80 60 40 program targeting specific countries
20
programs targeting
L AL
O PE R
A
.E U
C LA
EC A
AS IA
M EN
W
programs focusing on expansion
R
joint ventures
AF
special programs for
IC A
specific sectors
Investor Services - Activity Focus 100%
Pre-investment
80% 70% 60% 50% 40% 30% 20%
L AL
PE O R
A
W .E U
M EN
C LA
A EC
AS
IA
10%
R IC A
(based on budget allocation estimates)
90%
% of activity
Implementation
AF
After care
Phase II – IPA Internal Efficiency and External Effectiveness Analysis
Internal efficiency
Objective: help IPA managers allocate resources Measure inputs (staff time, budget) versus outputs (investors contacted and assisted, advertisements, etc) Comparison across countries and by activity
External effectiveness •
Objective: learn something about the performance of IPAs in stimulating FDI inflows performance of IPAs in stimulating FDI flows, including factors that are under the control of the IPA and external factors identification of key characteristics that are associated with different levels of IPA performance
Phase II – Internal Efficiency Analysis: Indicator Definitions
Investor Servicing
- Budget spent per visiting mission arranged - Staff days spent per visiting mission arranged - Budget spent per existing investor serviced (after-care services) - Staff days spent per existing investor serviced (after-care)
Investment Generation
- Budget spent per investor proactively contacted - Staff days spent per investor proactively contacted
Image Building
- Budget spent per public relation activity* - Staff days spent per public relation activity* - Budget spent per advertisement - Staff days spent per advertisement
Policy Advocacy
- Budget spent per position paper on FDI issues - Staff days spent per number of position papers on FDI issues
* Public relations activity as defined in questionnaire includes organizing seminars/presentations and conferences at home and abroad.
Phase II – Internal Efficiency Indicators
Investor Servicing Budget spent per visiting mission arranged
Staff days per visiting mission arranged
Budget spent per existing investor serviced
Staff days per existing investor serviced
Total
1,248
11.66
1,354
11.24
LIC
647
10.54
823
10.26
LMC
1,802
16.47
1,566
17.69
UMC
1,056
3.19
1,769
2.18
Phase II – Internal Efficiency Indicators
Investment Generation Budget spent per investor proactively contacted
Staff days spent per investor proactively contacted
Total
169
0.86
LIC
89
0.38
LMC*
321
1.64
UMC
61
0.14
*2 countries are responsible for bringing the average above $141and 1.62 staff days
Phase II – Internal Efficiency Indicators
Image Building Budget spent per Staff days spent PR activity per PR activity
Budget spent per Staff days spent advertisement per advertisement
Total
2,329
8.44
4,784
22.20
LIC
3,446
7.67
3,266
33.41
LMC
1,850
10.43
5,637
12.07
UMC
2,641
6.34
6,135
14.97
Phase II – Internal Efficiency Indicators
Policy Advocacy Budget spent per Staff days spent position paper on per position paper FDI issues on FDI issues Total
12,572
76.56
LIC
4,659
76.06
LMC
13,629
95.92
UMC
19,643
17.50
Phase II – IPA External Effectiveness Analysis
What we have done so far: Developed some options on methodology and approach
Problems/challenges: Defining
effectiveness—FDI proxy Lags—policy / outcome Incomplete data from survey, especially performance indicators, budget
Thank you www.fias.net
FIAS Workshop to Discuss Preliminary IPA Census Results May 21, 2002
Anne Miroux and Kelly Andrews Johnson FIAS
IPA Research Project
Project objectives: describe the functions, activities and experiences of IPAs; and provide a limited analysis of IPAs’ internal efficiency and external effectiveness
Ultimate objective of this research is help identify best practices and benchmarks
Project carried out in three phases:
Phase I consists of a census of IPAs to provide an understanding of their experiences
Phase II consists of an analysis of IPA effectiveness
Phase III consists of detailed case studies and identification of benchmarks and best practices
Phase I - The FIAS/MIGA Census objective is to collect information • Census relevant to IPAs’: Institutional/organizational aspects Resources Functions and activities Performance indicators
• Tools developed:
Questionnaire instrument Database
• Output: Doing?
Descriptive Study--What Are IPAs
Investment Promotion Agencies in 2001
A descriptive analysis
The FIAS/MIGA Census The questionnaire Institutional data Financial and human resources Functions and activities Performance indicators
The population surveyed
IPAs, institutions or parts of ministries for which FDI promotion is a prime responsibility
Focus on national IPAs in developing countries and transition economies Sent to about 100 IPAs worldwide
The FIAS/MIGA Census Africa1
Asia 2
ECA3
LAC4
MENA5
West. Europe6
TOTAL
Quest. sent
24
17
17
22
12
22
114
Resp. rcvd
15
11
12
19
6
11
74
63
66
71
86
50
50
65
Answ. Rate (%)
1. Sub-Saharan Africa
4. Latin America and Caribbean
2. Asia and Pacific
5. Middle East and North Africa
3. Eastern Europe and Central Asia
6. Western Europe and Australia
Institutional Features Other
1. Modes of creation
Decree only Law
80 60 40
PE R O
A W .E U
M EN
C LA
EC A
AS IA
R IC A
20
AF
% of agencies
100
ALL
Institutional Features 2. Status 70 50 40 30 20
L AL
R O PE .E U
A W
M EN
C LA
EC A
AS IA
IC
A
10
AF R
% of agencies
60
Unit of ministry
Autonomous public body
Semi-autonomous agency
Joint public/private
Other
Private entity
Institutional Features 3. Reporting Mechanisms 80 60 40
L AL
R O PE
A W
.E U
M EN
C LA
EC A
IA AS
IC
A
20
AF R
% of agencies
100
Ministry
Board
Board only
Other mechanism
Mandate & Responsibilities About 60% of the IPAs surveyed in high income countries work exclusively on FDI promotion 11% of agencies in low income and middle income countries work exclusively on FDI promotion Most commonly, agencies combine FDI promotion with: Domestic investment promotion (50% of cases) Export promotion (30% of cases)
About 50% of agencies surveyed in low income and middle income countries deal with registration, licensing or investment incentives. Of this group, 30% have decision making power
Financial & Human Resources 1. Sources of funding (in %) Africa Asia Govt
ECA
LAC
MENA
West. Europe
ALL
73
96
70
63
100
85
76
1
0
0
14
0
3
3
Fees
8
2
0
6
0
0
4
Aid
17
0
28
12
0
9
14
Other
1
2
1
5
0
3
3
Priv.S. Contrib
Financial & Human Resources 2. Budget size 55 agencies for which information was available In 2001, two-thirds of the agencies had an FDI promotion budget below: $ 350 000 in Africa $ 450 000 in Asia $ 650 000 in Latin America and Caribbean $ 800 000 in Eastern Europe and Central Asia A wide dispersion of budget size between income groups as well as within regions
Financial & Human Resources (Mn $)
3. Budget size (averages)
5 4 3 2 1
Low Income
Lower Middle Income
Upper Middle Income
High Income
Financial & Human Resources 4. Staff Size and Profile Average number of professionals employed in FDI promotion Africa Asia
ECA
LAC
MENA
West. Europe
ALL
Mean
25(*)
13
9
7
14
33
16
Median
8
10
7
6
6
21
8
Stand. Deviat.
42
11
6
4
18
30
23
No. of agencies
9
9
8
14
5
7
52
(*) If one country is excluded, the mean is reduced to 10
Financial & Human Resources 4. Staff Size and Profile (cont’d) 70 % of the agencies surveyed employ staff as civil servants 20 % employ staff under private sector status only 38 % have salaries in line with public sector, and 41 % are competitive with those of the private sector 60 % of staff have private sector experience, with the highest percentage in Latin America and Caribbean
Functions and Activities
The core functions of investment promotion
The focus of IPA activities
Investment Promotion Functions Agency Focus
POLICY ADVOCACY
100%
80% 70% 60% 50% 40% 30% 20%
L AL
PE R O
A
W .E U
M EN
C LA
EC A
AS IA
10%
A
(based on budget allocation estimates)
% of activity
IMAGE BUILDING
90%
IC
INVESTMENT GENERATION
AF R
INVESTOR SERVICES
Image Building - Activity Focus 100% Promotional Materials Public Relations*
L AL
PE R O
A W .E U
C LA
A EC
* Participation in fairs and conferences, organization of seminars, e.g.
M EN
AF
AS IA
50%
R IC A
(based on budget allocation estimates)
% of activity
Advertising
Investment Generation Activity Focus Receiving missions, conducting studies, matchmaking
100%
Proactive Contacts
60%
40%
L AL
PE
R O
A W .E U
M EN
C LA
EC A
AS IA
R IC
A
20%
AF
(based on budget allocation estimates)
% of activity
80%
Functions & Activities (cont’d)
% of agencies
Agencies with targeting or other specific programs 100 80 60 40 program targeting specific countries
20
programs targeting
L AL
O PE R
A
.E U
C LA
EC A
AS IA
M EN
W
programs focusing on expansion
R
joint ventures
AF
special programs for
IC A
specific sectors
Investor Services - Activity Focus 100%
Pre-investment
80% 70% 60% 50% 40% 30% 20%
L AL
PE O R
A
W .E U
M EN
C LA
A EC
AS
IA
10%
R IC A
(based on budget allocation estimates)
90%
% of activity
Implementation
AF
After care
Phase II – IPA Internal Efficiency and External Effectiveness Analysis
Internal efficiency
Objective: help IPA managers allocate resources Measure inputs (staff time, budget) versus outputs (investors contacted and assisted, advertisements, etc) Comparison across countries and by activity
External effectiveness •
Objective: learn something about the performance of IPAs in stimulating FDI inflows performance of IPAs in stimulating FDI flows, including factors that are under the control of the IPA and external factors identification of key characteristics that are associated with different levels of IPA performance
Phase II – Internal Efficiency Analysis: Indicator Definitions
Investor Servicing
- Budget spent per visiting mission arranged - Staff days spent per visiting mission arranged - Budget spent per existing investor serviced (after-care services) - Staff days spent per existing investor serviced (after-care)
Investment Generation
- Budget spent per investor proactively contacted - Staff days spent per investor proactively contacted
Image Building
- Budget spent per public relation activity* - Staff days spent per public relation activity* - Budget spent per advertisement - Staff days spent per advertisement
Policy Advocacy
- Budget spent per position paper on FDI issues - Staff days spent per number of position papers on FDI issues
* Public relations activity as defined in questionnaire includes organizing seminars/presentations and conferences at home and abroad.
Phase II – Internal Efficiency Indicators
Investor Servicing Budget spent per visiting mission arranged
Staff days per visiting mission arranged
Budget spent per existing investor serviced
Staff days per existing investor serviced
Total
1,248
11.66
1,354
11.24
LIC
647
10.54
823
10.26
LMC
1,802
16.47
1,566
17.69
UMC
1,056
3.19
1,769
2.18
Phase II – Internal Efficiency Indicators
Investment Generation Budget spent per investor proactively contacted
Staff days spent per investor proactively contacted
Total
169
0.86
LIC
89
0.38
LMC*
321
1.64
UMC
61
0.14
*2 countries are responsible for bringing the average above $141and 1.62 staff days
Phase II – Internal Efficiency Indicators
Image Building Budget spent per Staff days spent PR activity per PR activity
Budget spent per Staff days spent advertisement per advertisement
Total
2,329
8.44
4,784
22.20
LIC
3,446
7.67
3,266
33.41
LMC
1,850
10.43
5,637
12.07
UMC
2,641
6.34
6,135
14.97
Phase II – Internal Efficiency Indicators
Policy Advocacy Budget spent per Staff days spent position paper on per position paper FDI issues on FDI issues Total
12,572
76.56
LIC
4,659
76.06
LMC
13,629
95.92
UMC
19,643
17.50
Phase II – IPA External Effectiveness Analysis
What we have done so far: Developed some options on methodology and approach
Problems/challenges: Defining
effectiveness—FDI proxy Lags—policy / outcome Incomplete data from survey, especially performance indicators, budget
Thank you www.fias.net
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