چگونه ارتقاء سرمایه گذاری بر جذب سرمایه گذاری مستقیم خارجی: استدلال تحلیلی و تجزیه و تحلیل تجربی تاثیر می گذارد

This paper examines that how a host government's promotional effort, through the establishment of investment promotion agency (IPA), can influence foreign direct investment (FDI) inflows. This paper conducts structural equation analyses with maximum-likelihood estimations focusing upon the effectiveness of investment promotion as a mediator between the host country's FDI environment and FDI inflows. The empirical results show that the effectiveness of investment promotion, measured by IPA age, IPA's overseas staff intensity, and number of IPA staff, positively affects the attraction of FDI. From the results, we infer that enhancing investment promotion can be a tool for attracting FDI through the mediation effect that coordinates other determinants of FDI such as market size, market growth, and low labor costs

There is some view that national strategic marketing management is needed to create or increase economic development (Kotler, Jatusripitak, & Maesincee, 1997). That means, in other words, a government can market a country in the same way as a company's products and services in order to attract foreign direct investment (FDI). Most governments have increasingly adopted measures such as liberalizing the legal and regulatory framework for FDI and establishing mechanisms for the settlement of investment disputes to attract FDI, as a means to achieve their economic development goals. According to UNCTAD (1998, p. 91), the determinants of FDI include not only economic determinants (e.g., market size, low-cost unskilled labor, raw materials, and strategic assets and technology) but also business facilitation (e.g., investment promotion activities, investment incentives, and administrative services). As for determinants of FDI, even if the literature argued that business facilitation plays a less crucial role than economic determinants (Guisinger, 1992; Shah, 1995; United Nations Conference on Trade and Development (UNCTAD) (1996) and United Nations Conference on Trade and Development (UNCTAD) (1998); Wells & Wint, 1990), most governments regard business facilitation as a significant policy instrument (Bergsman, 1999; Lim, 2005; Morisset & Pirnia 2000; Wells & Wint, 1990). Promotion activities by investment promotion agencies (IPAs) have been considered to be a major part of business facilitation (United Nations Conference on Trade and Development (UNCTAD) (1995) and United Nations Conference on Trade and Development (UNCTAD) (1998)). However, the role of IPA in attracting FDI has been the subject of only a few studies (Morisset & Andrews-Johnson, 2003; Wells & Wint, 1990) and the literature has never been clearly argued as to how IPA activity affects FDI inflows. There are some exceptions: Wells and Wint (1990) and Wint and Williams (2002) tested whether the existence of IPA, measured by a dummy variable and four-category scale, has affected a host country's FDI inflows or not; Morisset and Andrews-Johnson (2003) showed recently that spending by IPAs was positively associated with attracting FDI. Regarding empirical tests in previous studies, they have developed in two directions: first, how to select proxies for the effectiveness of investment promotion affecting FDI inflows in large-sample analysis; second, which role of an IPA is the most important among various promotion activities, i.e., image-building activity, investment-generating activity, and investment service (after care service) with case analysis. The main line of inquiry of this paper is how and to what extent a host government's promotional effort, through an IPA, can influence FDI inflows. I regard an IPA as acting in the role of a mediator between the host country's FDI environment and FDI inflows, while the previous paper regards it as one of the determinants of FDI. That is, an IPA can function as a catalyst between the FDI environment and FDI-attraction performance of the host country. This view puts the IPA's role apart from other determinants affecting FDI inducement in this paper. Accordingly, this paper has three main contributions in developing the previous approach: first, various proxy of effectiveness of investment promotion is adopted even though it is an analysis of a relatively large set of countries in these kinds of studies; second, the functions of IPA, as a FDI promotion factor, is regarded not as a normal independent factor but a mediator between the host country's FDI environment and FDI inflows; third, related theories, such as the transaction cost economy approach and information searching cost are adopted to make a link between the hypothesis and empirical tests.

MNCs are exposed to uncertainty when they enter a foreign market. They face information costs and risks on entering host countries. Uncertainty stems from a lack of knowledge of an unfamiliar environment (UNCTAD, 1998). IPAs can counter these factors by providing potential investors with information and investor servicing. The marketing potential of IPAs gained through experience, a well-structured, well-staffed overseas network is particularly important since investors are more likely to visit a country after making initial contact at an overseas office. Previous studies on the role of IPAs (Morisset & Andrews-Johnson, 2003; Wells & Wint, 1990) regarded IPA activities as one of the determinants affecting FDI inflows and conducted empirical tests accordingly. However, an IPA can also be more of mediating factor between the host country's FDI environment and FDI inflows than any other FDI environmental factor. This view led to structural analyses on the mediating effect of IPA activities as conducted in this paper. The empirical results proved the hypothesis that IPA promotion effectiveness, measured by IPA age, IPA overseas staff intensity, and number of IPA staff, has a positive influence on attracting FDI by mediation effect between a host country's FDI environment and FDI inflows. From the result of analysis, we infer that establishing and enhancing an IPA's promotion activities can be a FDI policy instrument for improving the FDI attracting environment of the host countries. Furthermore, the investment promotion function is more easily implemented in comparison with changes to the economic factors (e.g., market size or labor cost) that influence the overall attractiveness of a particular FDI destination, which may be difficult and time consuming, or even entirely beyond government control. The point to be understood carefully from the result is that simply increasing the resources of an IPA will not automatically lead to an impact on FDI inflows. Only with efficient IPA coordination function will FDI inflows increase. In other words, enhancing an IPA promotion activity is not the only road to inducing FDI, but should be undertaken along with measures to develop other determinants of a location's attractiveness. That policy implication cannot usually be derived from previous studies assuming that the role of the IPA as a factor of the FDI attraction environment is located in same layer as other independent variables of FDI. This paper should be viewed as an initial attempt to examine empirically the mediating effectiveness of investment promotion agencies. Despite the contributions, weak points in this paper where improvement is required remain. In measuring the effectiveness of IPA promotion, this paper does not reflect the impact of various characteristics of IPA activities such as after-care services and policy advocacy services (i.e., problem-solving capability, sectoral targeting, and activities to reduce bureaucratic barriers, etc.) nor IPA structures such as government and/or quasi-government. It also cannot be completely objective since it relies in part on qualitative data derived from the survey questionnaire. Therefore, three directions would be proposed for future research. The first direction should consider a more various proxy of promotional techniques and the structure of IPAs. The evaluation of an IPA's techniques and structure should add considerably to the evidence on the influence of promotion on FDI inflows. The second direction should also consider various proxy of FDI performance, i.e., quality of FDI, as dependent variables. This is certainly true for sophisticated IPAs that focus on job creation, spillover effects of technology transfer to host country. The third direction would consist of supplementing the data collected in this survey by extending the coverage period over a longer period of time. Future research, depending on the data availability, should carefully explore the time lag between overall investment promotion and the decision of foreign investors to invest in a country.