1. Global Investment Promotion Best Practices (GIPB 2012) Robert Whyte Global Specialist, Investment Promotion Investment Climate Department, World Bank Group

2. Contents Difficult Market for FDI Conclusions and Implications for IPIs GIPB Results for Europe and Central Asia

3. 2012 Was a Difficult Year for FDI ……. Not clear that 2013 will be much better Global FDI inflows, average 2005–2007, 2007–2014 (Trillions of US dollars) Source: UNCTAD. * Revised, ** Estimates, *** Forecast.

4. Investment Sectors in ECA Region Source: fDiMarkets.com, Crossborder Investment Monitor No. of Announced projects % change since 2008

5. Contents Difficult Market for FDI Conclusions and Implications for IPIs GIPB Results for Europe and Central Asia

6. What is GIPB? What does GIPB measure?  The ability of IPIs to meet investors’ information needs through –Web sites –Handling investor inquiries What does GIPB NOT measure?  Economies’ overall FDI competitiveness  Economies’ business climates  IPIs’ effectiveness in other functions What does GIPB measure?  The ability of IPIs to meet investors’ information needs through –Web sites –Handling investor inquiries What does GIPB NOT measure?  Economies’ overall FDI competitiveness  Economies’ business climates  IPIs’ effectiveness in other functions Reducing investors’ perceptions of risk Affecting investors’ preconceptio ns about your location Encouraging investors to look at new opportunities Affecting investors’ perceptions of your IPI The Information Gap

7. GIPB Mirrors Companies’ Site Selection Process  Stepping into the shoes of two companies (tourism and agribusiness) a site location consultant assessed: – IPI Web sites: The extent to which IPIs offer country and sector information suitable to assist potential investors in their location search – Investor inquiry handling: A mystery shopper approach tested each IPI’s ability to interact with and manage two distinct investment inquiries, provide relevant information and make a business case for investment. A 2011 survey of 3,600 US large companies ($25m+) conducted by DCI Consulting reveals that:  47% of respondents would use the IPI website in their next location search  Only 17% of respondents say they would not contact the IPI during the investment decision process  Site location consultants are more likely to use the IPI services for information in the screening process A 2011 survey of 3,600 US large companies ($25m+) conducted by DCI Consulting reveals that:  47% of respondents would use the IPI website in their next location search  Only 17% of respondents say they would not contact the IPI during the investment decision process  Site location consultants are more likely to use the IPI services for information in the screening process Information drives investors’ location decisions

8. Countries are Missing Investment Projects and Jobs GIPB 2012 Regional Results: Web Site & Inquiry Handling When foreign companies come knocking, most IPIs fail even to respond. ♦ Many IPIs achieved weaker scores in GIPB 2012 compared to GIPB 2009. ♦ Overall, Web sites improved from 59% to 61%. ♦ Average inquiry-handling dropped from an already weak 28% to 22%. ♦ Only MENA showed significant progress. ♦ ECA (-7%) and OECD (-5%) high-income had the biggest declines between the 2009 and 2012.

9. GIPB 2012 – Web Site Results  Worldwide, there was an improvement of 3% from GIPB 2009, but this masks a lack of improvement in actual Content provision.  Most regions scored strongly in Architecture and Design, with some general improvement in Promotional Effectiveness.  Implying that more IPIs now understand that their site is a valuable marketing tool with the technical side well covered. 0 – 91% 0 – 81% 68 – 97% 22 – 91% 12 – 91% 31 – 83% 22 – 82% Wide Spread World Average GIPB (61%)

10. ECA and OECD Web Performance Result ………. content remains the weakest element ECA OECD OECD IPIs provide more quality content for investors ….

11. GIPB 2012 – Inquiry Handling Results  World performance deteriorated from GIPB 2009 by 6 percentage points.  Most IPIs still struggle to respond to investors’ information needs - just over one third of IPIs provided responses in both sectors  Only two IPIs (from Nicaragua and Hungary) scored at best practice levels (80%+), a further 8 IPIs gained a ‘good’ score (60-79%)  Two other non OECD High-Income economies were also in the top 6: Cyprus and Hong Kong SAR, China.  Although the majority of IPIs were easily contactable, only 21% provided a response to both inquiries, and the quality of response was highly variable.  In most cases, the lead was not followed up after the response was submitted, with only 16% of those who responded following up. World Average GIPB (22%)

12. Is Anybody There? Few IPIs are Ready to Answer When Investors Come Knocking.

13. ECA Inquiry Handling Performance Result: Overall Average = 23%

14. OECD (High-Income) Inquiry Handling Performance Result: Overall Average = 43%

15. Inquiry handling Response Rates All IPAs IPAs with Agribusiness as priority IPAs with Agribusiness as priority 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% No. = 189 World No. = 189 32% 62 responded 48% 11 responded No. = 23 WorldECA No. = 118 32% 38 responded No. = 17 No. = 10 58% 10 responded World ECA Sector prioritization does not seem to make much difference …. Agribusiness

16. Inquiry handling Response Rates All IPAs IPAs with Tourism as priority IPAs with Tourism as priority 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% No. = 189 World No. = 189 35% 68 responded 30% 7 responded No. = 23 WorldECA No. = 107 39% 42 responded No. = 14 No. = 10 43% 6 responded World ECA Sector prioritization does not seem to make much difference …. Tourism

17. Ending on a high note …. Where are the World’s Best practices 1.PRONicaragua (Nicaragua) 2.Hungarian Investment and Trade Development Agency 3.Invest in Greece 4.Invest in Finland 5.Cyprus IPA 6. InvestHK (Hong Kong) 7. ABA – Invest in Austria 8. Invest in Sweden Agency 9. aicep Portugal Global 10. Invest in Denmark 1. ABA–Invest in Austria 2. CzechInvest (Czech Republic) 3. Austrade (Australia) 4. Germany Trade and Invest 5. Invest in Denmark 6. Invest in Spain 7. Investment Support and Promotion Agency of Turkey 8. PRONicaragua (Nicaragua) 9. Department of Investment Services (Taiwan, China) 10. Hungarian Investment and Trade Development Agency Top 10 IPIs at Inquiry-Handling Top 10 IPI Web sites

18. Difficult Market for FDI Conclusions and Implications for IPIs GIPB Results Contents 18

19. Conclusions  GIPB 2012 has identified inquiry handling as the main weakness in the ECA region  The ultimate “weakness” for an IPI is failing to respond to an investor’s contact  Need to respond to all valid investor inquiries  Be serious! Investors expect IPIs to mean what they say – if a sector is really a priority then act on it.  Improve understanding of your selected sectors  What is your competitive advantage?  Do you have sufficient information on your priority sectors  Build sufficient resources and partnerships to develop sector-specific knowledge  Build contacts with other bodies in your priority sectors

20. Sector content is critical – even for those IPIs that responded  IPIs performed better on contactability in Investor Inquiry Handling.  But providing relevant investor information is the most fundamental function of an IPI, and this is where IPIs across GIPB 2012 are most weak. IPIs need to carry out detailed research or information gathering – investors come to the IPI for information they cannot easily source themselves. Availability And contactability Responsiveness And handling Customer care Response Quality of responses were poor ….. Better in OECD IPIs

21. Thank you. Questions?