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231. Investment incentives and the global competition for capital

Author:
Kenneth P. Thomas
Publication Date:
12-2011
Content Type:
Policy Brief
Institution:
Columbia Center on Sustainable Investment
Abstract:
Investment incentives (subsidies designed to affect the location of investment) are a pervasive feature of global competition for foreign direct investment (FDI). They are used by the vast majority of countries, at multiple levels of government, in a broad range of industries. They take a variety of forms, including tax holidays, grants and free land. Politicians, at least in the United States, may have good electoral incentives to use them.
Topic:
Development, Environment, Globalization, International Trade and Finance, Foreign Aid, and Foreign Direct Investment
Political Geography:
United States and Europe

232. Knowledge, FDI and catching-up strategies

Author:
Francisco . Sercovich
Publication Date:
12-2011
Content Type:
Policy Brief
Institution:
Columbia Center on Sustainable Investment
Abstract:
A recent Perspective by Terutomo Ozawa singles out protectionism and foreign direct investment (FDI) as alternative drivers for the take-off phase of catching-up industrialization. This dichotomy neglects the rich and nuanced variety of strategic options revealed by recent successful industrialization experiences.
Topic:
Development, Economics, International Trade and Finance, Science and Technology, and Foreign Direct Investment

233. FDI in retailing and inflation: The case of India

Author:
Nandita Dasgupta
Publication Date:
12-2011
Content Type:
Policy Brief
Institution:
Columbia Center on Sustainable Investment
Abstract:
India's food price inflation is a major driving factor behind the country's overall accelerating inflation over the past few years. Agricultural food prices in particular have risen recently: over the past year vegetables have become costlier by 18%, pulses by 14%, milk by 10%, and eggs, meat and fish by 12%. The rise in fruit prices was, however, relatively smaller (5%), and the same happened for cereals (3%). This price escalation is largely due to an inefficient supply chain in agriculture. Some of the supply side constraints have been identified: poor agricultural productivity, lack of corporate involvement in agriculture, ceilings on landholding size, existence of middlemen, hoarding, and, more importantly, insufficient cold storage facilities and transportation infrastructure. Around 50% of fresh produce in India rots and goes to waste between the farm gate and the market because of inadequate cold storage facilities and a poor distribution network. These factors unfavorably affect agricultural supply, create a supplydemand gap and help raise food prices.
Topic:
Security, Agriculture, Development, Economics, Food, and Foreign Direct Investment
Political Geography:
South Asia and India

234. Greek FDI in the Balkans: How is it affected by the crisis in Greece?

Author:
Persephone Economou and Margo Thomas
Publication Date:
11-2011
Content Type:
Policy Brief
Institution:
Columbia Center on Sustainable Investment
Abstract:
The current Greek crisis raises the question of its impact on foreign direct investment (FDI) by Greece on its neighbors in the Balkans. Greek multinational enterprises (MNEs) first began to establish a presence there in the 1990s, following the breakup of the former Yugoslavia. This trend accelerated during the past decade. As of 2009, Greece's outward FDI stock in the Balkans stood at US$ 10.5 billion or 26.5% of Greece's outward FDI stock worldwide.
Topic:
Foreign Policy, Global Recession, Foreign Direct Investment, and Financial Crisis
Political Geography:
Europe, Greece, Yugoslavia, and Balkans

235. Responsible business conduct: Re-shaping global business

Author:
John Evans
Publication Date:
11-2011
Content Type:
Policy Brief
Institution:
Columbia Center on Sustainable Investment
Abstract:
The Guidelines for Multinational Enterprises of the Organisation for Economic Co-operation and Development (OECD) is the Organisation's flagship instrument for responsible business conduct. The Guidelines provide non-binding recommendations to multinational enterprises (MNEs), drawn up and implemented by governments. Updated in 2011, they consist of principles and standards in such areas as sustainable development, governance, disclosure, human rights, employment and industrial relations, the environment, anti-corruption, consumer interests, and taxation. The 42 adhering governments are required to promote the Guidelines and to contribute to the resolution of issues arising under the Guidelines, including by setting up a complaints mechanism -- “National Contact Points” (NCPs) -- to which trade unions and non-governmental organizations (NGOs) are able to submit specific instances concerning alleged breaches of the Guidelines.
Topic:
Globalization, International Organization, International Political Economy, Markets, Foreign Direct Investment, and Governance

236. Inward FDI in Finland and its policy context

Author:
Dan Steinbock
Publication Date:
12-2011
Content Type:
Working Paper
Institution:
Columbia Center on Sustainable Investment
Abstract:
From independence to the collapse of the Soviet Union, inward foreign direct investment (IFDI) in Finland was either marginal (1917-1939) or insignificant (1945-early 1990s). Throughout this period, the success of Finland's core production clusters in forestry, metal engineering, chemicals, and plastics was based on exports, not IFDI (or outward FDI). However, with the end of the Cold War and the globalization of Finnish industries (especially the mobile communications cluster) in a period of strong export-led economic growth, IFDI in Finland took off rapidly from the mid-1990s. This period of growth came to an end with the global crisis of 2008-2009. In 2009, the Finnish economy shrank roughly by 8%, the sharpest plunge since the country's civil war in 1918. The recovery since 2010 has been relatively strong in comparison to that in most European Union (EU) economies, but Finland remains vulnerable to the Eurozone crisis. Today, IFDI is seen as an untapped resource, and the Finnish Government hopes to develop an IFDI promotion strategy in cooperation with the private sector and integrated with the national innovation system.
Topic:
Industrial Policy, Foreign Direct Investment, and Financial Crisis
Political Geography:
Europe and Finland

237. Outward FDI from Greece and its policy context

Author:
Aristidis P. Bitzenis and Vasileios A. Vlachos
Publication Date:
12-2011
Content Type:
Working Paper
Institution:
Columbia Center on Sustainable Investment
Abstract:
With the fall of centrally planned economies in the Balkans, their liberalization and the opening of their borders to free trade and capital movements, Greece became more active in the generation of outward foreign direct investment (OFDI). Greece's OFDI stock increased from US$ 3 billion in 1990 to US$ 6 billion in 2000 and to US$ 38 billion in 2010. The Europeanization process of Turkey and the transition of the economies in the Balkans was accompanied by a gradual rise of FDI from Greece into those economies. More than half of Greece's OFDI stock – over US$ 20 billion in 2009 (67% of total) – is located in South-East Europe: in the Balkans, Cyprus and Turkey. While Greece's early OFDI flows were directed to the secondary sector to reduce costs, the bulk of later flows was directed to the services sector, as new markets were opened. This shift signifies the rise of major corporate players. The Greek Balkan policy, which commenced through the European Union, and the upgrading of the Athens Stock Exchange have positively affected Greece's position as a key regional investor. The expectations for sustaining this leading role, however, have been weakened recently since, due to the Greek sovereign debt crisis, Greek multinational enterprises (MNEs) disinvested US$ 1.6 billion from their FDI abroad in 2010.
Topic:
Debt, Economics, Foreign Direct Investment, and Financial Crisis
Political Geography:
Europe, Turkey, Greece, Balkans, and Cyprus

238. Inward FDI in Italy and its policy context

Author:
Marco Mutinelli and Lucia Piscitello
Publication Date:
12-2011
Content Type:
Working Paper
Institution:
Columbia Center on Sustainable Investment
Abstract:
The attractiveness of the Italian economy for inward foreign direct investment (IFDI) has been traditionally limited, despite the country's locational advantages such as a large domestic market and a skilled labor force. The recent global crisis worsened the country's IFDI position, with flows falling from US$ 40 billion in 2007 to -US$ 11 billion in 2008 before recovering to US$ 20 billion in 2009 but down again to US$ 9 billion in 2010. Although the country's IFDI stock had grown since 2000 at a rate similar to that of the European Union as a whole, in 2010 IFDI stock contracted vis-à-vis 2009, reflecting how Italy, compared to other key European countries and to its own potential, continues to underperform. The main obstacles to exploiting the country's potential for IFDI lie both in the largely insufficient actions undertaken to attract and promote IFDI, and especially in the lack of coordination with other relevant policy measures (e.g. infrastructure development) within a broader framework aimed at regional and national development.
Topic:
Development, Economics, International Trade and Finance, and Foreign Direct Investment
Political Geography:
Europe and Italy

239. Safeguarding Mitigation Efforts for Sustainability

Publication Date:
04-2011
Content Type:
Policy Brief
Institution:
Transparency International
Abstract:
Developing countries are increasingly hosting climate change mitigation projects. They also often provide the natural resources necessary for low-carbon technologies.
Topic:
Climate Change, Corruption, Development, Foreign Direct Investment, and Governance

240. Rent(s) Asunder: Sectoral Rent Extraction Possibilities and Bribery by Multinational Corporations

Author:
Nathan Jensen, Edmund Malesky, and Dimitar Gueorguiev
Publication Date:
12-2011
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
We argue that openness to foreign investment can have differential effects on corruption, even within the same country and under the exact same domestic institutions over time. Our theoretical approach departs from standard political economy by attributing corruption motives to firms as well as officials. Rather than interpreting bribes solely as a coercive “tax” imposed on business activities, we allow for the possibility that firms may be complicit in using bribes to enter protected sectors. Thus, we expect variation in bribe propensity across sectors according to expected profitability which we proxy with investment restrictions. Specifically, we argue that foreign investment will not be associated with corruption in sectors with fewer restrictions and more competition, but will increase dramatically as firms seek to enter restricted and uncompetitive sectors that offer higher rents. We test this effect using a list experiment, a technique drawn from applied psychology, embedded in a nationally representative survey of 10,000 foreign and domestic businesses in Vietnam. Our findings show that the impact of domestic reforms and economic openness on corruption is conditional on polices that restrict competition by limiting entry into the sector.
Topic:
Corruption, Economics, and Foreign Direct Investment