Strengthening Service Delivery of Investment Promotion Agencies IN FOCUS The Comprehensive Investor FINANCE, COMPETITIVENESS & Services Framework INNOVATION Armando Heilbron and Yago Aranda-Larrey INVESTMENT PROMOTION FOR IMPACT © 2020 The World Bank Group 1818 H Street NW Washington, DC 20433 Telephone: 202-473-1000 Internet: www.worldbank.org All rights reserved. This volume is a product of the staff of the World Bank Group. The World Bank Group refers to the member institutions of the World Bank Group: The World Bank (International Bank for Reconstruction and Development); International Finance Corporation (IFC); and Multilateral Investment Guarantee Agency (MIGA), which are separate and distinct legal entities each organized under its respective Articles of Agreement. We encourage use for educational and non- commercial purposes. The findings, interpretations, and conclusions expressed in this volume do not necessarily reflect the views of the Directors or Executive Directors of the respective institutions of the World Bank Group or the governments they represent. The World Bank Group does not guarantee the accuracy of the data included in this work. Rights and Permissions The material in this publication is copyrighted. Copying and/or transmitting portions or all of this work without permission may be a violation of applicable law. The World Bank encourages dissemination of its work and will normally grant permission to reproduce portions of the work promptly. All queries on rights and licenses, including subsidiary rights, should be addressed to the Office of the Publisher, The World Bank Group, 1818 H Street NW, Washington, DC 20433, USA; fax: 202-522-2422; e-mail: pubrights@worldbank.org. Armando Heilbron (aheilbron@ifc.org) is the Investment Promotion Workstream Leader in the Investment Climate Unit of the Finance, Competitiveness and Innovation Global Practice of the World Bank Group. Yago Aranda-Larrey (yarandalarrey@worldbank.org) is a Private Sector Specialist within the same unit and global practice. The authors would like to thank Alex Sanchiz for his significant contributions, and Wim Douw, Peter Kusek, Roy Nelson, Ivan Nimac, and Dushyant Thakor for providing valuable peer-review comments. They also extend a sincere appreciation to senior executives at several leading IPAs who willingly participated in related research to produce this report. Lastly, thanks to Linda Stringer and Lucy Williams of Publications Professionals LLC for their editing services and to Aichin Lim Jones and Amy Quach for design and production services. Photo Credits: World Bank Photo Library and Shutterstock.com Table of Contents INTRODUCTION 1 RATIONALE 2 UNDERSTANDING THE INVESTMENT LIFE CYCLE 4 SERVICING INVESTORS ACROSS THE LIFE CYCLE 5 DEFINING THE FOUR CATEGORIES OF SERVICES PROVIDED BY IPAS 5 MARKETING SERVICES 5 INFORMATION SERVICES 7 ASSISTANCE SERVICES 8 ADVOCACY SERVICES 8 CONCLUSIONS 9 REFERENCES 11 ANNEX 1: THE CISF MENU 13 STRENGTHENING SERVICE DELIVERY OF INVESTMENT PROMOTION AGENCIES | I II | SUPPORTING ENTREPRENEURS AT THE LOCAL LEVEL: THE EFFECT OF ACCELERATORS AND MENTORS ON EARLY-STAGE FIRMS R esearch shows that investment promotion agencies (IPAs) may be the best public institutions to meet government objectives for attracting, establishing, retaining, expanding, and linking productive private investment. As part of this, IPAs need to provide relevant, high-quality services to investors at different stages of the investment life cycle. Informed by its research and experience in global operations, the World Bank Group introduces the Comprehensive Investor Services Framework (CISF), a catalog of specific services to meet investor needs. IPAs can use this investor-centric framework to design service offerings in line with their strategic focus and promotion capacity.1 Introduction investors. IPAs paid little attention to investment The rise in prominence of foreign direct establishment or post-establishment services, investment (FDI) has been matched by a global and many governments around the globe still proliferation of public institutions mandated underestimate the importance of IPA services to pursue it.2 Nearly 200 investment-promoting beyond attracting investment. An internal World institutions exist as part of national governments, Bank survey of IPAs in 2017 revealed that most IPAs’ while some 2,000 are estimated to operate as arms investor services fall within the attraction stage. (See of subnational governments. Though such a fierce figure 1 for IPA service-delivery heat map.) Many increase in competition may be felt most strongly investment promotion programs — typically labeled in years when FDI flows decline, even in times of promotion, facilitation, and aftercare — leave growth governments must compete for new FDI and important service gaps. keep established investors from leaving for more competitive locations. This note introduces the Comprehensive Investor Services Framework (CISF). The Opinions differ on the types of services IPAs CISF is a comprehensive, investor-centric, and should offer to address investors’ needs. Until service-oriented approach that helps governments the early 2000s, investment promotion was used and IPAs understand the importance of providing mainly as a tool to influence and attract potential relevant, standardized services to the investor at 1 The In Focus note “Establishing a High-Performing Institutional Framework for Foreign Direct Investment (FDI)” provides policy advice on the institutional set-up of IPAs (Heilbron and Whyte 2019). Key factors that directly affect the quality of IPA services include high-level government support, strategic focus and alignment, institutional autonomy and collaboration, mandate clarity, and adequate financial and human resources. 2 Before 1990, annual global FDI inflows had exceeded US$200 billion. As various globalizing factors came into play (cheap fiber-optic communications, the internet, the containerization of cargo, and so forth), global FDI inflows rose dramatically, reaching a record high of US$1.9 trillion in 2007. Even during the past decade, which was marked by the global financial crisis and macroeconomic problems, annual global FDI inflows averaged US$1.5 trillion (UNCTAD 2018). STRENGTHENING SERVICE DELIVERY OF INVESTMENT PROMOTION AGENCIES | 1 Figure 1. IPA Services Offered by Category and Investment Stage: Mostly at the Attraction Stage Percentage of responding IPAs Stage Entry Retention Linkages Attraction and and and Category establishment expansion spillovers Marketing 92 52 39 20 Information 94 61 49 23 Assistance 78 78 63 29 Advocacy 93 53 36 22 Source: Data from internal global survey of IPAs, World Bank Group 2017. Note: Stages are grouped according to the World Bank Group’s proposed investment policy and promotion life cycle (attraction, entry and establishment, retention and expansion, and linkages and spillovers). IPAs were asked which specific services they provided to investors. Their responses were grouped across the four investment life cycle stages and four service categories. Darker green denotes that more IPAs claim to offer that service. IPAs = investment promotion agencies. every stage of the investment cycle (attraction, Rationale entry and establishment, retention and expansion, and linkages and spillovers).3 The CISF helps start A recent investor survey (World Bank, forthcoming) the conversation about what services need to be reveals that multinational enterprises generally provided, aspiring at improving service delivery find IPA services valuable. Around 90 percent of to achieve more and better FDI and avoiding the investors surveyed considered at least one IPA typical gaps in service delivery, especially those of service to be important or critically important, having traditional IPA promotion programs. Globally, the selected services across several categories and stages CISF could help improve and expand the service of the investment life cycle. These services included delivery of IPAs—to both their own and their advocacy and assistance with operational issues, investors’ benefit. Some leading IPAs are already which, unfortunately, IPAs tend to ignore. adopting similar frameworks in an effort to optimize IPAs may be providing undervalued services to their service offering and set a benchmark for the investors while neglecting to offer services that future. One good practice, for example, is for IPAs would be highly valued. Figure 2 illustrates the case to ensure their offerings include relevant services of a real economy’s IPA. This IPA’s customer base is for investors in strategic sectors. Realistically, dissatisfied with the IPA’s services, compared with though, IPAs in developing countries may be unable global averages of customer satisfaction (83 percent). to provide personalized services across all the Dissatisfaction is especially strong for those services categories and stages described in this note because that investors value the most. The World Bank’s 30 of either strategic goals or constraints on resources years of operational experience in the field confirm or capacity. Investor services alone cannot attract or retain investors; therefore, an IPA’s services must build on the location’s attractiveness 3 as an investment destination. This includes providing advocacy services to continuously improve it. 2 | STRENGTHENING SERVICE DELIVERY OF INVESTMENT PROMOTION AGENCIES Figure 2. Investor Attitudes toward IPA Services: IPAs May be Delivering Poorly the Most Relevant Services 100 90 23 19 22 Global Average 34 customer 80 satisfaction 47 51 55 70 60 26 37 28 60 50 32 40 32 42 30 51 38 50 33 44 20 35 10 17 11 7 7 0 Highly relevant Relevant Not relevant Excellent Good Poor Relevance Satisfaction Source: Data from internal investor services survey in pilot country, World Bank 2018. Note: Investors were asked how relevant specific IPA services were to them. Then, they were asked to rate their satisfaction with each of the services. The figure summarizes results in four service categories: marketing, information, assistance, and advocacy. that this view toward IPAs is common in developing work toward mutually beneficial relationships by economies. providing relevant investment services and adapting to investors’ changing needs. As in the private In the past, delivering key services to satisfy sector, IPAs that do not adapt risk losing investors to investors’ needs, which vary from economy to competing locations. economy, has not been a focus of many IPAs. The Global Investment Promotion Benchmarking The CISF considers the four categories of (MIGA 2006) and Global Investment Promotion services (marketing, information, assistance, and Best Practices (GIPB) reports (World Bank 2009, advocacy) across the four stages of the investment 2012) revealed that only a few IPAs properly life cycle (with intensity levels varying depending provided the most basic service to investors: online on the IPA or economy). In doing so, the CISF information and inquiry handling. World Bank’s helps IPAs ensure that they offer all relevant services 2017 IPA survey also confirmed that IPAs focus and establish long-term relationships with investors. mostly on the attraction stage and that a considerable Specifically, the CISF does the following: percentage of IPAs leave the investor unattended after an investment decision has been made. • It focuses on investors to get a fuller (See figure 1.) understanding of their goals, requirements, and challenges. Productive foreign investors strive to build long- term, beneficial, and healthy relationships with • It thoroughly defines services with the aim of their host economies. Thus, governments and their satisfying customer needs across the investment IPAs must fully understand investors’ needs and life cycle. STRENGTHENING SERVICE DELIVERY OF INVESTMENT PROMOTION AGENCIES | 3 • It goes beyond the traditional focus of IPAs — relevant stakeholders by resolving grievances and attracting the investor — and the blanket words advocating for policy change. promotion, facilitation, and aftercare, whose meanings have become diluted over the years. Understanding the Investment • It seeks to establish long-term relationships Life Cycle among IPAs and strategic investors — from The investment life cycle represents the exploration, to establishment, to expansion, investment process from beginning to end on and so on — and to make the IPA the investor’s both the investor side and the government and primary adviser in a specific location. IPA side. On the investor side, the cycle maps the This strategic and far-reaching approach investor journey, from planning an investment to investment service provision ultimately project; to exploring, researching, and deciding on helps maximize investment and reinvestment a location; to entering and establishing operations opportunities that benefit both investors and in a location; to operating in, expanding in, and location. possibly leaving a location if conditions become less favorable. In less developed economies, foreign Current discussions by the World Trade investors need more support than do domestic Organization that aim to reach a multilateral investors—especially when exploring, establishing, agreement on investment facilitation highlight and starting operations. On the government and IPA the importance of easing certain procedures for side, the cycle maps the four stages of investment investors. What such an agreement might look like policy and promotion, as shown in figure 3. From remains to be seen, but IPAs will play a key role an IPA’s point of view, investor services begin in identifying and developing the elements of a with proactive generation of an investment lead facilitation framework. In this context, IPA services (the attraction stage), progress to support of an can improve the transparency and predictability investor’s entry and establishment in a location, and of the legal system, speed up administrative eventually lead to support of expansion or retention. procedures, and enhance cooperation among IPAs should also foster investor linkages and Figure 3. The Investment Life Cycle Plan (define business needs) Host Country Investment Stages Attracting By enhancing the investment climate, investors promoting the location and supporting Transition Explore investor’s planning and exploration Linkages and Attraction Assisting their By providing a transparent and spillovers entry and predictable legal environment and Expand Validate diversify IPAs selected establishment delivering information and assistance link Retention location services and Entry and Securing their By ensuring that investors operate expansion establishment retention and without sudden legal and regulatory Operate Establish expansion changes and by assisting investors during operations and expansions Fostering links By looking for win-win benefits for both Investor’s project cycle Host country location cycle and spillovers the investor and the domestic economy 4 | STRENGTHENING SERVICE DELIVERY OF INVESTMENT PROMOTION AGENCIES spillovers, and they may need to manage eventual and establish long-term relationships with investors, transitions or divestments. thereby maximizing opportunities for investment, reinvestment, and embedding. The conceptual framework helps IPAs see themselves as key proactive service providers in an internationally competitive environment Defining the Four Categories of for FDI projects. They hope to win investment Services Provided by IPAs projects through well-designed services provided with a customer service mindset. The framework Marketing services also demonstrates that they are part of a government Traditional business theory defines marketing as an policy to leverage FDI as a tool of economic growth organizational service for creating, communicating, and development. and delivering value to customers and for managing customer relationships in ways that benefit the Servicing Investors Across the organization and its stakeholders (Kotler 1988). Life Cycle Marketing in the context of investment The CISF puts investor services at the core promotion is about generating awareness of the of investment promotion designed to satisfy value that an economy can offer to international investors’ needs. It divides investor services into four investors in specific sectors. It implies that an IPA categories — marketing, information, assistance, and (a) understands investor needs and location strengths, advocacy — at each of the four stages of the investment (b) develops a compelling value proposition, cycle. (See figure 4 and annex 1.) (c) raises awareness and positively influences the Because global standards do not exist, way investors think about the location, and (d) gets governments and IPAs have historically them to take the next steps to invest. interpreted the traditional concepts of promotion, facilitation, and aftercare in many ways. Such Investors are open to hearing diverse solutions variation often means that basic investor needs are to their challenges. An investor looking to lower not properly addressed. The innovative approach of costs would likely appreciate an IPA’s reaching the CISF allows IPAs to offer all relevant services out with a strong value proposition to reduce the Figure 4. CISF Matrix Stage Entry Retention Linkages Attraction and and and Category establishment expansion spillovers Marketing ✓ ✗ ✓ ✓ Information ✓ ✓ ✓ ✓ Assistance ✓ ✓ ✓ ✓ Advocacy ✓ ✓ ✓ ✓ Note: CISF = Comprehensive Investor Services Framework. STRENGTHENING SERVICE DELIVERY OF INVESTMENT PROMOTION AGENCIES | 5 investor’s current operating costs by 20 percent. commercials or print advertisements, as part of a Similarly, an investor facing issues with market wider national branding initiative, though such access would likely appreciate an IPA’s introducing campaigns are often too broad to sway any particular an option not previously considered. Of note, investor. There is little indication of a good return marketing services are not required at the entry and on investment for IPAs that conduct expensive establishment stage because investors have already mass media advertising as a stand-alone initiative. selected the location for their investment project. Instead, IPAs might conduct sector-specific advertising through trade journal advertisements, One-on-one meetings with targeted investors blog posts, or direct communication with potential remain the most effective marketing service. investors who have been prescreened. IPAs can also A 2017 survey of corporate executives and site identify free or inexpensive ways to target groups selection consultants outlined that the most effective of potential investors. (See box 1.) marketing channel was planned meetings with corporate executives (66 percent of respondents), Reflecting the increasing importance of social followed by media relations/publicity, IPA-hosted media, IPAs and governments use different social events, and trade shows. (See table 1.) networks to target investors and key stakeholders more effectively.4 In later stages of the investment It is important to note, however, that investors life cycle, the purpose of marketing shifts from consider IPAs’ marketing efforts to be attracting new investors to educating established “services” only if those efforts are relevant to investors about IPA services that can help them their business needs. IPAs occasionally conduct operate more successfully, expand, diversify, or general advertising campaigns, such as television even link to local suppliers. Table 1. The Most Effective IPA Communication Channels Technique 2017 2014 2011 2008 2005 2002 1999 1996 Marketing Planned meetings with corporate executives 66 64 57 55 54 53 46 53 Media Relations/Publicity 51 48 33 52 50 21 19 19 IPA-hosted events 51 46 35 45 49 37 42 49 Trade Shows 39 38 35 — 33 32 45 39 Advertising 32 17 16 15 20 21 19 19 Direct Mail 23 14 15 19 23 33 25 25 Telemarketing 17 6 4 4 6 4 6 7 Information Websites 74 67 55 56 53 34 37 18 Percentage of respondents that rated 4 or 5 on a 5-point scale Source: Adapted from Development Counsellors International 2017, with permission. Note: IPA = investment promotion agency; — = not available. Source: Data from internal global survey of IPAs, World Bank Group 2017. According to the survey, LinkedIn is the most popular 4 social media among IPAs (35 percent), followed by Facebook (34 percent) and Twitter (27 percent). YouTube is relevant only for image-building purposes (17 percent). 6 | STRENGTHENING SERVICE DELIVERY OF INVESTMENT PROMOTION AGENCIES Box 1. Illustration of Smart Marketing Services Invest in Turkey identified a way to reach the hundreds of thousands of businesspeople who travel through Istanbul every year. Turkey’s Prime Ministry Investment Support and Promotion Agency partnered with Turkish Airlines, which set up an Invest in Turkey splash page on its website. Travelers who used Turkish Airlines’ Wi-Fi at its Istanbul airport business lounge were automatically directed to the splash page when connecting to the network. The lounge wows first-time visitors to Istanbul — especially those who may not fully appreciate the sophistication of Turkey’s economy — and subsequently directs their Wi-Fi–connected devices to a pitch for investing in Turkey. Wi-Fi users also can download an app with excellent sector-specific data and testimonials. This service is considered of great value to investors. Invest Lithuania did something similar in its international airports and credits the measure with convincing American technology company Revel Systems to consider Lithuania and eventually bring 100 high-skill jobs to the country. Information Services editions of the GIPB report (MIGA 2006; World Bank 2009, 2012) indicated that national IPAs Information plays a key role at a very early did not consistently handle investor inquiries. stage of the investment decision-making process. Moreover, the quality of service delivery dropped Companies deciding where to invest usually over the years, with a global average score of just put together long lists of potential investment 22 percent in 2012. destinations before visiting them. Relevant, accurate, and complete information reduces uncertainty for All information services delivered across the investors and influences their decisions in favor investment cycle complement the marketing of locations that provide complete information. services described earlier. Information may be Investors discard locations for which they do not delivered face to face; through websites, webinars, have such information, even if those locations PowerPoint presentations, apps, and social media; would have been a valuable choice for their project. and in printed brochures, promotional pamphlets, frequently-asked-question sheets, and white papers, Several empirical studies confirm that among other materials. information asymmetries constitute an important constraint on capital flows across To deliver quality information services, IPAs international borders (Gelos and Wei 2005; Portes must maintain information that is credible, and Rey 2005; Portes, Rey, and Oh 2001). IPAs play accurate, relevant, and comprehensive. It must a vital role in alleviating information asymmetries include sector- or even segment-level data and be (Harding and Javorcik 2011) when they provide up to date on the following: the very basic information-related services to investors. Technology has also transformed how • The legal and regulatory regime for investment people access information, and research indicates that investors use IPA websites as a primary source • Costs of doing business and set-up procedures of information in their decision-making processes. • Government support in the form of investor (See table 1.) Although IPA websites have become services, as well as fiscal, financial, and commonplace and have improved over time, the administrative incentives more dynamic provision of information through inquiry handling has not. Three consecutive • Available logistics, utilities, and infrastructure STRENGTHENING SERVICE DELIVERY OF INVESTMENT PROMOTION AGENCIES | 7 • Available labor, land, facilities, and essential officials and other stakeholders in the economy, inputs arrange site visits, and even join meetings. IPAs solve problems at all stages of the investment cycle • Local markets, competitors, suppliers, and and frequently advise both investors and government service providers officials on how to interact for their mutual benefit. • Competitor locations Assistance services can be especially important to investors from different cultures or whose home • Other business information, particularly as it economies are far from the investment location. relates to different types of investment A knowledgeable, experienced, and well- The type of information sought by investors varies connected IPA can help investors more easily by investment motivation. For example, market- navigate the investment location. IPA staff seeking investors intend to serve their host markets; members can make a real difference by taking therefore, they tend to be interested in the size of ownership of the investor’s journey, maintaining local and regional markets and in competitors that close contact with the investor, and helping the offer comparable products or services. Efficiency- investor navigate government procedures at seeking investors are generally concerned with all stages of the investment life cycle. Official exports and seek to increase the cost-efficiency of procedures are not always clear, and they often production by taking advantage of location-specific differ in practice from how they are written. IPA competitive factors. Such factors might include a assistance services might include expediting permit competitive labor force; a reliable, low-cost energy approval, coordinating with lawyers, liaising with supply; research and development, design, and regulators, and so on. Assistance services also logistics services; and proximity to sea lanes. These cover introducing and following up with established investors will look, for example, at benchmarking investors, local service providers, and partners. analysis of the location’s logistical performance against competing economies. Investors in this On the one hand, the high percentage of IPAs that category are also interested in information related offer at least basic assistance services in the first to regional and global value chains. Resource- three stages of the investment life cycle points to seeking investors establish enterprises to access the fundamental nature of this type of service. natural resources such as oil, gas, minerals, fertile (See figure 1.) On the other hand, many IPAs land, water, and solar energy. Information about may not currently have the capacity to deliver specific resource and infrastructure maps, as well the relevant, timely, and high-quality assistance as clear guidance on relevant laws and regulatory services that investors require. (See figure 2.) procedures, is important for these investors. IPAs that can provide these types of granular data and analyses will increase their influence over investors’ Advocacy Services decisions and strengthen their own image as valuable Advocacy in investment promotion is about investment partners. (a) understanding the issues investors face, (b) advocating on their behalf, and (c) influencing stakeholders to improve the investment ecosystem Assistance Services so investors can operate more efficiently and IPA assistance services proactively support smoothly. Though advocacy efforts can be investors’ exploration, establishment, operation, complex, they ultimately contribute to a structured retention, and expansion. These fundamental and sequenced plan to influence decision makers services reduce common constraints to investments to solve investor challenges. Investors consider on the ground. IPAs provide contacts, make advocacy to be the most important service IPAs can introductions and connect investors with government provide (World Bank, forthcoming) while Harding 8 | STRENGTHENING SERVICE DELIVERY OF INVESTMENT PROMOTION AGENCIES and Javorcik (2011) point out that the weaker the By analyzing priority sectors’ specific project investment climate is, the more important the IPA challenges, IPAs can advocate for reform. advocacy function becomes. Doing so, however, requires that staff members have certain skills (such as legal, economic, public As an indirect service, IPA advocacy helps administration, and stakeholder management many investors — and the location — achieve skills) and that IPA management be willing to key reforms needed for their investments. For dedicate internal resources to formulate solutions instance, IPAs can advocate to improve processes at that legislators, public administrators, and relevant all stages of the investment life cycle (for example, stakeholders (such as utilities or other service the visa-granting process) and systematize day- providers) can easily adopt. Once a solution is to-day operations (such as expediting customs adopted, many investors benefit. clearance, eliminating red tape, removing delays in utility connections, or supporting sector-specific reforms). They can coordinate with investors and Conclusions private sector representatives to identify and solve IPAs can effectively harness FDI if a number the challenges that limit FDI, thereby strengthening of policy-related preconditions are in place the investment ecosystem. (investment fundamentals such as investment policy friendliness and competitiveness for the An effective IPA has an advantageous perspective particular project), However, IPAs may not of the investment projects its economy has won be delivering relevant, high-quality services to and lost, and has access to both investors and investors. This may be because IPAs do not tend policy makers. Leveraging those two factors, an to be service oriented or fully understand investor IPA can offer the government insight into constraints needs across the investment life cycle—at least on the economy’s investment ecosystem and how beyond the attraction stage, where most IPAs seem they affect the location’s attractiveness to investors. to gravitate. (See figure 5.) Figure 5. Contact with Investors Allows IPAs to Influence Investment Policy Policy Arena National development Feedback plans, vision, FDI strategy, for investment and investment industrial policy reform Promotion Arena Implementing institutions Investors (chiefly IPAs) Note: FDI = foreign direct investment; IPA = investment promotion agency. STRENGTHENING SERVICE DELIVERY OF INVESTMENT PROMOTION AGENCIES | 9 Box 2. How Common are CISF-Defined Investor Services among Leading IPAs? In collaboration with chief executive officers and investment promotion directors of six leading IPAs, the World Bank piloted the CISF in 2019. The objectives were (a) to identify the services considered good practice among practitioners of investment promotion and (b) to clarify which metrics, targets, and tools are used to measure, deliver, and improve those services. • The services provided most frequently by these IPAs (over 80 percent) include image building, participation in business events, and one-on-one outreach; production of informational materials such as investment guides and regulatory roadmaps; response to and follow-up on investor queries; assistance with first-time site visits; guidance on regulatory and other procedures, including project management; monitoring of investment status; and channeling of investor grievances to relevant authorities. • The services provided by the majority (60–80 percent) include production of sector-specific brochures and profiles that reflect market intelligence; support during follow-up site visits; outreach to gather information on grievances; and advocacy services such as identification of challenges that limit FDI, as well as submission of and follow-up on investment policy proposals. • The services provided less widely (fewer than 60 percent) include advertisement in media of priority sectors; promotion of priority sectors through participation in investment-related trade shows and networking with intermediaries; provision of information updates and project opportunity profiles (only 17 percent of these leading IPAs); facilitation of investors’ participation in networking and matchmaking events, as well as organization of such events; and standardized analysis and reporting of the investment climate for priority sectors. The CISF pilot mirrored the results of the World Bank’s internal 2017 survey of IPAs. Both show that not all IPAs provide all services, and most agencies — including leading global IPAs — tend to be oriented toward the attraction phase and to focus less on the entry, retention, and linkage phases. The best IPAs, however, recognize the need to eliminate any service gaps for strategic investors. Over the past decade, advanced IPAs adopted the success of their activities at different stages of a more investor-centric approach to link IPA the investment cycle. The CISF brings a level of operations with higher-level policy objectives. granularity to the field of investment promotion, These IPAs seem to provide services that satisfy allowing IPAs to meet a greater number of investor investor needs across the investment life cycle, needs ranging from exploration, to start-up, to which may increase the probability of the investor expansion and linkages with domestic suppliers. selecting, staying in, or reinvesting in that location. Thus, the IPA that uses the CISF as a guide has This does not mean that every IPA provides all a greater chance of successfully harnessing the services to all investors. Rather, the leading IPAs investment its location wants. strategically choose which services to offer. However, the CISF is not offered as a prescription. The CISF gives IPAs in developing economies a Future research should attempt to understand detailed framework to assess, design, package, and the nuances of service provision by level of offer vital services for investors according to their development and by sector. It should also examine capacity and sectoral and economic priorities. the link between service provision and overall At the same time, the CISF allows IPAs to evaluate IPA impact. 10 | STRENGTHENING SERVICE DELIVERY OF INVESTMENT PROMOTION AGENCIES References Development Counsellors International. 2017. A View from Corporate America: Winning Strategies in Economic Development Marketing. Development Counsellors International, New York. Gelos, R. Gaston, and Shang-Jin Wei. 2005. Transparency and International Portfolio Holdings. Journal of Finance 60 (6): 2987–3020. Harding, Torfinn, and Beata Smarzynska Javorcik. 2011. Roll Out the Red Carpet and They Will Come: Investment Promotion and FDI Inflows. Economic Journal 121 (557): 1445–76. Heilbron, Armando, and Robert Whyte. 2019. Institutions for Investment: Establishing a High-Performing Institutional Framework for Foreign Direct Investment (FDI). In Focus Note, Investment Climate Unit, World Bank, Washington, DC. ———. Forthcoming. Investment Promotion for Impact Series: Strengthening Investment Promotion Agencies. In Focus Note, Investment Climate Unit, World Bank, Washington, DC. Kotler, Philip. 1988. Marketing Management: Analysis, Planning, Implementation, and Control. Upper Saddle River, NJ: Prentice-Hall. MIGA (Multilateral Investment Guarantee Agency). 2006. Investment Promotion Agency Performance Review 2006: Providing Information to Investors. Washington, DC: World Bank. Portes, Richard, and Helene Rey. 2005. The Determinants of Cross-Border Equity Flows. Journal of International Economics 65 (2), 269–96. Portes, Richard, Helene Rey, and Yonghyup Oh. 2001. Information and Capital Flows: The Determinants of Transactions in Financial Assets. European Economic Review 45 (4–6), 783–96. UNCTAD (United Nations Conference on Trade and Development). 2018. World Investment Report 2018: Investment and New Industrial Policies. New York and Geneva: United Nations. World Bank. 2009. Global Investment Promotion Benchmarking 2009 (Vol. 2): Summary Report. Washington, DC: World Bank. ———. 2012. Global Investment Promotion Best Practices 2012. Washington, DC: World Bank. ———. Forthcoming. Global Investment Competitiveness Report 2019–2020. Enhancing Investor Confidence in Times of Uncertainty. World Bank: Washington, DC. STRENGTHENING SERVICE DELIVERY OF INVESTMENT PROMOTION AGENCIES | 11 Chapter Annex 1: Title The CISF Menu Category Service 1. Marketing 1.1. Build or reinforce a positive image of the general investment location and its advantages via a media campaign. 1.2. Advertise priority sectors through different international media outlets (social media, newspapers, magazines, radio, television). 1.3. Proactively participate in business events held domestically or abroad to promote priority sectors. 1.4. Proactively participate in relevant investment-related trade shows to promote priority sectors. 1.5. Proactively promote priority sectors through a network of intermediaries. 1.6. Reach out to targeted investors and suppliers domestically or abroad within a priority sector; seek face-to-face meetings to communicate the location’s value proposition. 1.7. Reach out to the main office of established investors within a priority sector; seek face-to-face meetings to communicate the location’s value proposition for reinvestment (expansion or diversification). 2. Information 2.1. Issue the location’s investment guide — printed, PDF, or downloadable from website. 2.2. Actively provide updated information. 2.3. Gather and adapt data and information to include in sector-specific brochures with top reasons to invest in the location. 2.4. Produce detailed sector profiles based on market intelligence and relevant to investors in priority sectors. 2.5. Produce detailed project opportunity profiles based on specific information on concrete projects of interest to relevant investors. 2.6. Issue a guide to regulatory procedures. 2.7. Provide tailored responses to investors’ unique questions and inquiries. 2.8. Follow up on satisfaction with the service provided in item 2.7 and to determine next steps. STRENGTHENING SERVICE DELIVERY OF INVESTMENT PROMOTION AGENCIES | 13 3. Assistance 3.1. Support the first-time site visit (FTSV) with agenda suggestions, planning, and meeting confirmation. 3.2. Deliver a one- or two-hour comprehensive briefing on the location and accompany the investor during the FTSV. 3.3. Support the follow-up site visit (FUSV) with agenda suggestions, planning, and meeting confirmation. 3.4. Accompany the investor to the FUSV. 3.5. Outside of a site visit, respond to specific requests to introduce the investor to other foreign companies, domestic companies, potential suppliers, and institutions (public, private, educational, or government authorities). 3.6. Follow up proactively with the investor after the site visit to assess other needs. 3.7. Provide guidance on government structure and on regulatory and nonregulatory aspects for business start-ups, including entry and establishment procedures, through advice and introductions. 3.8. Provide comprehensive support through project management intervention for business start-ups, including A-to-Z follow-up; tactical problem solving for individual investors; compliance with licensing, permitting, and regulatory procedures; and support for linking with service providers. 3.9. Facilitate and coordinate investor participation in initiatives and events that provide networking opportunities in the local market. 3.10. Proactively coordinate periodic visits to and meetings with individual investors to monitor well-being and explore new investment opportunities. 3.11. Reach out to investors to gather information on grievances related to government conduct. 3.12. Direct investor grievances to relevant parties looking for a solution. Invite market players (buyers and suppliers) to relevant events to provide 3.13.   matchmaking opportunities. 3.14. Organize events for market players (buyers and suppliers) to provide networking opportunities. 4. Advocacy 4.1. Coordinate and interact with investors and private sector representatives to identify the issues and challenges limiting foreign direct investment; define strategies and actions to address challenges. 4.2. Analyze and report on the state of the investment ecosystem for priority sectors. 4.3. Formulate and submit proposals to improve the investment ecosystem based on feedback from prospective investors in priority sectors. 4.4. Advocate and follow up on government actions to improve the investment ecosystem for investors in priority sectors. 14 | STRENGTHENING SERVICE DELIVERY OF INVESTMENT PROMOTION AGENCIES