2018 - OECD Mapping of Investment Promotion Agencies in OECD Countries

Mapping of Investment Promotion Agencies
in OECD countries
Please cite this publication as:
OECD (2018), Mapping of Investment Promotion Agencies in OECD Countries
www.oecd.org/investment/Mapping-of-Investment-Promotion-Agencies-in-OECD-Countries.pdf
In collaboration with the Inter-American Development Bank
This work is published under the responsibility of the Secretary-General of the OECD. The opinions expressed and
arguments employed herein do not necessarily reflect the official views of OECD member countries.
This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to
the delimitation of international frontiers and boundaries and to the name of any territory, city or area.
© OECD 2018
FOREWORD │3
Foreword
Investment is central to growth and sustainable development. It expands an economy’s

productive capacity and drives job creation and income growth. Recognising this,
governments around the world have established investment promotion agencies (IPAs) to
create awareness of existing investment opportunities, attract investors that can foster job
creation and productivity growth, and facilitate their establishment and expansion in the
economy.
This report provides an inventory of existing practices among IPAs in 32 OECD countries.
This mapping exercise covers a wide range of areas pertaining to investment promotion
and facilitation with a view to enhancing peer-learning amongst practitioners. It will allow
practitioners and policy makers to benchmark their IPAs against those of other countries
and help them to better grasp the similarities and differences across agencies.
The report has been prepared in close consultation with IPAs and is based on an extensive
survey designed and conducted in partnership with the Inter-American Development Bank
(IDB). Using the same survey, the OECD and the IDB are preparing a further report
covering countries in Latin America and the Caribbean.
This IPA mapping report paves the way for further analytical and evidence-based
investment promotion work on topics of interest to OECD and non-OECD countries.
The report has been prepared by Alexandre de Crombrugghe, Peline Atamer and Monika
Sztajerowska from the Investment Division of the OECD Directorate for Financial and
Enterprise Affairs, under the supervision of Ana Novik, Head of the Investment Division,
and Stephen Thomsen from the Investment Division. Comments were received from
Christian Volpe Martincus from the IDB. The report was supported by financial
contributions from the IPAs of the Netherlands, Chile, Ireland, Sweden and Germany.
MAPPING OF INVESTMENT PROMOTION AGENCIES IN OECD COUNTRIES © OECD 2018

TABLE OF CONTENTS │5
Table of contents
Executive Summary ...................................................................................................................................... 9

Introduction ................................................................................................................................................. 13
The role of foreign direct investment in OECD countries ......................................................................... 13
What drives investors’ location decisions? ................................................................................................ 14
The rationale for investment promotion and the role of IPAs ................................................................... 15
Purpose of the OECD IPA mapping report................................................................................................ 16
Chapter 1. Institutional choices and organisational characteristics ....................................................... 19
Institutional environment and governance of IPAs ................................................................................... 19
Resources and internal organisation .......................................................................................................... 27
Summary.................................................................................................................................................... 33
Annex 1.A. Snapshot of IPAs’ main institutional characteristics .............................................................. 35
Chapter 2. Functions and activities ........................................................................................................... 37
IPAs’ resource allocation across the four core functions of investment promotion .................................. 38
IPAs’ activities within core functions........................................................................................................ 40
Categorising IPAs into strategic profiles to understand their activities ..................................................... 48
Annex 2.A. Core functions’ definitions in the OECD-IDB IPA survey .................................................... 52
Annex 2.B. Correlation analysis between the size of budget and the share of core functions into total
budget ........................................................................................................................................................ 53
Annex 2.C. Detailed activity mix analysis of OECD IPAs according to their strategic profiles ............... 54
Chapter 3. Prioritisation strategies for FDI attraction and generation.................................................. 57
What is prioritised and why? ..................................................................................................................... 59
How does prioritisation work? ................................................................................................................... 66
Conclusion ................................................................................................................................................. 72
Annex 3.A. Overview of prioritisation and exclusion strategies by OECD IPAs ..................................... 74
Chapter 4. Monitoring and evaluation ...................................................................................................... 77
Organisational setting and reporting, data tracking tools and feedback processes .................................... 78
Methodologies and indicators .................................................................................................................... 83
Chapter 5. Co-operation and co-ordination .............................................................................................. 89
IPA’s co-operation network ....................................................................................................................... 90
Co-operation and co-ordination with agencies and representations abroad............................................... 95
Co-operation and co-ordination with sub-national agencies...................................................................... 97
Chapter 6. The way forward .................................................................................................................... 101
Bibliography............................................................................................................................................... 105
Notes ........................................................................................................................................................... 107

6 │ TABLE OF CONTENTS
Tables
Table 1. Summary typology of OECD agencies ........................................................................................... 11

Table 1.1. Average number of organisational reforms in recent years .......................................................... 20
Table 1.2. Challenges perceived by IPAs that can limit the ability of their agency to attract investment in
the next 5-10 years ................................................................................................................................ 27
Table 1.3. Typology of OECD IPAs in terms of size, specialisation and autonomy..................................... 34
Table 2.1. IPAs’ four core functions ............................................................................................................. 37
Table 2.2. Shares of IPAs that perform activities in each core function ....................................................... 41
Table 2.3. Number of facilitation and aftercare activities performed by OECD IPAs .................................. 44
Table 2.4. List of countries within IPA categories ........................................................................................ 49
Table 3.1. Typology of OECD IPAs based on prioritisation strategies ......................................................... 60
Table 3.2. Existence of a dedicated organisational unit for priority sectors/countries among OECD IPAs,
by country ............................................................................................................................................. 68
Table 5.1. General framework of IPA institutional co-operation and co-ordination ..................................... 90
Table 5.2. Obstacles to the attraction of FDI in the regions according to IPAs ............................................ 98
Annex Table 1.A.1. Snapshot of IPAs’ main institutional characteristics..................................................... 35

Annex Table 2.B.1. Correlation analysis between the size of budget and the share of core functions into
total budget............................................................................................................................................ 53
Annex Table 2.C.1. Key differences among IPA categories in the performance of activities ...................... 55
Annex Table 3.A.1. Overview of prioritisation strategies by IPAs in OECD countries ............................... 74
Annex Table 3.A.2. Overview of exclusion strategies by IPAs in OECD countries ..................................... 75
Figures
Figure 1. Global FDI inflows, 2005-2017 ..................................................................................................... 14

Figure 1.1. Creation of IPAs and recent organisational reforms ................................................................... 20
Figure 1.2. IPAs’ legal status ........................................................................................................................ 21
Figure 1.3. IPAs’ reporting lines ................................................................................................................... 22
Figure 1.4. Share of IPAs with a board depending on their legal status ........................................................ 22
Figure 1.5. IPA board compositions .............................................................................................................. 23
Figure 1.6. Approval authorities of planning and reporting documents across IPAs .................................... 24
Figure 1.7. Number of mandates by agency .................................................................................................. 25
Figure 1.8. Share of IPAs reporting the function as an official mandate....................................................... 25
Figure 1.9. Share of sub-national IPAs performing the following functions................................................. 26
Figure 1.10. Average IPA budgets (excluding incentives), 2016 .................................................................. 28
Figure 1.11. IPAs’ investment promotion budgets in comparison to the size of their economies, 2016....... 28
Figure 1.12. Evolution of IPA budget and personnel over the past five years .............................................. 29
Figure 1.13. Average break-down of IPA investment promotion budget ..................................................... 30
Figure 1.14. Education and experience of IPA staff...................................................................................... 31
Figure 1.15. Level of average annual wage as compared to the public sector .............................................. 31
Figure 1.16. Number of IPA offices abroad .................................................................................................. 32
Figure 1.17. Geographic distribution of IPA offices abroad ......................................................................... 33
Figure 2.1. OECD IPAs’ budget and personnel allocation across core functions ......................................... 39
Figure 2.2. Resource allocation across the four core functions, by country .................................................. 39
Figure 2.3. Shares of OECD IPAs performing image building activities ...................................................... 42
Figure 2.4. Shares of OECD IPAs performing investment generation activities .......................................... 43
Figure 2.5. Shares of OECD IPAs performing investment facilitation activities .......................................... 45
Figure 2.6. Shares of OECD IPAs performing aftercare activities ................................................................ 46
Figure 2.7. Shares of OECD IPAs performing policy advocacy activities .................................................... 47

TABLE OF CONTENTS │7
Figure 2.8. Staff dedication to policy advocacy according to IPA’s legal status .......................................... 48
Figure 2.9. OECD IPA human resource allocation patterns .......................................................................... 49
Figure 2.10. GDP per capita and FDI stock / capita of the different IPA categories .................................... 51
Figure 3.1. Overview of prioritisation strategies of IPAs in OECD countries .............................................. 59
Figure 3.2. Criteria used to prioritise specific sectors and countries in OECD countries ............................. 63
Figure 3.3. Criteria used for exclusion of countries and sectors by OECD IPAs .......................................... 64
Figure 3.4. Criteria used for prioritisation of investment projects by OECD IPAs ....................................... 65
Figure 3.5. Elements of a process of selecting country and sector priorities by OECD IPAs ....................... 67
Figure 3.6. Government bodies responsible for approval of the prioritisation strategy ................................ 68
Figure 3.7. Share of staff assigned to priority sectors by the OECD IPAs .................................................... 69
Figure 3.8. Type of services provided to priority investors by OECD IPAs ................................................. 70
Figure 3.9. Budget and activities of OECD IPAs according to prioritisation................................................ 71
Figure 3.10. The share of sector-specific investment generation activities tracked in the CRM of the
OECD IPAs ........................................................................................................................................... 72
Figure 4.1. Frequency of objective-setting and report documents ................................................................ 78
Figure 4.2. OECD IPAs’ evaluation organisational setting ........................................................................... 79
Figure 4.3. Possibilities offered by CRM systems ........................................................................................ 80
Figure 4.4. CRM-tracking of IPAs’ activities ............................................................................................... 81
Figure 4.5. Events triggering corrective action ............................................................................................. 82
Figure 4.6. IPAs’ evaluation methodologies ................................................................................................. 83
Figure 4.7. Number of indicators used by IPAs ............................................................................................ 85
Figure 4.8. Output indicators used by IPAs................................................................................................... 86
Figure 4.9. Outcome indicators used by IPAs ............................................................................................... 87
Figure 4.10. Correspondence between project prioritisation and evaluation criteria used by OECD IPAs .. 88
Figure 5.1. Number of organisations with which OECD IPAs interact, by country ..................................... 91
Figure 5.2. OECD IPAs’ ten most strategic relationships ............................................................................. 91
Figure 5.3. Mapping of IPA interactions with government, public and semi-public institutions .................. 93
Figure 5.4. Mapping of IPA interactions with the private sector, academia and international
organisations ......................................................................................................................................... 95
Figure 5.5. OECD IPA offices abroad performing investment promotion .................................................... 96
Figure 5.6. Interactions of IPAs with embassies and consulates depending on the presence of affiliated
foreign offices abroad performing investment promotion .................................................................... 97
Figure 5.7. Number of IPAs’ affiliated sub-national offices performing investment promotion .................. 98
Figure 5.8. Reasons why IPAs contact sub-national agencies ....................................................................... 99
Boxes
Box 1. The OECD-IDB survey of IPAs ........................................................................................................ 17

Box 3.1. Prioritisation in investment promotion and facilitation and the OECD Policy Framework for
Investment ............................................................................................................................................. 58

8 │ ACRONYMS AND ABBREVIATIONS
Acronyms and abbreviations
CEO Chief Executive Officer

CRM Customer Relationship Management
FDI Foreign Direct Investment
FTA Free Trade Agreement
GDP Gross Domestic Product
ICT Information and Communications Technology
IDB Inter-American Development Bank
IIA International Investment Agreement
IPA Investment Promotion Agency
KPI Key Performance Indicator
LAC Latin America and the Caribbean
M&A Merger and Acquisition
MNE Multinational Enterprise
OECD Organisation for Economic Co-operation and Development
PFI Policy Framework for Investment
PR Public Relations
RBC Responsible Business Conduct
R&D Research and Development
SME Small and Medium-sized Enterprise
TV Television
USD United States Dollars
WEF World Economic Forum

EXECUTIVE SUMMARY │9
Executive Summary
Recognising the positive effects of investment in supporting economic growth and

sustainable development, governments around the world have established investment
promotion agencies (IPAs) to create awareness of existing investment opportunities, attract
investors that can foster job creation and productivity growth, and facilitate their
establishment and expansion in the economy. One size does not fit all, however, and
different activities, approaches and strategies are suitable for different countries, even in
similar economic contexts. Based on an extensive survey of 32 national agencies, this
report presents a comprehensive mapping of national IPAs in OECD countries. It
addresses: i) IPAs’ institutional choices and organisational characteristics, ii) their
functions and activities; iii) their prioritisation strategies for investment attraction and
generation; iv) their monitoring and evaluation processes and tools; and v) their approaches
to co-operation and co-ordination with external partners.
The average OECD IPA was created 20 years ago and has experienced close to two
organisational reforms in recent years, reflecting rapidly evolving policy environments and
investment promotion dynamics. The majority of IPAs (60%) are autonomous public
agencies while 31% are governmental (part of a ministry) and 6% are joint public-private
agencies. Only one agency is fully privately owned. Just over half of IPAs have multiple
reporting lines and the majority report to a minister. Over two thirds have a board – either
supervisory or advisory – but both their role and composition vary greatly across agencies,
often depending on their legal status. While IPAs are always created to promote inward
foreign investment, all OECD agencies have at least one other mandate or a little less than
six different mandates on average. The most common combination of mandates is for
export promotion and innovation promotion, which are both included by 56% of IPAs.
Other key mandates reflect the role of IPAs in promoting investments that support socio-
economic objectives, including the promotion of regional development (50% of IPAs),
green investment (44%) and domestic investment (41%).
Investment promotion budgets vary widely across IPAs – ranging from USD 0.26 million
to USD 351 million in 2016 – reflecting the disparities in size and income levels among
OECD countries but also potentially the priority given to investment promotion.
Governments are the largest source of IPA budgets, providing on average 98% of
investment promotion resources. Over 90% of staff has a high level of education and three
quarters have private sector experience. While most agencies align their salaries on the civil
servants’ pay scale, less than a quarter – most of them autonomous IPAs – pay higher wages
to attract employees with a private sector background. Disparities also exist in terms of
secondary offices, as close to half have no other offices in the country while 15% have
more than 10 sub-national offices. Similarly, the average OECD IPA has 19 investment
promotion offices abroad, with 22% of reporting agencies having none and 6% over 50.
The average trend among OECD IPAs is to allocate the bulk of their resources to
investment generation (46% of total budget) and investment facilitation and retention
(30%), while image building (18%) and policy advocacy (6%) receive less resources. Most

10 │ EXECUTIVE SUMMARY
activities that fall under the image building and investment generation functions are carried
out by a significant majority of IPAs. Conversely, agencies’ activity portfolios in
investment facilitation and retention and in policy advocacy vary greatly from one IPA to
another. Agencies also tend to cover more investment facilitation activities (59% on
average) than aftercare activities (36%). Overall, 6% of IPAs can be categorised as Image
builders, as they devote a significantly higher share of their resources than the average to
image building; 41% qualify as Generators, as they focus more on investment generation
while performing less image building and investment retention activities; 25% are
Facilitators, i.e. IPAs with large budgets with a wide investment facilitation and retention
activity portfolio but that do not neglect the other three core functions; and 28% denote as
Balanced IPAs, i.e. agencies that aim to have a relatively broad investment facilitation and
retention portfolio but face trade-offs within core functions to achieve their goal as they
have fewer resources than Facilitators.
In their promotion activities, IPAs may target some investments over others either because
of their higher probability of being realised or due to the benefits they can bring to the host
economy. All OECD agencies prioritise certain sectors and countries, two thirds prioritise
specific investment projects and over one third specific investors. While some countries
tend to prioritise only sector or countries – denoted as Basic Prioritisers (19% of all IPAs);
others also prioritise specific investment projects (Project-Centred Prioritisers, 34%) or
investors (Investor-Centred Prioritisers, 3%). 41% are Super-Prioritisers, i.e. they
prioritise sectors and countries, projects and investors. Over three quarters of OECD IPAs
take a project-centric view on prioritisation, on top of the priority sectors and countries,
focusing on specific investment projects identified as “priority” projects; often also referred
to as “high-quality” or “strategic” investment projects. Strong domestic capacity (64%), a
strong competitive position vis-à-vis other countries (58%) and the potential to diversify
the economy (58%) are the most frequently cited reasons for prioritising certain sectors.
Access to high-technology is the most cited reason (58%) for targeting specific countries,
followed by strong economic or political ties (42%). Around 70% of IPAs have pre-
established criteria that a project needs to satisfy to qualify, particularly the impact on
innovation (83%), priority sector (83%), job creation (79%) and the size of the investment
(75%). IPAs that prioritise projects or investors have on average higher budgets than those
that do not.
Close to two thirds of OECD IPAs have a dedicated evaluation unit and almost all use
customer relationship management systems to track and monitor their activities. IPAs rely
more on qualitative methodologies such as benchmarking (78% of IPAs), surveys (75%)
and consultations (69%) than on quantitative methodologies such as cost-benefit analysis
(22%) and econometric assessments (16%) to assess their performance. Their key
performance indicators can be divided into output and outcome indicators, the former
measuring the performance of the IPA’s activities and the latter assessing the impact of
their overall action on the economy. The most frequently used indicators are output
indicators relating to investment projects (91%), investing firms (66%) and client
satisfaction (66%) as well as outcome indicators relating to job creation (88%) and total
amounts of FDI (81%). Agencies often face data availability challenges, which make it
difficult to conduct impact assessments and calculate overall performance ratios.
OECD IPAs typically operate in a dense and complex network of public and private
stakeholders, as they interact with 25 different organisations on average in the framework
of their activities. The most strategic relationships for IPAs involve their sponsor minister,
the ministry of foreign affairs and diplomatic missions abroad, sub-national agencies
(affiliated or not to the IPA), and local authorities. Business associations are the only

EXECUTIVE SUMMARY │ 11
stakeholders outside the public sector that rank among IPAs’ most important relationships.
While more than three quarters of IPAs have a network of offices abroad affiliated to their
headquarters, the great majority also rely on diplomatic missions to promote their country
as an attractive investment destination. At the sub-national level, IPAs mostly co-operate
with local government-related agencies to attract and retain foreign investors as well as to
support their establishment. IPAs’ co-operation with diplomatic missions and sub-national
agencies need well-functioning processes and mechanisms such as shared customer
relationship management systems, dedicated communication channels and tools, and clear
and well-defined responsibilities.
Table 1 summarises some of the OECD IPAs’ main institutional and strategic
characteristics in a simple typology based on more detailed categorisations presented in
subsequent chapters. It uses the following criteria:
• The columns classify IPAs according to their number of staff and mandates (see
Chapter 1);
• The rows categorise IPAs according their strategic profile, in line with the main
focus of their activity mix (see Chapter 2); and
• The asterisks represent the extent to which IPAs prioritise in their investment
promotion activities (see Chapter 3).
Table 1. Summary typology of OECD agencies
Size, mandates, profiles and prioritisation of IPAs
Large Specialist Large Generalist Small Specialist Small Generalist
Austria**
Chile*
Greece***
Estonia* Iceland**
France*** Poland**
Promoters Germany* Netherlands**
Sweden*** Slovak Republic*
Korea** New Zealand**
Slovenia***
Switzerland**
United States**
Australia*** Czech Republic*

Facilitators Ireland** Japan* Denmark** Hungary***
United Kingdom*** Norway***
Finland***
Latvia*
Canada**
Balanced Spain*** Mexico***
Israel***
Portugal***
Turkey**
Notes: (1) Large/Small IPAs include those with a higher/smaller number of staff than the median, while
Specialist/Generalist include IPAs with a smaller/higher number of mandates than the median (see Table 1.3);
(2) Promoters include IPAs focusing their activity mix on image building and targeting, Facilitators on
investment facilitation and Balanced equally on all (see Table 2.4); (3) One asterisk include IPAs that prioritise
sectors or countries only, two those that additionally prioritise investors or projects, and three those that
prioritise sectors and countries, projects and investors (see Table 3.1).
Source: Authors based on OECD-IDB survey of Investment Promotion Agencies (2017).

INTRODUCTION │ 13
Introduction
Virtually all governments worldwide seek to promote foreign direct investment (FDI) to
support growth, welfare and prosperity. Decision-makers can adopt a wide array of policy
instruments to attract multinational enterprises (MNEs) and have established dedicated
organisations, mostly known as investment promotion agencies (IPAs). Before reviewing
and comparing the different choices, approaches and strategies adopted by IPAs in OECD
economies, it is worthwhile recalling the rationale for investment promotion. This
introductory chapter starts by recalling the potential benefits of international investment on
host economies and its role in OECD countries. It then seeks to explain the rationale for
FDI promotion by briefly reviewing the drivers of firms’ location decisions and
highlighting the key role of the policy and institutional framework for investment. It then
examines why IPAs have been created and what is their specific role in attracting FDI. It
ends by explaining the purpose and methodology of the IPA mapping exercise presented
in subsequent chapters.
The role of foreign direct investment in OECD countries
In market economies, private investment is central to economic growth and sustainable

development. Domestic investments usually dominate, but FDI can provide additional
advantages beyond the direct contribution to the capital stock. Under the right conditions,
international investment can raise overall productivity in recipient countries and ultimately
lead to an increase in its citizens’ standard of living. These benefits do not necessarily occur
automatically, but an adequate policy framework can maximise them as well as minimise
any potential costs of FDI. Different channels exist through which these positive
contributions can materialise: 1
• Foreign investment often contributes to growth, beyond what domestic investment
normally would, by raising both total factor productivity and the efficient use of
resources in host economies;
• FDI can support host economies’ global trade integration by providing them with
improved access to international markets, developing local export capabilities and
integrating them with global value chains;
• MNEs often bring new technologies in recipient economies and FDI can thus lead
to local technology transfers and innovation spillovers, especially through the
creation of local supplier linkages;
• FDI creates direct and indirect jobs (i.e. through backward and forward linkages
with small and medium-sized domestic companies) and can enhance human capital
through the dissemination of new skills, know-how and management techniques –
which can benefit both MNE workers and local firms that act as suppliers to MNEs;
• International investment can also support greater competition in host markets and
thus lead to productivity gains, lower prices and more efficient resource allocation;

14 │ INTRODUCTION
• Lastly, FDI has the potential to bring social and environmental benefits to host
countries by disseminating good practices of responsible business conduct (RBC),
as laid out in the OECD Guidelines for Multinational Enterprises. 2
OECD countries have been actively attracting FDI to boost productivity, enhance overall
competitiveness and support sustainable economic growth. The total stock of FDI in the
OECD is equivalent to just under a third of the area’s combined gross domestic product
(GDP) (32.2% in 2016), reflecting the key role played by FDI in the overall economic
development of the OECD area, as in most other countries (OECD, 2017).
OECD economies remain the main destination for FDI globally but face increasing
competition from large emerging economies, notably China, Brazil and Russia, which have
increasingly attracted the attention of international investors. In the aftermath of the global
financial crisis, FDI flows to OECD economies have been evolving irregularly and their
share of total flows has decreased over time to the benefit of emerging economies,
particularly over 2008-14 (Figure 1). In recent years, the OECD share has recovered in
2015 and 2016, accounting for 61% and 63% of global FDI inflows respectively – up from
45% in 2014 – but fell back to 52% in 2017.
Figure 1. Global FDI inflows, 2005-2017
In USD billion
OECD Non-OECD
1600
1400
1200
1000
800
600
400
200
0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Source: OECD International Direct Investment Statistics (database).
What drives investors’ location decisions?
To better apprehend the rationale for investment promotion, it is essential to first

understand what drives international investment and MNE location decisions. 3 When a firm
decides to locate overseas, it usually engages in a systematic comparison of potential
investment destinations. A number of factors, which can be categorised under five main
characteristics, can influence MNEs’ decision to locate in a certain country over another
(OECD, 2002): 4

INTRODUCTION │ 15
• Market size and growth: these economic determinants play a prominent role in
MNEs’ location decisions, as countries with a large market size and a high growth
rate will provide more profitable investment opportunities;
• Natural and human resource endowments: the availability and cost of natural and
human resources – including labour productivity and adequate skills – are another
driving force behind FDI;
• Physical, financial and technological infrastructure: the quality and availability of
backbone services are key elements of a sound investment climate and are key
considerations to attract MNEs;
• Openness to international trade and investment: an open economy to international
trade and investment provides investors with more business opportunities and will
influence their decision-making accordingly; and
• The policy and institutional framework: a fair, transparent and predictable
regulatory and administrative framework for investment with efficient institutions
affects MNEs’ decisions in both their initial investments and potential
reinvestments or expansions.
While the first three characteristics are economic determinants, the latter two are more
directly related to policy, regulatory and institutional considerations. Economic
determinants will influence MNEs’ motivations to invest depending on the type of FDI
they are engaging in. Following an internationally recognised classification by Dunning
(1993), MNE motivation factors include four categories: i) resource-seeking FDI, when
MNEs locate in a country to take advantage of its natural resource endowments:
ii) efficiency-seeking FDI, which is driven by the objective to maximise efficiency through
lower costs or economies of scale; iii) market-seeking FDI, driven by the size and growth
of the host market; and iv) asset-seeking FDI, driven by the access to specific assets in the
host economy (e.g. technology, skills).
Policy settings, on the other hand, will affect FDI decisions horizontally, regardless of the
economic motives. In their quest to attract FDI – and hence to influence MNEs’ location
choices – decision-makers in both OECD and non-OECD countries seek to create a
favourable business environment and to continuously enhance their investment policy
framework to allow the private sector, both domestic and international, to grow.
A broad range of policy actions can contribute to shaping the investment climate, including
in the areas of investment policy, investment promotion and facilitation, tax policy,
competition, trade, infrastructure, human skills and others covered in the OECD Policy
Framework for Investment (PFI). 5 A sound investment policy framework is not only key
to attract investment, but also to maximise their benefits to the host economy – as discussed
in the previous section. Investment promotion activities thus need to take place within the
context of, and not as a substitute for, sound investment policies.
The rationale for investment promotion and the role of IPAs
Governments are responsible for the welfare and prosperity of their citizens. Public policies
in market-oriented economies are geared towards achieving national socio-economic
objectives. Investment promotion is no exception and consists of government interventions
to influence firms’ location decisions to attract FDI that can meet public policy objectives
(e.g. generate jobs, productivity growth, linkages with domestic companies and transfers
of skills and know-how).

16 │ INTRODUCTION
In this context, governments compete fiercely with one another for each investment
decision with appealing location value propositions and this requires efficient and well-co-
ordinated institutions. When establishing a formal structure to conduct investment
promotion activities, most jurisdictions have chosen to establish an IPA. In the OECD area,
all countries have established national or sub-national IPAs. 6 IPAs can help remedy market
failures by carrying out a range of services aimed at marketing their country, its competitive
business environment, industries and firms, and by simply facilitating business
establishment and operations.
The rationale for investment promotion finds its roots in the need to correct or mitigate
market imperfections, particularly to overcome information asymmetries (Wells and Wint,
2000; Loewendahl; 2001). International investors, who intend to invest in a foreign market,
often lack specific information, including on operational costs, capital expenditures,
business partners, competition, taxes, and legislation in potential locations (OECD, 2015c).
Large MNEs typically have more resources and capacity to collect such information than
small and medium-sized enterprises (SMEs).
The nature of – and need for – investment promotion undertaken by IPAs has changed over
time, however. While in the 1980s and 1990s, IPAs were primarily engaged with
disseminating information on their country’s investment opportunities and business
climate, the Internet has made a great amount of information directly available to investors
and IPAs have had to engage in more sophisticated activities to gather business intelligence
and attract MNEs (OECD, 2015c). IPAs currently offer a wide array of different services
– that go far beyond information dissemination – to both potential and existing investors
and are also often involved in business climate reforms.
While there is an overall consensus on the positive impact and effectiveness of investment
promotion activities on host economies, 7 it remains an insufficiently explored discipline.
One size does not fit all and different forms of IPAs, institutional settings, activities and
strategies for investment promotion can match different government objectives, but also
different target enterprises. Even in similar geographic and development contexts, large
differences exist among IPAs in terms of strategic priorities, functions, tools, organisational
characteristics and governance policy. Investment promotion practitioners need to adapt to
changing industry developments, sector trends and investment policy reforms.
Purpose of the OECD IPA mapping report
The purpose of this mapping report is to complement existing research on investment

promotion with a comprehensive inventory and comparative analysis of IPAs in OECD
economies; their institutional environments, internal organisations, core activities,
prioritisation strategies, evaluation methodologies and institutional co-ordination
mechanisms.
This study intends to provide evidence-based analysis to practitioners and policymakers in
OECD countries to allow them to benchmark their institutions against those from other
countries as well as to help them better grasp the similarities and differences across
agencies. It presents both aggregate and individual datasets and intends to lay out different
profiles of IPAs and explain existing trends and practices. This mapping exercise also
allows peer-learning among OECD IPAs and provides an opportunity to discuss good
practices. It also highlights key considerations for practitioners and policymakers as well
as ideas on where further evidence-based work could be conducted.

INTRODUCTION │ 17
The data used in this report have been gathered through different means, the most important
one being a comparative survey developed by the OECD and the Inter-American
Development Bank (IDB) (Box 1). It draws on existing literature on FDI and investment
promotion and is supplemented by desk research as consultations with senior IPA
representatives, both individually and collectively.
Box 1. The OECD-IDB survey of IPAs
The OECD and the IDB have partnered to design a comprehensive survey of
IPAs. The questionnaire provides detailed data that reflect the multiple recent
policy developments as well as rich and comparable information on the work of
IPAs in different countries. The survey was displayed and shared with IPA
representatives from OECD and Latin America and Caribbean (LAC) countries
in the form of an online questionnaire that was divided into nine parts:
• Basic profile;
• Budget;
• Personnel;
• Offices (home and abroad);
• Activities;
• Prioritisation;
• Monitoring and evaluation;
• Institutional interactions; and
• IPA perceptions on FDI.
National IPAs from 32 OECD countries participated in the OECD-IDB survey.
The participating agencies are those from the following countries: Australia,
Austria, Canada, Chile, Czech Republic, Denmark, Finland, France, Estonia,
Germany, Greece, Hungary, Iceland, Ireland, Israel, Korea, Latvia, Japan,
Mexico, the Netherlands, New Zealand, Norway, Poland, Portugal, Slovak
Republic, Slovenia, Spain, Sweden, Switzerland, Turkey, the United Kingdom
and the United States.
IPA respondents completed the questionnaire between May and September 2017.
The preliminary results of the survey were presented and discussed at an OECD
workshop on investment promotion and facilitation on 16 October 2017. The data
and information gathered through this questionnaire serve as the basis for this
mapping report.
The OECD-IDB survey of IPAs also serves as the main data source of a separate
study prepared by the OECD and the IDB, which is mapping LAC IPAs and
benchmarking them against those from the OECD. An additional 19 IPAs from
LAC countries (outside the OECD area) participated in the survey: Argentina,
Barbados, Brazil, Colombia, Costa Rica, Dominican Republic, Ecuador, El
Salvador, Guatemala, Guyana, Haiti, Honduras, Jamaica, Nicaragua, Paraguay,
Peru, Trinidad and Tobago, Uruguay and Venezuela.

18 │ INTRODUCTION
The mapping report is divided into five chapters, as follows:

1. Institutional choices and organisational characteristics of IPAs
2. IPA functions and activities
3. Prioritisation strategies for FDI attraction and generation
4. Monitoring, evaluation and impact
5. Institutional co-operation and co-ordination
The first chapter of this mapping report covers the IPAs’ institutional settings and
organisational characteristics, including their governance, scope and diversity of mandates,
financial and human resources, and organisation of secondary offices. The second chapter
addresses the IPAs’ key functions and specific activities within each function. It identifies
the most recurrent activities across IPAs and provides insights on their diverse choices in
terms of resource allocation and strategic focus. Chapter 3 looks at how IPAs design and
implement their prioritisation strategies to attract investment. Chapter 4 maps the different
monitoring and evaluation tools used by IPAs to track and measure their performance. The
fifth chapter examines how IPAs co-ordinate and collaborate with their institutional
environment at three different geographical levels: international, national and sub-national.
Finally, the last chapter of this report proposes some ideas for future analytical and
evidence-based investment promotion work.

1. INSTITUTIONAL CHOICES AND ORGANISATIONAL CHARACTERISTICS │ 19
Chapter 1. Institutional choices and organisational characteristics
Different policy choices are available to governments seeking to attract and benefit from
FDI. The way they organise their institutional framework for investment promotion and
facilitation responds to their policy objectives and the priority they give to investment
promotion can greatly influence their success in attracting investment in the most efficient
and effective manner.
IPAs can be created as part of a ministry, as an autonomous public agency, as a joint public-
private body or as a fully privately-owned organisation. While adequate financial and
human resources are a prime concern of all IPAs, they can have very different mandates,
governance mechanisms and organisational cultures. An increasing number of IPAs are
merging their investment and trade promotion functions while others are becoming more
specialised. Some have an extensive presence abroad while others rely on partner
organisations to represent them overseas. Governments have also pushed through reforms
to decentralise investment promotion and facilitation by delegating some functions of IPAs
to the sub-national level.
This chapter provides a comparative analysis of institutional choices made in OECD
countries on investment promotion and facilitation policies. It is divided into two sections:
the first addresses the institutional environment of IPAs, including their legal status,
governance models and formal mandates; and the second section looks at IPAs’ resources
and internal organisation, including their budget, personnel and secondary offices. It ends
with a short summary providing a categorisation of OECD IPAs based on some of the
chapter’s main findings and is followed by an annex table providing a snapshot of the
agencies’ main organisational characteristics.
Institutional environment and governance of IPAs
IPAs evolve in their own historical and institutional contexts. They were established to
respond to specific policy objectives and the way they are governed is often dictated by
their institutional contexts and broader political choices. This section addresses how IPAs
from OECD economies fit in the overall institutional framework for investment promotion
and facilitation within their respective public administration and looks at: i) IPAs’
establishment and recent reforms; ii) their legal status and reporting lines (including
governance models and the role of the board); and iii) the scope and diversity of IPA formal
mandates.
IPAs’ establishment and recent reforms

While some OECD countries gradually institutionalised their investment promotion efforts
after the Second World War, most started to establish their national IPAs from the 1970s
and particularly in the 1990s and 2000s (Figure 1.1). Today, the average OECD IPA is
about 20 years old. IPAs’ organisational structures have evolved over time. As open trade
and investment policies were progressively adopted in all OECD economies, IPAs were

20 │ 1. INSTITUTIONAL CHOICES AND ORGANISATIONAL CHARACTERISTICS
primarily tasked with disseminating information on the host country and its business
climate. Investment promotion practitioners then had to engage in ever more sophisticated
activities, as governments increasingly recognised their role in fulfilling national
development objectives, notably by targeting companies in priority sectors and in high
value-added activities.
Figure 1.1. Creation of IPAs and recent organisational reforms
Number of recent organisational reforms Number of IPAs
35
30
25
20
15
10
0
1955-59 1960-64 1965-69 1970-74 1975-79 1980-84 1985-89 1990-94 1995-99 2000-04 2005-09 2010-14 2015-17
Source: OECD-IDB survey of Investment Promotion Agencies (2017).
Several agencies were initially created, very early on, as trade promotion agencies, such as
the Swiss agency (created in 1927), the Japanese agency (1958) and the Korean agency
(1962), and included investment promotion decades later. Conversely, other countries have
been pioneers at establishing fully-fledged IPAs specialised in investment promotion from
their establishment, including Ireland in 1969, the Netherlands in 1978 and Austria in 1982.
In more recent years, many IPAs have experimented with new organisational reforms,
suggesting that IPAs have been seeking to adapt to changing environments and emerging
challenges. As reflected in Table 1.1, a majority of IPAs (81%) have restructured their
organisation at least once in recent years and a quarter of them have experienced at least
three reforms. While most recent IPA reforms consist in integrating new mandates within
agencies (e.g. trade promotion, innovation promotion, tourism promotion, etc.), very few
of them have involved dividing an agency or removing some of its responsibilities (the
issue of mandates will be further examined below).
Table 1.1. Average number of organisational reforms in recent years
No reform 1 reform 2 reforms 3 reforms 4 or more reforms

19% 31% 25% 12% 13%

Legal status and reporting line

The governance of an IPA is related to the way it is supervised, guided, controlled and
managed. When IPAs are established, their legal status – often formalised by law – will
determine many organisational and functional aspects of the agency. It will have a
particular incidence on the level of autonomy of the IPA vis-à-vis the government,
particularly in terms of financial and human resources management. From the least to the
most autonomous forms of IPA, the most common types of legal status are the following:
• governmental (often as a department or a unit within a ministry);
• autonomous public agency;
• joint public-private body; and
• fully privately-owned organisation.
Autonomous public agencies dominate the IPA landscape across OECD countries (60% of
respondents), while close to one third are fully governmental and part of a ministry
(Figure 1.2). Only one agency is fully private (Switzerland – which is yet publicly funded)
and two are joint public-private entities (Iceland and Sweden).
Figure 1.2. IPAs’ legal status
Autonomous public agency Governmental (department or unit in a ministry) Joint public-private agency Private agency
3%
6%
31%
60%
IPAs can have different reporting lines, depending on their legal status and broader
institutional environment. A majority of IPAs (56%) have multiple reporting lines and the
most common ones are the line minister (59% of IPAs), followed by the sub-ministerial
level (44%) and the board of directors (41%) (Figure 1.3). Line ministries are often those
for trade or the economy, but some IPAs also report to foreign affairs ministries.
An important part of the governance of IPAs is the existence and role of a board. When an
IPA is created, a board is sometimes established, which allows for an external entity to
supervise or advise the work of the agency, or both. Boards can vary greatly from one
organisation to another; they can be of advisory nature or with a high degree of decision-
making power. They can be composed of public or private representatives, or both, and
sometimes include representatives from research and academia, civil society or other parts
of society.

Figure 1.3. IPAs’ reporting lines
Minister 59%
Sub-ministerial level 44%
Board of directors 41%
Several ministers or inter-ministerial taskforce 25%
Head of government 16%
Other 13%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
In OECD economies, over two thirds of IPAs (69%) have a board, either supervisory or
advisory. The discrepancy with the much lower share of IPAs that report to a board of
directors (41% – see Figure 1.3) might be explained by the very nature of the board – as
some are meant to oversee and approve the work of the IPA while others are only advisory
and meant to guide and advise the IPA management.
The legal status of an IPA seems to have an influence on whether it has a board or not and
on its nature. Those agencies with a higher degree of legal autonomy tend to be governed
by a board. Figure 1.4 shows that all private or joint public-private agencies as well as
nearly three quarters of autonomous public agencies do have a board. This is not a
systematic trend, however, as half of governmental IPAs also have a board whereas, by
definition, they are less autonomous – their boards tend to be of an advisory nature rather
than a supervising board of directors to which IPAs have to report.
Figure 1.4. Share of IPAs with a board depending on their legal status
With board With no board
20
18
16
14
12 74%
10
8
50%
6
2 26% 50%
100%
0
Autonomous Governmental Joint public-private or private

All boards have a chairperson and are largely dominated by public and private sector
representatives. They account, on average, for 37.6% and 40.5% of total board members
respectively (excluding the chairman), but their distribution varies greatly from one country
to another (Figure 1.5). Chairpersons are most often from the public sector but can also
come from the private sector in some cases. Other categories, such as representatives from
research and academia and from civil society, account for marginal shares of board
members.
Figure 1.5. IPA board compositions
Chairman Public Sector Private Sector Research & Academia Civil Society Other or unspecified
16
14
12
10
The role of the board in managerial decisions also varies from an agency to another. For
example, only 27% of IPAs that have a board appoint their Chief Executive Officer (CEO)
or general manager, while almost all the remainder have their CEO appointed by the
supervising minister. In IPAs with no board, it is also the line minister that, in the vast
majority of cases, appoints the CEO. Similarly, an even smaller share (14% of IPAs with a
board) appoint or hire their upper managerial staff through the board, while in other cases
it is done by the CEO of the IPA or through the line ministry.
A final important aspect of IPA governance is their planning and reporting tools. Figure
1.6 shows that both the board and the government (typically the line ministry) are the main
approval authorities of IPA planning and reporting tools. Their roles vary, however,
according to the tools in question. Governments most often approve IPA strategy and
targets, while boards are, on average, more often in charge of approving financial reports,
activity reports and business plans. The IPA upper management has a more prominent role
in approving business plans, activity reports and IPA targets.
When taking in consideration only those IPAs with a board, at least half of all planning and
reporting documents are approved by the board. The highest shares are for the financial
report (over 70%), the business plan (two thirds) and the activity report (about 65%). This
demonstrates that IPA boards tend to take an active role in overseeing the use of IPAs’
allocated resources and in guiding their strategic orientations.

Figure 1.6. Approval authorities of planning and reporting documents across IPAs
Board Government Board & Government IPA management
Financial report 50.0% 37.5% 12.5%
IPA strategy 37.5% 45.8% 4.2% 12.5%
IPA targets 26.9% 50.0% 3.8% 19.2%
Activity report 47.8% 30.4% 21.7%
Business plan 45.5% 31.8% 22.7%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Note: These five planning and reporting tools are all used by the majority of reporting IPAs (at least 84% and
up to 97% of them).
Scope and diversity of IPA mandates

All IPAs have been created with the core mandate to promote and attract inward foreign
investment. Institutional environments differ from one country to another, however, and
IPAs can thus be either fully dedicated to investment promotion or be part of a broader
agency that includes additional mandates.
In the OECD area, large variations exist across the 32 responding IPAs with respect to the
number of mandates, but all of them perform at least one other mandate beyond investment
promotion (Figure 1.7). They range from 2 to 13 different mandates with an average of 5.7
mandates. Only seven IPAs fulfil only two mandates while four fulfil more than ten, which
shows the relatively high integration of sometimes very different mandates into a single
institution.
When looking more closely at the types of mandates that IPAs fulfil – beyond inward FDI
promotion – the most common combinations are with export promotion and innovation
promotion, accounting both for 56% of IPA mandates (Figure 1.8). The combination of
trade and investment promotion into a single agency can be motivated by both the need to
maximise synergies and the opportunity for economies of scale by grouping qualified
foreign trade and foreign investment promotion staff under one roof. This is particularly
true for those governments that are seeking to attract export-oriented investors, as similar
industries and markets can be targeted. Governments that choose to keep separate agencies
deem that the different skillsets and activities necessary to respond to the needs of their
respective clients – foreign investors for IPAs and domestic companies for export
promotion organisations – are too different to justify an institutional merger.

Figure 1.7. Number of mandates by agency
14
12
10
6 OECD average (5.69)
Figure 1.8. Share of IPAs reporting the function as an official mandate
100%
90%
80%
70%
60% 56% 56%

50%
50% 44%
41%
40%
31%
28%
30% 25% 25%
19%
20% 16%
13% 13%
9% 9% 9% 9% 9%
10% 3% 3%
0%
Merging export and inward investment promotion has become an increasingly adopted
strategic choice by governments. While countries like Japan, Korea and the United
Kingdom have been pioneers in merging their investment and export promotion functions
into a single agency in the 1990s, a number of other agencies have followed a similar path
in the past ten years. This includes Australia (2008), Switzerland (2008), Germany (2009)

Spain (2012), Sweden (2013), Greece (2014), France (2015), and Poland (2016-17). Only
one IPA – Hungary – followed the opposite trend in 2014. Interestingly, the agencies which
have merged export and investment promotion in the last decade are all private, public-
private or public autonomous agencies, suggesting that this growing trend is mostly
prominent across more autonomous forms of agencies as compared to fully governmental
IPAs, which often do not include trade promotion. There are notable exceptions to this
trend, however, such as IDA Ireland and CzechInvest.
Merging investment and innovation promotion within the same agency follows a rather
different rationale, reflected by the fact that only a minority of IPAs (28%) perform, in
addition to inward investment promotion, both innovation and export promotion. It can be
a judicious choice when IPAs seek to attract high-tech and R&D driven MNEs that can
invest in high value-added activities. Location determinants in high-technology industries
include the availability of an innovation network, such as high-quality scientific
infrastructure, skilled labour, technology clusters and public knowledge centres
(OECD, 2011). In this context, merging FDI and innovation promotion can allow for
synergies to attract innovation-oriented MNEs. In some cases, the agency in charge of
innovation was established beforehand and created a specific investment promotion unit
(e.g. Innovation Norway).
The role of IPAs in promoting investments that support economic development in the host
country also emerges from the survey findings with half of OECD agencies reporting that
they promote regional development and 41% domestic investment. As regards sustainable
development objectives, 44% of IPAs include green investment promotion in their
mandates (the fourth most reported mandate reflecting the interest to leverage FDI for
fostering green growth), while less than 10% include the promotion of responsible business
conduct.
Figure 1.9. Share of sub-national IPAs performing the following functions
100%
90% 84%
80%
70% 64% 64%
60%
50%
40%
32%
28%
30% 24%
20%
10%
0%
Inward foreign investment Domestic investment Issuing of relevant Operation of one-stop Outward investment Screening and approval of
promotion promotion business permits shop promotion investors

The diversity and scope of IPA mandates at the national level can also depend on the
activities of sub-national agencies (Figure 1.9). In most of OECD reporting economies,
sub-national IPAs (independent from national IPAs) perform the same core mandate
(i.e. inward foreign investment promotion). In close to two thirds of them, they also
promote domestic investment and issue business permits. As addressed in Chapter 5,
national and sub-national IPAs mostly interact during the investor’s establishment phase.
Resources and internal organisation
This second section focuses on some strategic aspects of IPAs’ internal organisation,
notably: i) the level, sources and use of budget, ii) their staff’s skills and wage level; and
iii) the organisation of their secondary offices. Adequate financial and human resources are
essential success factors of any institution and IPAs are no exceptions. As illustrated by the
perceptions’ part of the OECD-IDB survey of IPAs, respondents consider that the two
greatest challenges faced by their institutions in the mid- to long-term to fulfil their
investment promotion and facilitation mandate are respectively inadequate resources and
inadequate staff (Table 1.2).
Table 1.2. Challenges perceived by IPAs that can limit the ability of their agency to attract
investment in the next 5-10 years
(Ranking from the most to the least important factor)
Ranking Challenges
1 Inadequate Resources
2 Inadequate Staff
3 Wider Business Climate or Regulatory Framework
4 Inadequacy or Instability of the Mandate
5 Lack of Political Support for the IPA
6 Emergence of New Players in the Market
Note: A section of the OECD-IDB survey questionnaire includes questions on IPAs’ perceptions. In this case,
the question was the following: “What biggest challenges do you see that can limit the ability of your IPA to
attract investment into your country in the next 5-10 years?”
Financial resources: budget size, source and spending

An IPA’s financial resources determine the scope of its activities, the quantity and quality
of staff, the mechanisms to evaluate success, and other organisational aspects such as the
number of overseas and domestic offices. For those agencies that have a high number of
mandates, the difference between the total IPA budget and the one dedicated to investment
promotion can be quite significant. As presented in Figure 1.10, the average of total IPA
budgets (excluding incentives) accounted for USD 69 million in 2016 while the average
budget for investment promotion represented USD 12 million – the difference reflecting
the relative importance of other mandates.
Large variations exist across IPAs in terms of investment promotion budgets, with the
maximum being just below USD 351 million and the minimum around USD 0.26 million
– reflecting the disparities in terms of size and income level within the OECD area, but also
potentially the varying priority given to investment promotion by their respective
governments. As one could expect and as reflected on Figure 1.11, there is a rather clear
correlation between the size of the economy and the budget given to the national IPA for
investment promotion. Values above and below the trendline reflect IPAs with a

respectively greater or smaller budget for investment promotion as compared to the size of
their economy. Given the fact that the main source of IPA budgets is public sector
budgetary allocation (see below), this could indicate the differences across OECD
economies in the priority given by governments to investment promotion.
Figure 1.10. Average IPA budgets (excluding incentives), 2016

In USD million
Total IPA budget Budget for investment promotion
80
68.77
70
60
50
40
30
20 12.34
12.00
10 5.21
0
Average Median
Note: The average investment promotion budget does not include IPAs that only reported total budget.
Figure 1.11. IPAs’ investment promotion budgets in comparison to the size of their economies, 2016
Investment promotion budget (USD millions)
80
GBR
70
60
50 MEX
AUS
40
FRA
30
IRL
20
NLD DEU
OECD average
10 CAN
POL ESP
TUR
0
0 500 1000 1500 2000 2500 3000 3500 4000 4500
GDP (USD billions)
Notes: This figure does not include IPAs that only reported total budget. It does not show the United States, as
it is an outlier in terms of GDP, but the OECD average takes it into account. GDP values are expressed in USD
billions, current prices and current purchasing power parities for 2016. GDP for Australia, New Zealand, Poland
and Turkey are estimated values and GDP for France, Greece, Mexico, Netherlands, Portugal and Spain are
provisional values.
Source: Authors based on OECD-IDB survey of Investment Promotion Agencies (2017) and OECD, Gross
domestic product (GDP) (indicator).

IPA investment promotion budgets are subject to changing economic and political contexts
and total budget sizes have evolved over the past years accordingly. The outlook remains
overall positive, as only 16% of IPA respondents across the OECD area have seen their
investment promotion budget reduced during the past five years while almost half of them
have benefitted from a budget increase during the same period (Figure 1.12). The same
goes for personnel, but to a lesser degree. While variations of personnel have been stable
or increasing in a majority of cases – 20% and 45% respectively – over a third of IPAs have
experienced either downward or erratic variations, which is not insignificant.
Organisational reforms involving new mandates would have little impact on these figures
as only investment promotion budgets and staff are considered here.
Figure 1.12. Evolution of IPA budget and personnel over the past five years
Downward Stable Upward Erratic
100%
90% 15%
26%
80%
70%
60% 45%
50% 47%
40%
30% 20%
20% 11%
10% 16% 20%

0%
Budget Personnel
Note: These results are based on a smaller sample (N=20).

Governments provide the vast majority of total IPA budgets, with close to 90% of IPA
budget sources on average being public sector budgetary allocations. Interest or other
income from the agency’s own assets are just below 4%, private sector contributions (other
than fees for services to firms) represent less than 3% and fees for services to firms account
for 2.2% on average.
There are high discrepancies across agencies, however, as a few have adopted a more
systematic approach to using fees from services to firms to finance their operations.
Business France, for example, leads the way with approximately 44% of its budget financed
by private sector contributions in 2016, but those exclusively concern export-related
services. A majority (64% of respondents) are fully financed by public sector budgetary
allocations. A number of agencies (Greece, Iceland, Korea, Poland, Portugal and Slovenia)
also receive private sector contributions other than fees for specific services, which is
justified by the fact that the IPA’s overall action has a bearing on businesses but it is also a
good way to engage them in the IPA’s strategic thinking.
When looking at investment promotion only, public sector budgetary allocation is an even
bigger share of total budget sources, with 98% of all reporting IPAs. This suggests that

firms are mostly providing fees for services outside the scope of their inward foreign
investment promotion activities, particularly for export promotion activities.
In terms of expenditures, over half of IPA expenditures in investment promotion on average
are dedicated to personnel expenditures while operative expenditures account for 29% on
average (Figure 1.13).
Figure 1.13. Average break-down of IPA investment promotion budget
Personnel Expenditure Operative Expenditure Physical Infrastructures

Services Hiring Information Technologies Other
4%
3%
6%
7%
51%
29%
Human resources: skills and wages

Human resources are the most important asset of an IPA. As described above, they
represent the highest share of OECD IPAs’ budget expenditures and their quality and
motivation are a prerequisite to the success of any IPA. Attracting adequately skilled staff
will highly influence the ability of the IPA to attract investments in line with its targeted
objectives. Quality skills are first and foremost determined by the combination of the level
of education and previous experience of staff.
In OECD economies, most staff has a high level of education and both public and private
sector experience. On average, over half of IPA employees have a university degree and an
additional 40% have completed post-graduate studies. Close to three quarters have
experience in the private sector – either exclusively or combined with public sector
experience – while less than 24% have only public sector experience (Figure 1.14).
Attracting skilled human resources also depends on the level of wages provided by IPAs.
While some agencies align their salaries on the civil servants’ pay scale, others pay higher
wages to attract employees with private sector experience. Figure 1.15 shows that it is
mostly at the higher level of hierarchy (upper and lower managerial level) that wages are
more often above the level of the public sector – in 33% and 29% of IPAs respectively.
Conversely, marketing/events manager and project/account managers are better paid than

in the public sector in 15% and 25% of responding agencies respectively. As one could
expect, the majority of IPAs (83%) that provide most (or all) of their annual wages above
the level of the public sector are autonomous public agencies, which reflects their higher
degree of management flexibility vis-à-vis governmental IPAs.
Figure 1.14. Education and experience of IPA staff
A. Level of education of staff (% of each IPA) B. Past experience of staff (% of each IPA)
Secondary Other
School 3%
6%
Public Sector
Experience Public and
24% Private
Sector
Experience
Post- 37%
Graduate University
Studies Studies
41% 53%
Private
Sector
Experience
36%
Note: These results are based on a smaller sample (N=20 for Figure 1.14.A and N=19 for Figure 1.14.B).
Figure 1.15. Level of average annual wage as compared to the public sector
At the level of the public sector Above the level of the public sector
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Note: These results are based on a smaller sample (N=18).


Network of secondary offices

A final important element of the internal organisations of IPAs is the network of offices,
both within the country and abroad. Depending on the IPA’s financial and human resources
as well as its strategic orientations, different options are available as regards the number of
secondary offices to establish and how to best strike a balance between headquarter vs.
local presence and headquarters vs. overseas presence. While the way offices are structured
and organised, both internally and overseas, is primarily a matter of institutional co-
ordination and is addressed in Chapter 5, some interesting trends emerge on how IPAs
structure their network of offices in the OECD area.
Close to half of reporting IPAs (47%) have no other offices within the country while just
over 15% have more than 10 sub-national offices (Czech Republic, Japan, Latvia, Mexico
and Spain). IPAs that do not have their own sub-national offices also often rely on local
governments and institutions.
As regards overseas offices, 75% of OECD IPAs have their own offices abroad, meaning
that they have personnel abroad, dedicated to investment promotion, on their payroll. The
average OECD IPA has 34 offices abroad, a little more than half of which (19) conduct
inward foreign investment promotion. There is an important dispersion across economies,
however: the number of offices ranges from 1 (Israel) to 74 (Japan) while 40% of offices
are defined as “regional hubs” 8. While seven agencies (less than a quarter of all reporting
IPAs) do not have an investment promotion office abroad, only two agencies – Japan and
the United Kingdom – have over 50 offices abroad with an investment promotion mandate
(Figure 1.16). As several IPAs are part of broader agencies covering other mandates, their
overseas offices can respond to different needs and perform different functions (e.g. trade,
investment and tourism promotion). As such, six additional agencies have over 50 overseas
offices abroad but with different mandates than investment promotion.
Figure 1.16. Number of IPA offices abroad
IPA offices abroad with investment promotion mandate IPA offices abroad with other functions
120
100
80
60
40
20
There are some clear trends as to the geographic distribution of overseas offices with an
investment promotion mandate. Most of them are located in other OECD countries, with
most respondents having at least an investment promotion office in the United States (94%

of all IPA respondents), followed by the United Kingdom (84%), Germany (79%) and
Japan (74%). France, Korea, Sweden and Canada are also popular locations to place an IPA
office (Figure 1.17). Among non-OECD countries, China leads the way with 84% of
respondents having at least one office located in one of its major cities. Other non-OECD
countries with a high OECD IPA presence include large emerging markets such as India
(53% of respondents) and Brazil (42%), but also the United Arab Emirates (53%).
Figure 1.17. Geographic distribution of IPA offices abroad
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
United States 94%
United Kingdom 84%
China 84%
Germany 79%
Japan 74%
France 61%
Korea 61%
Sweden 56%
India 53%
UAE 53%
Canada 50%
Singapore 47%
Brazil 42%
Spain 42%
Australia 37%
Italy 37%
Switzerland 37%
Norway 28%
Belgium 26%
Israel 26%
Russia 26%
Note: These results are based on a smaller sample (N = 19).

Large countries, such as the United States and China attract, in most cases, several IPA
offices with an investment promotion mandate. For example, the Irish agency has located
close to 60% of its overseas offices in three countries, respectively the United States (7
offices out of 21) China (3) and India (2) while the Dutch agency has located over three
quarters of them in Asia, which in both cases reflects the IPA’s market prioritisation
strategy (see Chapter 3 on prioritisation strategies). Conversely, the Australian, Canadian,
French, Portuguese and Swedish agencies, among others, have much more balanced
geographic distributions of their overseas investment promotion offices around the world.
Summary
This summary attempts to use the information gathered in this chapter to reflect OECD
IPA’s organisational structures and characteristics in a simple typology. In Table 1.3,
agencies are categorised according to: i) their size; ii) the extent to which they are
specialised in a limited number of functions; and iii) their degree of autonomy vis-à-vis the
government. While the table rows make the distinction between highly autonomous IPAs
(i.e. joint public-private and private agencies), moderately autonomous IPAs

(i.e. autonomous public agencies) and non-autonomous IPAs (i.e. governmental), the
columns categorise the agencies according to their total number of staff and of mandates,
as follows:
• Large Specialist: agency with over 135 total staff and a maximum of five
mandates; 9
• Large Generalist: agency with over 135 total staff and over five mandates;
• Small Specialist: agency with no more than 135 total staff and a maximum of five
mandates; and
• Small Generalist: agency with no more than 135 total staff and over 5 mandates.
Table 1.3. Typology of OECD IPAs in terms of size, specialisation and autonomy
Large Specialist Large Generalist Small Specialist Small Generalist
Sweden Iceland
Highly autonomous IPA
Switzerland
Czech Republic
Estonia
Greece
Australia Finland
Austria Hungary
Spain Germany
Moderately autonomous IPA Chile Poland
France Latvia
New Zealand Slovenia
Ireland Norway
Portugal
Turkey
Canada
Japan Denmark
Non autonomous IPA United Kingdom Korea Israel Slovak Republic
Mexico Netherlands
United States

Annex 1.A. Snapshot of IPAs’ main institutional characteristics
Annex Table 1.A.1. Snapshot of IPAs’ main institutional characteristics
Staff
Number of Number of investment
Country Legal status Board Investment
mandates Total agency staff promotion offices abroad
promotion staff
AUS Autonomous Public Agency No 4 1056 132 36
AUT Autonomous Public Agency No 2 23 23 0
CAN Governmental No 2 66 66 35
CHE Private Yes 5 104 5 10
CHL Autonomous Public Agency Yes 2 50 50 3
CZE Autonomous Public Agency Yes 9 147 93 10
DEU Autonomous Public Agency Yes 6 360 65 14
DNK Governmental No 2 50 50 16
ESP Autonomous Public Agency Yes 5 614 30 44
EST Autonomous Public Agency Yes 12 300 50 5
FIN Autonomous Public Agency Yes 6 299 40 12
FRA Autonomous Public Agency Yes 2 1480 150 33
GBR Governmental Yes 5 2315 420 60
GRC Autonomous Public Agency Yes 6 62 33 0
HUN Autonomous Public Agency No 7 129 84 0
IRL Autonomous Public Agency Yes 4 307 307 21
ISL Joint Public-Private Agency Yes 4 4 4 0
ISR Governmental No 3 25 25 1
JPN Governmental Yes 6 1773 n/a 74
KOR Governmental Yes 7 1043 n/a 36
LVA Autonomous Public Agency No 13 235 12 20
MEX Governmental Yes 11 576 288 46
NLD Governmental No 2 100 100 26
NOR Autonomous Public Agency No 11 689 3 0
NZL Autonomous Public Agency Yes 5 41 34 9
POL Autonomous Public Agency Yes 7 104 43 6
PRT Autonomous Public Agency Yes 7 447 23 37
SVK Governmental Yes 6 60 14 0
SVN Autonomous Public Agency Yes 8 47 5 0
SWE Joint Public-Private Agency Yes 5 474 32 13
TUR Autonomous Public Agency Yes 6 141 60 12
USA Governmental No 2 40 40 13
Note: The number of investment promotion staff for the Japanese and Korean agencies can hardly be dissociated
from other staff according to the reporting agencies.

2. FUNCTIONS AND ACTIVITIES │ 37
Chapter 2. Functions and activities
To promote countries as attractive investment destinations, IPAs can carry out a large
variety of marketing and servicing activities that are traditionally categorised into four core
functions, following a first classification by Wells and Wint (2000): image building,
investment generation, investment facilitation and retention, and policy advocacy. These
activities range from e-marketing and investor targeting to administrative support and
dedicated processes to enable the dialogue between investors and the government, either to
solve problems or to influence policies. A wide range of skills can thus be necessary for
IPAs to properly fulfil their mandate.
Each core function has a specific objective (Table 2.1). Image building activities aim at
raising potential investors’ awareness of the host country’s strengths and branding it as an
attractive investment destination. Investment generation involves directly reaching out to
potential investors to generate leads and investment projects in the host economy.
Investment facilitation and retention consist of services designed to accompany the investor
in its project definition and during its establishment phase, provide additional assistance
once the project is implemented and encourage expansions and reinvestments through
aftercare. Policy advocacy can be qualified as a “horizontal” function as its purpose is to
contribute to the creation and enhancement of an enabling national investment policy
framework by using the feedback of investors.
Table 2.1. IPAs’ four core functions
Investment Investment facilitation

Image building Policy advocacy
generation and retention
Facilitate the Monitor foreign

Create awareness and Reach out to foreign implementation of investors’ perception of
generate positive investors and convince investment projects, the host country’s
Main
feelings about a them to locate their maximise their investment climate and
objective
country as investment investment in the host economic benefits and propose changes to
destination country generate follow-up improve the investment
investments policy
• Marketing plans • Provision of • Global rankings

• Meetings with foreign
• Media campaigns investors information
• Surveys of foreign
• Website • Reaching-out • Site visits investors and industry
Examples of campaigns associations
• Brochures • Administrative support
activities (including one-stop- • Policy impact
• Targeted
• General communication and PR shop services) assessment
communications and events (sector-specific • MNE-SME linkage
public relations (PR) • Meetings with the
or investor-specific) programmes government
events

38 │ 2. FUNCTIONS AND ACTIVITIES
This chapter analyses the specific activities that the 32 surveyed OECD IPAs carry out
within the four core functions: it identifies the most frequent activities across IPAs and
provides insights on their diverse choices in terms of resource allocation and strategic
focus. The exact definitions and scope of IPA’s four core functions can slightly vary from
one organisation to another and are described in Annex 2.A.
This chapter shows that the average trend among OECD IPAs is to allocate the majority of
their resources to investment generation and investment facilitation and retention. It also
finds that while a large majority of OECD IPAs carry out all or most image building and
investment generation activities, there are wide differences with regards to investment
facilitation and retention and policy advocacy activity portfolios.
After first describing OECD IPAs’ resource allocation patterns across the four core
functions of investment promotion, the chapter looks at the activities performed within each
of these functions. It then suggests an IPA classification into four strategic profiles
according to their resource allocation patterns. Image builders tend to allocate more
resources to image building and notably conduct more TV and print campaigns. Generators
allocate more resources to investment generation and focus less on image building than the
average. Facilitators are IPAs with large budgets that have a wide activity portfolio in the
investment facilitation and retention core function while still carrying out many activities
in the other three functions. Balanced IPAs pursue a similar strategy to Facilitators but
with fewer resources, thus providing more facilitation and retention services while making
activity trade-offs in each core function.
IPAs’ resource allocation across the four core functions of investment promotion
The way IPAs allocate their resources across the four core functions differs from one
agency to another, and is driven by different factors. First, some functions can be more
costly than others, as they are more personnel-intensive, for example. This is the case for
investment generation and investment facilitation. Second, IPAs’ objectives vary from one
agency to another and some of them face lower expectations to deliver facilitation and
retention activities than others. Lastly, IPAs’ resource limitation in terms of budget and
staff can have an impact on the way they choose to prioritise some activities over others to
fulfil their mission.
The average OECD IPA dedicates the bulk of its financial resources to investment generation
activities (46%), followed by investment facilitation and retention (30%), image building
(18%), and at last policy advocacy (6%), as shown in Figure 2.1. 10 This average resource
allocation pattern across IPAs’ four core functions is relatively similar when human resources
are considered. This result offers a slightly different picture than that of other research: in
their 2004 study, Morisset and Andrews-Johnson found that on average IPAs spent a lower
share of resources on investment generation (33%) and a higher share on image building
(27%), which can be at least partially explained by the different IPA sample compositions.11
These averages hide differences across IPAs that cannot be explained solely by the total
budget size. Some IPAs spend more resources on one particular core function over others,
while others follow a more balanced approach. There is no direct correlation between budget
size and the allocation of resources to a single function, however: the average trend
demonstrates that an increase in the total budget will likely be spread across the different
functions rather than allocated to a specific function. The correlation analysis shows weak
positive correlations between an overall budget increase and a budget increase in investment
facilitation (0.25) and a budget increase in investment generation (0.13) (Annex 2.B).

Figure 2.1. OECD IPAs’ budget and personnel allocation across core functions
Average of 32 OECD IPAs, based on 2016 figures
Image building Investment generation Facilitation, retention and aftercare Policy advocacy
100%
6% 7%
90%
80% 30%
34%
70%
60%
50%
40% 46%
42%
30%
20%
10% 18% 17%
0%
Budget Personnel
Source: OECD-IDB Survey of Investment Promotion Agencies (2017).
Figure 2.2. Resource allocation across the four core functions, by country
In % of budget, 2016
Image Building Investment Generation Investment Facilitation and Retention Policy Advocacy
AUS 50% 35% 5% 10%

SVN 40% 45% 5% 10%
DEU 35% 50% 15%
TUR 30% 30% 25% 15%
ISR 30% 40% 30%
GRC 30% 50% 10% 10%
POL 27% 35% 29% 9%
SVK 25% 40% 30% 5%
FRA 25% 50% 20% 5%
CHL 20% 59% 20% 1%
JPN 20% 60% 20%
HUN 20% 25% 45% 10%
CAN 20% 30% 30% 20%
GBR 15% 17% 65% 3%
ESP 15% 33% 48% 4%
NDL 15% 55% 25% 5%
IRL 15% 40% 40% 5%
ISL 15% 60% 20% 5%
AUT 14% 86%
KOR 11% 38% 19% 32%
LVA 10% 45% 40% 5%
SWE 10% 50% 40%
FIN 10% 55% 30% 5%
EST 10% 80% 10%
NOR 5% 10% 85%
NZL 5% 95%
MEX 3% 49% 48%
PRT 2% 45% 53%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Rather than budget size, the resource allocation pattern of an IPA seems to be tied to its
mission statement and strategy, as illustrated by the resource allocation patterns by country
(Figure 2.2.) For example, Germany Trade and Invest’s primary goal as an IPA is to
promote Germany as an attractive destination for investment and thus focuses its resources
on image building and investment generation. Conversely, Japan’s agency JETRO has been
strengthening its approach to foster reinvestment among existing MNEs located in Japan
and to provide support to projects with a strong R&D component, as part of a wider national
policy. As a result, JETRO is one of the agencies with the highest shares of resources
dedicated to investment facilitation and retention.
IPAs’ activities within core functions
As explained in the introduction of this chapter, each core function entails a number of
specific activities that jointly aim at fulfilling one of the four main objectives of an IPA:
build the image of the host country as an attractive investment destination, attract
investment projects, facilitate projects’ implementation and re-investments, and advocate
for investment-friendly policy reforms.
Regardless of their mission definition and resource focus, all IPAs perform at least one
activity in each core function. A number of activities can qualify as core IPA activities as
they are performed by 90% of IPAs or more, including having a website, organising site
visits and tracking available rankings that can help monitor a country’s investment climate
and attractiveness (Table 2.2).
Two core functions stand out as being those with the most activities carried out by IPAs:
almost all the image building and investment generation activities listed in the survey are
performed by more than 80% of OECD IPAs. Conversely, there are wide disparities across
investment facilitation and retention, and policy advocacy activities (see variation
coefficients in Annex Table 2.B.1).
Image building activities

Image building, although representing only 18% of the average OECD IPA’s total budget
and 17% of its total staff, appears as a key area for a large majority of IPAs. Out of nine
activities, seven are performed by at least 80% of agencies, including five that are carried
out by 90% or more.
All IPAs in the OECD market their countries through websites and publish promotional
materials such as brochures and investment guides (Figure 2.3). These two activities can thus
be considered as the fundamentals of image building. Having a website is a cost-efficient way
to offer centralised, available, up-to-date and key information for a large audience of potential
foreign investors. The absence of a website could potentially send the wrong signal to
investors about the investment climate on the ground. Investment guides and brochures are a
more traditional marketing tool. They provide the advantage to be more tailored in terms of
audience and contents and to remain cost-effective compared to TV and print advertising.
IPAs often publish their brochures and investment guides on their websites.
Over 90% of IPAs organise or participate in public relations (PR) events abroad, i.e. general
business fora, roadshows and fairs, and high-level missions involving their Prime Minister or
President. A smaller share of IPAs, although still a majority of them (81%), organises or
participates in domestic PR events. Media advertising such as TV, print or radio is less frequent
among OECD IPAs (61% for both international and domestic media), probably because they
are very costly activities and possibly because they are less targeted marketing tools for IPAs.

Table 2.2. Shares of IPAs that perform activities in each core function
Performed by Performed by Performed by

Performed by
51% to 80% of 25% to 50% of less than 25% of
more than 80% of IPAs
IPAs IPAs IPAs
• Website • International media • Other marketing
• Web services • Domestic media activities
Image
• Promotion materials (e.g.
building
brochures, investment guides)
(variation
coefficient: • Attending general events* abroad
17%) and at home
• Organising abroad / hosting high-
level** general missions
• Raw data analysis
• Market studies
• Handling inquiries / requests
Investment • Holding pro-active campaigns
generation • Organising abroad / hosting
(variation sector- or investor-specific
coefficient: missions
4%) • Initiation one-to-one meetings
with investors
• Attending sector-specific events*
abroad and at home
• Organising site visits • Airport pickups • Mitigation of • Training or
• Organising and attending working • Assistance in conflicts (e.g. educational
meetings (e.g. with Officials and/or obtaining financing between investors programmes for
potential suppliers) • Database of local and authorities) local staff
Investment • Providing information on local suppliers • Ombudsman
facilitation suppliers / clients • Matchmaking • Cluster
and • Assistance with administrative between investors programmes
retention procedures and local firms • Capacity-building
(variation • Undertaking structured trouble- support for local
coefficient: shooting with individual investors firms
35%) • Assistance in
recruiting local staff
• Assistance with
other business
matters
• Tracking of available rankings • Public awareness • Inputs on • Surveys of expats
(e.g. WEF) campaigns or Regulatory Impact (including national
• Meetings with the private sector or events Assessment employees of
with associations • Surveys of foreign • Surveys of Multinational
• Meetings with the Prime Minister / investors domestic firms Enterprises)
President or other agencies investing at home /
Policy abroad
advocacy • Participation in an
intergovernmental taskforce /
(variation
council on investment climate
coefficient:
reform
34%)
• Participation in periodic meetings
with the private sector
• Production of reports or position
papers
• Consultations with foreign offices /
Embassies / Consulates abroad
Notes: Activities in bold are considered as “core” activities, i.e. activities performed by 90% of IPAs or more.

Figure 2.3. Shares of OECD IPAs performing image building activities
% of surveyed IPAs
Website 100%
Promotion material (e.g. general brochures) 100%
Attending general events abroad 94%
High-level missions abroad 90%
Web services (e.g. GoogleAds, Social Media) 87%
Incoming, high-level missions 81%
Attending general events at home 81%
International media (e.g. TV, print) 61%
Domestic media (e.g. TV, print) 61%
Other marketing activities 19%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Investment generation activities

Investment generation appears to be at the heart of investment promotion: all the activities
falling under this function are carried out by 87% or more of OECD IPAs (Figure 2.4). As
the mission to locate investment projects in the host country is in the core mandate of
national IPAs, it can hardly be outsourced to other organisations. Image building and
investment facilitation and retention can be devolved to other organisations. The image
building function can be part of another organisation’s wider mandate to elaborate and
execute a branding strategy, targeting not only foreign investors but also international
workforce, tourists the diaspora and the general public. Investment facilitation can be de-
centralised at sub-national level, shared across several administrative bodies, or just limited
to a minimum level, especially if the process to establish a business has been streamlined.
All the investment generation activities listed in the survey are widely carried out by OECD
IPAs: intelligence gathering, sector-specific event organisation and attendance and direct
contact with investors. Almost all (97%) OECD IPAs initiate one-to-one meetings,
organise or participate in sector- or investor-specific high-level missions abroad, organise
or attend sector-specific events abroad such as road-shows, business fora and fairs, and
perform raw data analysis (e.g. analysis of press articles, proprietary data and company
data).
Overall, 90% of responding IPAs handle enquiries and requests from foreign investors,
meaning that 10% of IPAs surprisingly do not report doing so. Similarly, while almost all
IPAs initiate one-to-one meetings with foreign investors, only 87% undertake pro-active
emailing or phone campaigns.
All OECD IPAs elaborate prioritisation strategies in line with national development
objectives to target specific sectors and activities, based on which they pursue their
investment generation activities. This aspect of the investment generation function is
explored in Chapter 3 of this report.

Figure 2.4. Shares of OECD IPAs performing investment generation activities
In % of surveyed IPAs
One-to-one meetings initiated by the IPA 97%
Organising sector- or investor-specific missions abroad 97%
Attending sector-specific events abroad 97%
Attending sector-specific events at home 97%
Raw data analysis 97%
Inquiry/request handling 90%
Hosting sector- or investor-specific incoming missions 90%
Market studies 90%
Pro-active campaigns (email/phone) 87%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Investment facilitation and retention activities

Investment facilitation and retention, together with policy advocacy, is the most
heterogeneous of the four core functions across OECD IPAs, as there are wide disparities
from one national agency to another in the different activities covered under this function.
This can often be explained by the fact that in some countries, such as France, facilitation
and aftercare services are provided by local autonomous agencies such as local regional
development agencies. In these cases, national IPAs and local agencies in charge of
facilitation functions usually co-operate to ensure an end-to-end service to foreign investors
(see Chapter 5). Thus, the fact that a national IPA does not provide facilitation and aftercare
services is not so much an indication of the existence of such services in a country as it is
a characteristic of its overarching institutional setting for investment promotion and
facilitation.
The investment facilitation and retention function can be divided into: 1) facilitation
services to support new investors’ project implementation; and 2) aftercare or retention
services that help established investors develop and expand their activity, with a view to
trigger reinvestments (or at least maintain existing investments). Facilitation services
include information provision, visits and meetings in the host country, as well as assistance
with administrative procedures. Aftercare activities comprise solving problems
encountered by businesses, and helping them expand their activities, including by
anchoring them in the local economy. This categorisation somewhat simplifies the reality,
as some of these activities can sometimes overlap with both the facilitation and aftercare
sub-categories (e.g. an IPA can support an established business with immigration
procedures).
In practice, OECD IPAs conduct more investment facilitation than aftercare activities. The
average frequency of facilitation activities among surveyed agencies is 59%, while it is
36% for aftercare activities. IPAs that provide a high number of facilitation services often
provide a high number of aftercare services, but this is not a systematic trend (Table 2.3).
Among the eleven IPAs that provide at least ten different facilitation services, two
(Denmark and the Netherlands) provide less than the average number of aftercare

services (4.7). Conversely, some IPAs that provide a comparatively low number of
facilitation services offer a high number of aftercare services than the average, as is the
case of Innovation Norway. Overall, there is nonetheless some consistency between the
number of facilitation services and the number of aftercare services carried out by an IPA.
Table 2.3. Number of facilitation and aftercare activities performed by OECD IPAs
Facilitation Aftercare
TUR 14 10
HUN 13 8
LVA 12 8
DNK 11 2
EST 11 6
GRC 11 6
JPN 11 7
NLD 10 3
SVK 11 6
GBR 11 6
CZE 11 9
ISR 10 6
ESP 10 6
SWE 10 6
CHL 10 7
FIN 8 5
IRL 8 6
MEX 8 3
ISL 7 1
POL 7 3
PRT 7 5
SVN 7 4
FRA 6 2
KOR 6 3
AUS 5 1
CAN 5 2
NZL 5 2
NOR 5 5
DEU 3 3
CHE 1 0
Site visits (94%), information on local suppliers and customers (90%) and working
meetings with local stakeholders such as local officials or local suppliers (90%) are the top
three investment facilitation activities performed by OECD IPAs (Figure 2.5).

Figure 2.5. Shares of OECD IPAs performing investment facilitation activities
Site visits 94%
Information on local suppliers/customers 90%
Working meetings with local stakeholders 90%
Assistance to obtain visas and work permits 71%
Assistance in obtaining financing 71%
Airport pick-ups 58%
Assistance with business/tax registration 58%
Assistance to obtain land and construction approvals 58%
Assistance with legal issues 58%
Assistance with utilities 55%
Assistance to obtain licenses 52%
Assistance with other business matters 33%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
The most frequent administrative support services are assistance with visa and work
permits and with obtaining financing (71%). Other types of assistance services such as
support to obtain permits, business licenses, tax and business registration, are offered by
50% to 60% of IPAs. These results are lower than for other activities, which could be
explained by the fact that there are different approaches as regards administrative support
for foreign investors. In countries like Japan and Turkey, helping foreign investors navigate
through the administrative procedures to establish a business is part of the IPA’s mission.
Sometimes, it leads to the creation of a ‘one-stop-shop’ within the agency, as is the case in
Estonia, Israel, Korea and Latvia. In other countries like Canada, administrative support
services are carried out at local level by sub-national agencies. In New Zealand, the
procedures to establish a business have been simplified to make the process sufficiently
lean and easy, and it is considered unnecessary for the national IPA to offer strong support
services beside the provision of relevant information.
The most widely offered aftercare service is structured trouble-shooting with individual
investors (81%) (Figure 2.6). This is the preferred mode to solve problems and issues as
only 45% of surveyed IPAs engage in mitigation of conflicts and 26% offer an ombudsman
service. In some cases, countries choose to locate conflict and dispute resolution
mechanisms outside of their IPA. Locating such a service within the framework of
investment promotion can be an efficient way to leverage it to improve the overarching
policy framework through policy advocacy. Korea offers a good example of a well-
functioning ombudsman service, which was established in the larger context of investment
policy reform. The ombudsman not only handles specific investors’ grievances but also
contributes to enhancing the investment policy framework by providing inputs from his
observations and field experience (OECD, 2013).

Figure 2.6. Shares of OECD IPAs performing aftercare activities
Structured trouble-shooting with individual investors 81%
Database of local suppliers 65%
Matchmaking service between investors and local firms 65%
Cluster programs 48%
Mitigation of conflicts 45%
Capacity-building support for local firms 39%
Assistance in recruiting local staff 39%
Ombudsman intervention 26%
Training or educational programmes for local staff 19%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Business support services are another important component of aftercare services, an area
in which IPAs are comparatively less active. Matchmaking with local suppliers and
customers is the service that is the most often offered to foreign investors (65% of surveyed
IPAs). Cluster programmes, capacity-building for local firms, assistance in recruiting and
training programme for local staff are performed by a minority of OECD IPAs (48% or
less). While training local staff and companies is often carried out by other government
agencies, which can justify why IPAs do not do it often, it could be interesting to research
whether other business support services and linkage programmes can affect the levels of
FDI inflows and if IPAs should offer them more. There is a lack of research on the evidence
of the potential benefits of business support services to established foreign companies on
the levels of FDI inflows.
Policy advocacy activities

Although, on average, policy advocacy represents only 6% of IPAs’ total budgets and 7%
of their staff, seven activities out of twelve relating to policy advocacy are undertaken by
more than 80% of agencies. The extent to which policy advocacy actions are frequent
among OECD IPAs shows the importance of this function. Through their interactions with
foreign investors, IPAs are best placed to understand their challenges and expectations, and
can accordingly provide invaluable insights and feedback to enrich the policy-making
process and contribute to enhancing the overall investment climate.
Five out of the six most widespread policy advocacy activities are about investment climate
monitoring through consultations and feedback to the government (Figure 2.7). Almost all
IPAs (97%) provide informal feedback to the government and meet with the private sector
to gather their views on the national investment climate, and 90% of the surveyed IPAs
participate in such meetings on a regular basis. To a lesser extent, but still high, OECD
IPAs also consult with foreign offices, embassies and consulates to collect informal
feedback on the ground (84% of surveyed IPAs). Formal feedback through meetings with

the President, the Prime Minister or other agencies in charge of investment policy is also
very widespread (90% of surveyed IPAs), and 90% of IPAs participate in an
intergovernmental taskforce or council on investment climate reform.
Figure 2.7. Shares of OECD IPAs performing policy advocacy activities
Informal feedback to the government on the investment climate 97%

Meetings with the private sector or business associations 97%
Tracking of available rankings (e.g. WEF, Wold Bank) 94%
Participation in periodic meetings with the Private Sector 90%
Participation in an intergovernmental council on investment climate reforms 90%
Meetings with the President / Prime Minister or other agencies 90%
Production of reports or position papers 87%
Consultation with foreign offices, Embassies, Consulates 84%
Public awareness campaigns or events 74%
Surveys of foreign investors 65%
Inputs on Regulatory Impact Assessment 42%
Surveys of domestic firms investing at home/abroad 35%
Surveys of expats 19%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
OECD IPAs’ use of analytical tools to monitor the investment climate is less common than
meetings and consultations. The vast majority of IPAs track available rankings such as the
World Economic Forum (WEF) Global Competitiveness Index and the World Bank’s
Doing Business scores, but only 65% survey foreign investors, 42% provide inputs on
regulatory impacts assessment, 35% survey domestic firms and 19% survey expatriate
staff, which can be explained by the fact that these activities are resource-intensive and
time-consuming.
There are 87% of IPAs that produce policy advocacy reports or position papers to provide
inputs and influence policies that enhance the investment climate and foster reforms. Some
IPAs have a very structured process, as in the case of Business France where a dedicated
team of seven chief economists collects, from the aftercare and servicing teams, feedbacks
and views from investors. Solutions and improvements are identified and analysed through
impact assessments. An annual report with concrete suggestions is given to the government
and subsequently discussed with CEOs from the private sector before reforms are
envisaged and executed. According to Business France, over 200 propositions have been
implemented.
Interestingly, the IPA’s legal status seems to have a role in the decision to formally dedicate
staff to the policy advocacy function. 90% of governmental IPAs dedicate staff to policy
advocacy, while only 63% of autonomous public agencies do (Figure 2.8). On average,
governmental IPAs allocate 10% of their financial resources to policy advocacy, versus 4%
for autonomous agencies and 3% for joint public-private agencies.

Figure 2.8. Staff dedication to policy advocacy according to IPAs’ legal status
In % of IPAs
IPAs without dedicated staff IPAs with dedicated staff

100%
10%
90%
80% 37% 33%
70%
60%
50%
90%
40%
30% 63% 67%
20%
10%
0%
Autonomous Public Agency Governmental (Department or a Unit in a Ministry) Joint Public-Private and private Agency
Source: Authors based on OECD-IDB Survey of Investment Promotion Agencies (2017).
Categorising IPAs into strategic profiles to understand their activities
To understand better the different activity focus and choices of OECD IPAs, this section
classifies them into four groups according to their resource allocation patterns across the
four core functions. Examining the activity mix of IPAs in the light of these “strategic
profiles” provides insights on how they differ in the way they define their missions and
conduct their operations. To complement the activity mix analysis, this section looks into
country and agency average characteristics by profile and provides interesting insights.
IPA classification into four strategic profiles

The resource allocation pattern of an IPA reflects the way it conceives its mission and
conducts its activities. Such a classification can be used to define strategic profiles of IPAs.
In this section, the categorisation is based on personnel allocation under the assumption
that personnel break-down estimates are more reliable, as it is easier to identify who works
on what than to break down a budget in a way that does not correspond to accountings
systems. Following this logic, OECD IPAs have been classified into four groups of
strategic profiles, which are reflected on Figure 2.9 and Table 2.4:
1. Image builders: IPAs that allocate 40% or more of their human resources to image
building activities, and for which the second most important spending function is
at least ten points below image building. This category entails only two IPAs, or
6% of the total sample.
2. Generators: IPAs that allocate 40% or more of their resources to investment
generation, and for which the second most important spending function is at least
ten points below investment generation. This category groups the majority of the
sample: 41% of the total, i.e. 13 IPAs.
3. Facilitators: IPAs that allocate 40% or more of their resources to investment
facilitation, and for which the next main spending function is at least ten points
below investment facilitation. This category covers eight IPAs or 25% of the total
sample.
4. Balanced: IPAs that have a resource allocation pattern close to the average picture.
Most resources are equitably shared between investment generation and investment
facilitation, and image building and policy advocacy are allocated lower levels of
resources. Nine IPAs, or 28% of the total sample, are categorised as Balanced.

Figure 2.9. OECD IPA human resource allocation patterns
Average resource allocation across core functions in the four different categories, in % of employees (2016)
Policy advocacy Investment facilitation Investment generation Image building
100%
8% 6% 5%
11%
90%
18% 17%
80%
39%
70%
60% 30% 55%
50%
62%
40%
40%
30%
45% 22%
20%
10% 16%
15% 13%
0%
Image builders Generators Facilitators Balanced
Table 2.4. List of countries within IPA categories
Image builders Generators Facilitators Balanced
Austria
Chile
Estonia Canada
Australia
France Finland
Czech Republic*
Germany* Israel
Denmark
Greece Latvia
Slovenia Hungary
Iceland Mexico
Switzerland Ireland
Korea* Poland
Japan*
Netherlands Portugal
Norway
New Zealand Spain
United Kingdom
Slovak Republic Turkey
Sweden
United States
Note: (*) These countries are not taken into account in the average budget as their data is not available.
There is no single IPA characteristic that explains an IPA’s strategic profile, although a
couple of considerations stand out. 12 First, Facilitators have the highest amounts of
resources in absolute terms with an average investment promotion budget of 35 million
compared to a total average of USD 14 million, and 162 staff vs. a total average of 78
(Table 2.5). 13 They also have more offices (domestic and foreign) than the other categories.
Facilitators also have the highest average budget per head of all IPA profiles. Generators,
on the other hand, have a lower average budget, less staff and fewer sub-national and
foreign offices, which is likely the result of an institutional choice to rely on co-operation
with external offices at sub-national level, rather than having a network of domestic
affiliates.

Table 2.5. Key characteristics of IPAs by category
IPA strategic profile Image builders Generators Facilitators Balanced

Have an overall
Have the widest balanced approach
Advertise more in TV Focus more on facilitation and with a wider
Activity mix
and print media, carry investment generation aftercare service facilitation and
characteristics
out more pro-active activities than image portfolio, but do not aftercare offering than
(summary)
campaigns building neglect the other the average (yet
three core functions narrower than
Facilitators)
Average budget
5.3 7.7 34.9 9.0
(in million USD)
Average staff
N/A 46 162 65
(in number of employees)
Average budget / head
N/A 167.8 215.6 137.4
(in thousands USD)
Average number of
mandates of the overall 8 5 6 7
agency
Average number of
domestic offices doing 0 0 10 4
investment promotion
Average number of
foreign offices doing 7 11 27 26
investment promotion
Note: The data for Image builders should be considered with caution as the sample is very small (only 2 IPAs).
No overall pattern emerges from the economic characteristics of IPAs’ home countries
according to their strategic profiles (Figure 2.10), but a couple of highlights can be made.
Facilitators have a higher GDP per capita than the average (USD 43 079 vs. 37 921),
whereas Balanced IPAs have a lower GDP per capita (31 250). Generators, on the other
hand, have the highest FDI stock per capita (16 891).
In their 2000 edition of “Marketing a Country”, Wells and Wint suggest that the
promotional technique choice of an IPA to adopt an “image building” or an “investment
generation” focus follows a particular sequence of stages where image building precedes
investment generation. As a result, countries needing to position or re-position their image
as a result of a lack of awareness or a shift in the investor targeting strategy will adopt an
“image builder approach”. On the other hand, Facilitators and Balanced IPAs appear to
share a common objective to offer more facilitation and aftercare services while still
fulfilling the other three core functions. Their affiliated networks of offices suggest that it
is in their mandate to offer a wide portfolio of facilitation and aftercare services. Their main
difference is their budget size. The analysis thus suggests that Balanced IPAs are agencies
that pursue a similar strategy to Facilitators, but with fewer resources.

Figure 2.10. GDP per capita and FDI stock / capita of the different IPA categories
In USD thousands
GDP / capita FDI stock / capita
50
45 43.1
40.2
40 37.9
35 31.8
30
25
20 16.9
15.6
14.3
15 11.1
10
5
N/A
0
All Generators Facilitators* Balanced Image builders
Notes: (*) The Facilitators sample does not take Ireland into account, the country being an outlier; data for
Image builders is not displayed here as the category only comprises two countries; FDI stock / capita data is
2016, GDP / capita data is 2015.
Source: Authors based on OECD-IDB Survey of Investment Promotion Agencies (2017) and on OECD (2018),
Gross domestic product (GDP) (indicator).

Annex 2.A. Core functions’ definitions in the OECD-IDB IPA survey
• Image building comprises all general marketing activities (website and web
services, TV, print, and promotion materials such as brochures), and general public
relations events (road-shows and fora as well as general mission abroad and
incoming missions).
• Investment generation encompasses intelligence gathering (raw data analyses and
market studies), sector and investor-specific events (such as road-shows and
missions abroad and incoming missions) and direct targeting of investors (one-to-
one meetings, pro-active campaigns and inquiry and request handling).
• Investment facilitation and retention consists of assistance with project definition
(information on local suppliers and clients, working meetings, site visits and airport
pickups), assistance with administrative procedures (such as support to obtain visas,
tax registration, etc.) and with obtaining financing, aftercare services (structured
troubleshooting, ombudsman, intervention, and conflict mitigation), and specific
business support programmes (linkage programmes including local supplier
database, cluster programmes, and personnel recruitment programmes).
• Policy advocacy entails actions to monitor the investment climate (tracking of
rankings, meetings with the private sector, consultation with offices, Embassies and
Consulates abroad, investor and expat survey and inputs on Regulatory Impact
Assessment), formal feedback to government on how to improve the investment
climate (meetings, participation in taskforce or councils, and production of reports
or position papers), and informal feedback to the government on how to improve
the investment climate (participation in periodic meetings with the private sector
and public awareness campaigns or events).

Annex 2.B. Correlation analysis between the size of budget

and the share of core functions into total budget
Annex Table 2.B.1. Correlation analysis between the size of budget

and the share of core functions into total budget
Correlation index
Image building -0.0324
Investment generation 0.1281
Facilitation and aftercare 0.2480
Policy advocacy 0.0783
Note: Correlations were run excluding Japan, JETRO being an outlier due to its high budget.

Annex 2.C. Detailed activity mix analysis of OECD IPAs

according to their strategic profiles
The detailed analysis of the four categories of IPAs’ activity mixes offers insights on how
they structure their portfolio of products and services to foreign investors according to their
strategic profile (Table 2.C.1). This analysis compares the frequency of activities across
IPAs according to their strategic profile versus the average for the whole sample. It relies
on the number of activities performed but does not take into account the depth or extent to
which activities are performed; but it provides some interesting highlights.
Image builders appear to make activity trade-offs within the core functions, including in
image building. 14 They advertise more in international media (such as TV and print) and
use more web services, which explains how their image building resources are spent. They
focus less on general business home events and incoming high-level missions, however. In
the investment generation and investment facilitation functions, they overall conduct fewer
activities, with some exceptions such as pro-active campaigns and supplier databases. They
tend to use more analytical methodologies for policy advocacy compared to the total OECD
IPA population: reports and position papers, surveys and inputs to regulatory impact
assessments. Compared to the full sample’s average, Generators dedicate more resources
to investment generation and less to image building and aftercare programmes. These IPAs
perform less image building activities except having a website and producing promotion
materials such as brochures and investment guides. They do not perform less facilitation
services than the total average, but they clearly perform less aftercare services, particularly
business support programmes such as matchmaking with local suppliers, capacity-building
for local firms and local personnel training.
Facilitators’ focus on facilitation, which allows them to have a wider facilitation and
aftercare service portfolio than the average, does not come at the expense of the other three
core functions. The larger offering in administrative support services and business support
programmes appears very clearly. They provide more information, do more airport pickups
and provide more administrative assistance than the average OECD IPA. They are also the
IPAs with the wider aftercare programme. There are activities from the other three
functions, however, that they perform more than the average. For example, they use more
web services and domestic media such as TV and print for image building. They conduct
more pro-active investment generation campaigns and produce more policy advocacy
reports and position papers and conduct more public awareness campaign than the average.
Balanced IPAs cover the four core functions of investment promotion and offer more
facilitation and aftercare services than the average. To achieve this balance, they opt for
activity trade-offs within each function. For example, their aftercare support programmes
focus on capacity-building for local firms and on cluster programmes, but not on
matchmaking and local personnel programmes. As regards facilitation services, they
provide more information on local suppliers and customers, but they do less airport pickups
than the average. They use more international media for image building, which is a costly
choice, but they conduct less proactive reaching out campaigns and handle less

systematically foreign investors’ inquiries and requests. Like Facilitators, they conduct
more policy advocacy public awareness campaigns, but less foreign investors’ surveys.
Annex Table 2.C.1. Key differences among IPA categories in the performance of activities
List of activities that are more performed (by more than 10 points vs. average)
or less performed (by less than 10 points vs. average) within each category
Generators Facilitators Balanced Image builders*

Perform less of all image • Attend / organise more • Use more international media • Use more international media
building activities except general business events at (+14) (+39)
website and promotion home (+19) • Use more web services (+13)
Image materials such as brochures • Use more web services (+13) • Attend / organise less high-
building (-12 to -18) • Use more domestic media level incoming missions (-47)
(+17) • Attend / organise less
general business events at
home (-14)
Perform more of all • Conduct more pro-active • Conduct less proactive • Conduct more pro-active
investment generation campaigns (+13) campaigns (-25) campaigns (+13)
activities except attending • Do less inquiry / request • Do less inquiry / request
Investment sector-specific events at handling (-15) handling (-15)
generation home, but not by large • Do less market studies
(+1 to +10) (-24)
• Attend / organise less sector-
specific events at home (-24)
• Do more airport pickups • Provide more information on • Provide less information on
(+29) local suppliers / customers local suppliers (-20)
• Provide more information on (+13) • Provide less administrative
local suppliers / customers • Provide more administrative assistance overall
Investment (+13) assistance (visas and work (-20 to -71)
facilitation - • Provide more administrative permits, financing, business
services assistance (land and and tax registration and
construction permits, utilities, business licenses)
legal issues and business (+11 to +29)
licenses) • Do less airport pickups
(+11 to +20) (-21)
• Offer more ombudsman • Offer more business • Do more conflict mitigation • Offer more structured
services (+11) programmes (Matchmaking (+17) trouble-shooting services
• Offer less business support with local suppliers, capacity- • Do more capacity-building for (+19)
programmes (database and building for local firms, local firms (+24) • Have more local suppliers
matchmaking with local assistance to recruit local • Offer more cluster databases (+39)
Aftercare staff and local personnel
supplier, capacity-building for programmes (+30) • Offer less of all other
services training (+13 to +16)
local firms, cluster and local business support
personnel training) • Offer less ombudsman programmes
(-18 to -21) services (-13) (-12 to -39)
• Do less conflict mitigation (-
12)
• Provide less inputs on • Consult more with foreign • Conduct more public • Produce more reports /
regulatory impact offices or Embassies / awareness campaigns or position papers (+13)
assessment (-15) Consulates (+16) events (+13) • Conduct more surveys of
• Produce more reports / • Conduct less foreign investor foreign investors (+35) and
position papers (+13) surveys (-15) expats (+14)
• Conduct more public • Provide more inputs on
Policy awareness campaigns or regulatory impact
advocacy events (+13) assessment (+25)
• Conduct less public
awareness campaigns or
events (-41)
• Consult less with foreign
offices or Embassies /
Consulates (-17)
Notes: The figures in parentheses indicate the number of points above or below the average frequency of activity
performance among all surveyed IPAs (average frequency being expressed in % of total IPAs);
(*) the data for Image builders should be considered with caution as the sample is very small.

3. PRIORITISATION STRATEGIES FOR FDI ATTRACTION AND GENERATION │ 57
Chapter 3. Prioritisation strategies for FDI attraction and generation
As seen earlier, IPAs undertake a panoply of activities to attract, help establish, and retain
investors in the economy. Through prioritisation, i.e. choosing to focus on certain types of
sectors and countries, investment projects or individual investors – either because they have
a higher probability of being realised or because they may bring unique benefits to the host
economy – agencies can focus better their resources and tailor the services offered to investors
considered as the most important. As such, prioritisation is an essential element of the
toolkit of agencies faced with a potentially unlimited pool of investors to attract or service
and only limited resources. It allows for a strategic use of those resources, focusing on activities
where returns are the highest, for example in terms of the value or type of FDI, and can have
far-reaching consequences on what the IPA does and how, as well as on its impact (in terms of
investment assisted).
Prioritisation is a dominant practice among IPAs – as shown in this chapter, all agencies in
the OECD area prioritise specific sectors or countries, and three quarters target specific
investment projects. Over one third also prioritise individual investors, offering them
certain tailor-made services. Overall, the logic behind prioritisation is to provide
information and undertake specific activities to alleviate the existing information
asymmetries and help identify and overcome potential barriers to investment where such
barriers can be highest (existence of market failures) or can translate into highest positive
impact (existence of externalities). The existing research finds that countries obtain higher
levels of FDI in the sectors that their IPAs target. For example, Harding and Javorcik (2011)
focus on FDI flows from the United States and analyse the impact of targeting efforts of 97
agencies worldwide. They find that sector prioritisation translates into higher FDI inflows: a
dollar spent on investment promotion of a specific sector translates into USD 189 of FDI
inflows. 15
Prioritisation raises many methodological questions related to what to support (i.e. what
sectors, projects and investors), why (i.e. using what criteria) and how (i.e. offering
particular services or adopting a particular institutional or managerial approach) and poses
a challenge to most IPAs. In addition, the choice regarding an optimal strategy resides not
only in a decision on what to prioritise but also on what to exclude – either from pro-active
prioritisation efforts or even the agency’s re-active assistance to avoid a de facto crowding
out of its resources by non-priority investments. The agencies, hence, face a difficult task
of choosing what to support, on what basis, and how. While selectivity may allow for a
more strategic approach and focus in the agency’s work, it also involves risks. This
dilemma is linked to a wider policy debate on whether the government can and should be
“picking winners”, and if so, how to do this in an effective manner. While this broad
discussion lies outside of the scope of this report, it underlies the principles behind good
practices on investment promotion in the OECD Policy Framework for Investment,
outlined in Box 3.1. How to do this in practice is one of the key dilemmas – or an element
of the art – of prioritisation by IPAs, and involves an intricate process of decisions-making.

58 │ 3. PRIORITISATION STRATEGIES FOR FDI ATTRACTION AND GENERATION
Box 3.1. Prioritisation in investment promotion and facilitation

and the OECD Policy Framework for Investment
Prioritisation in investment promotion and facilitation activities is an important

consideration for investment policymakers and IPA professionals. As identified in the
OECD review of good practices on investment policy over ten years ago (OECD, 2006),
prioritisation of sectors, countries and activities is ubiquitous in investment promotion
and involves a number of challenges. They relate among others to the appropriate
understanding of location factors of firms as well as careful balancing between a strategic
vision and flexibility as well as non-discriminatory approach to investment policy-
making. As such, the OECD PFI asks several questions relating to prioritisation
strategies in investment promotion and facilitation (OECD, 2015):
• Are specific sectors, markets and investors targeted as part of the government’s
investment promotion strategy and on what basis the specific sectors, markets or
investors have been selected?
• How is flexibility ensured in the targeting strategy to respond and adapt to new
market demands and opportunities? This stresses the importance of regular
review of the strategy, basing the selection on market realities, and implementing
regular assessments.
• Has the government considered the impact of its targeting strategy on other
sectors, including sub-sectors that can potentially support the sectors targeted?
The aim is to consider potential intended and unintended consequences – of
positive and negative nature – on other domestic and foreign firms.
• In an attempt to broaden the scope of targeting from the sheer volume of FDI to
more “quality FDI”, are broader aspects considered in the targeting strategies,
such as the potential investors’ track record on RBC, including environmental
and social issues in its activities?
• The PFI highlights throughout the need for evaluation of investment policies,
including investment promotion, to ensure that their goals have been achieved in
an efficient manner, did not have any unintended consequences, and can improve
over time. The link between evaluation and prioritisation is critical to allow for
a feedback loop necessary to achieve intended results.
These questions provide a set of broad principles to be considered by governments. They
require, nevertheless, operationalisation to be implemented. This chapter provides insights
on how the management of the agencies address some of these questions in practice.
Meanwhile, despite the importance of prioritisation to the work of IPAs and its possible
effects, thus-far little is known about the methods, criteria and tools used in this field.
Previous mapping exercises have only considered whether prioritisation of sectors and
countries is done16, and have not provided further information on how this is done, or why.
The following chapter aims to fill this gap by providing an overview of prioritisation
strategies of IPAs and discussing what is prioritised and why – at the level of sectors,
countries, projects and individual investors, and outlining the different methods for
implementing prioritisation (e.g. institutional and managerial arrangements) and possible
implication for the agencies activities and budgets.

What is prioritised and why?
Overview of strategies
All OECD agencies prioritise some investments over others. Indeed, all the respondents to
the survey confirmed that they prioritise certain sectors and countries, three quarters
prioritise specific investment projects and over one third specific investors (Figure 3.1).
Prioritisation is, hence, a dominant practice in the world of surveyed IPAs. Besides pro-
actively prioritising certain investments, i.e. activities and contacts with firms initiated by
the agency, IPAs can also prioritise re-actively by excluding certain types of investment
from their assistance when approached by investors, whereby exclusion may mean different
things – for example, it may imply not assisting at all a particular investment or devoting
fewer resources or activities, which may vary from agency to agency. In other words,
agencies may prioritise by focusing on some investments and attending to others as time
and resources permit, and they can specifically exclude certain investments. Both
approaches aim to ensure that resources are spent where the return is highest and are not
crowded out by investment that is not considered a priority. Over one third (34%) of OECD
IPAs explicitly exclude certain countries and sectors and 42% specific investment projects.
Only one agency reports to exclude specific investors (see Annex Table 3.A.1.)
Figure 3.1. Overview of prioritisation strategies of IPAs in OECD countries
Priority sectors/countries
Priority projects - Yes Priority projects - No
Priority investors - Yes Priority investors - No
100%
25%
44%
56%
75%
In practice, agencies use a combination of these various prioritisation strategies (Table 3.1
provides an overview). For example, while some countries tend to prioritise only sectors or
countries – denoted as Basic Prioritisers (19% of all IPAs); others also prioritise
additionally specific investment projects (Project-Centred Prioritisers, 34% of the total) or
investors (Investor-Centred Prioritisers, 3%). 41% are Super-Prioritisers – i.e. they
prioritise sectors and countries as well as projects and investors. The importance of
prioritisation among IPAs highlights the relevance of considering further both the methods
of choosing the priorities and their implementation (as well as evaluation). Overall, a

project and investor-centric view on prioritisation means that, on top of choosing target
sectors and countries, IPAs need to identify specific investment projects or firms
considered to be “priority”, “high-quality” or “strategic” in nature and developing
actionable criteria in order to permit such prioritisation exercise.
Table 3.1. Typology of OECD IPAs based on prioritisation strategies
Panel A. Targeting Strategies
Does not Target Investors Target Investors
“Basic Prioritisers” “Investor-Centred

Prioritisers”
Chile
Czech Republic Canada
Does not Target Projects Estonia
Japan
Latvia
Slovak Republic
“Project-Centred “Super-Prioritisers”
Prioritisers” Australia
Austria Greece
Denmark Hungary
Iceland Israel
Ireland Finland
Target Projects
Korea France
Netherlands Mexico
New Zealand Norway
Poland Portugal
Switzerland Slovenia
Turkey Spain
United States Sweden
United Kingdom

Panel B. Exclusion Strategies
Does not Exclude Investors Excludes Investors
“Sector/Country Excluders “Investor-Centred

Only” Excluders”
Canada
Does not Exclude Projects Hungary
Iceland
Korea
Latvia
“Project-Centred Excluders” “Super-Excluders”

Australia*
Czech Republic*
Denmark*
Ireland
Netherlands*
Excludes Projects New Zealand
Norway
Poland*
Sweden
Switzerland
United Kingdom
United States*
Note: The following agencies do not exclude countries or sectors, projects or investors (i.e. are Non-Excluders)
and are hence not featured in the table above: Austria, Chile, Estonia, Finland, France, Germany, Greece, Israel,
Japan, Portugal, Slovak Republic, Slovenia, Spain, Turkey. (*) Countries marked with an asterisk do not exclude
any sectors or countries while excluding certain projects.
This approach is often mixed and interacts with what the agency decides to exclude. It is
not entirely clear what form the exclusion takes in practice and it appears that agencies may
be taking different approaches – for example, some may interpret exclusion as not
proactively prioritising a specific sector, country, project or investor. Others may refer to
outright exclusion from their assistance even when approached by the investor, such as
investments by state-owned enterprises, for example. Bearing this caveat in mind, we find
that the majority of IPAs (65%) do not exclude specific investment sector or countries while
project-based exclusion is the most frequent type of exclusion strategy among IPAs (39%
of the total or 67% of the excluding IPAs). Finally, about half of Super-Prioritisers are also
Project-Centred Excluders, hence, strengthening the effect of their pro-active prioritisation
strategy with a filtering strategy for reactive assistance.
As seen through the agencies’ prioritisation profiles, agencies differ in the degree to which
they either target or exclude investments and the overall depth of their prioritisation. The
three levels of prioritisation – of countries and sectors, investment projects, and investors
– that can involve both targeting and exclusion, are discussed in turn below, together with
criteria used for their selection.
Priority sectors and countries

In terms of sector and country mix selection, IPAs tend to adopt different strategies. While
the majority of IPAs uses a combination of priority sectors and countries – often tailoring

the specific business proposition to a given country-sector market – some focus on priority
sectors or countries only. For example, Select USA (the national IPA of the United States)
has 32 priority countries but no sectoral priorities. Overall, OECD IPAs tend to prioritise
similar types of sectors, in particular life sciences and healthcare services, information and
communications technology (ICT) and business support services, transport and logistics,
infrastructure, agri-business, bio-, green- and nanotechnologies, chemicals, engineering
and other advanced manufacturing and high-tech services. The degree of specificity and
the number of priority sectors differs from agency to agency, depending on the country’s
natural endowments, the process of setting priorities, and other factors. Overall, this choice
of priority sectors appears consistent with the type of criteria used for their selection
(Figure 3.2).
Most agencies aim to prioritise countries that can be a source of high technology (58% of
IPAs) as well as sectors where they have a strong domestic capacity (64%) and competitive
position vis-à-vis other countries (58%) or that help diversify the economy (58%).
Meanwhile, the existence of international investment agreements (IIAs) between a pair of
countries or a high-quality regulatory framework in general does not appear to play a role
in the selection of priority countries; nor does the impact on environment and climate
change or RBC-related considerations for targeting specific sectors by IPAs.
In terms of the type of sectors that are explicitly excluded by IPAs, the selection varies
across countries. For example, some agencies exclude real estate and distribution sectors
(e.g. Canada and Norway), tourism (e.g. Hungary and Canada), and agriculture and
fisheries (e.g. Iceland and Hungary), among others. Some countries exclude specific
countries with which the country does not sustain commercial relations. The criteria used
for excluding particular sectors or countries from IPA’s assistance also differ from those
used for targeting. For example, a perceived lack of need for the IPA’s intervention is the
most cited reason for an exclusion of a particular sector (32%), followed by national security
considerations (24%) and market maturity (12%). Exclusion of particular countries appear to
be based on less well-established criteria whereby undefined factors are most important
(21%), followed by reputational risks (11%) and poor political relations or a specific
regulation (5% each) (Figure 3.3). Notably, lack of a market failure to correct is not
mentioned by IPAs when deciding to exclude a sector or country. Interestingly, IPAs
mention much more frequently the lack of need for IPA’s intervention for the exclusion of
particular sectors (32%) than countries (5%). It may be that market saturation is less
systematically analysed by the origin country of an investor than by sector or that there
may be a need not to exclude particular countries from assistance for political reasons, even
when there is no clear need for IPA’s assistance.

Figure 3.2. Criteria used to prioritise specific sectors and countries in OECD countries
Panel A. Sectors
Strong Domestic Capacity 64%

Potential to Diversify the Economy 58%
Competitive Position vis-à-vis Other Countries 58%
Impact on Employment and/or Working Conditions 55%
Important/Strong Links to the Rest of the Economy 48%
Importance to Regional Development or Agglomeration Effects 48%
Strong Global Demand 48%
Green Investment 27%
Existence of Market Failure 21%
Impact on Evironment or Climate Change 21%
Other 6%
Investors Record on RBC in the Sector 0%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Panel B. Countries
Source of High Technology 58%

Strong Economic or Political Ties (in General) 42%
Presence of Investors from that Country Locally 39%
Large Market 39%
Dynamic Market Growth 37%
Free Trade Agreements (FTAs) 26%
Level of Development Per Capita GDP Income 26%
Good Reputation 24%
Distance 16%
Common Laguage 13%
Other 8%
International Investment Agreements (IIAs) 8%
High-Quality Regulatory Framework 8%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Figure 3.3. Criteria used for exclusion of countries and sectors by OECD IPAs
Panel A. Sectors Panel B. Countries
32% No Need for an Intervention of the IPA

Others 21%
24% National Security Considerations
12% Market Maturity Reputational Risk 11%
8% Little Links to Wider Economy

Poor Policital Relations 5%
8% Impact on Regional Development
4% Green Investment Regulation 5%

4% Impact on Environment/Climate Change
4% Market Maturity 5%
Impact on Employment/Working Conditions
4% Market Saturation No Need for IPA's Intervention 5%
0% Investors Record on RBC
0% No Market Failure
Market Saturation 0%
100% 80% 60% 40% 20% 0% 0% 20% 40% 60% 80% 100%
Priority projects
Besides prioritising certain countries or sectors, most OECD IPAs (78%) also prioritise
specific investment projects, referred to as “high-quality”, “strategic” or “priority” projects.
Most OECD IPAs (71%) have pre-established criteria that a project needs to satisfy in order
to qualify (Figure 3.4), particularly the impact on innovation, (83%), priority sector (83%),
job creation (79%) and the size of investment (75%), followed by the impact on exports,
sustainability and the image of the country. Meanwhile, the impact on taxes or wages does
appear to play an important role. Moreover, in many cases, agencies adopt specific
thresholds relating to these criteria in order to classify or score projects – for example,
supporting projects that create more than a pre-defined number of jobs, or particular types
of jobs (e.g. above a certain salary), or involve an investment above a certain size.17 Overall,
IPAs differ in the type of criteria used as well as the thresholds that they consider
meaningful. For example, in the area of jobs – a topic of common interest to IPAs as
reflected in Chapter 4 on monitoring and evaluation – some look at the total job count,
while others at specific types of jobs (e.g. R&D jobs) or jobs with a salary above a certain
level; and some agencies consider the number of jobs created at the time of investment,
while others 3-5 years after investment.

Figure 3.4. Criteria used for prioritisation of investment projects by OECD IPAs
Impact on Innovation 83%
Priority Sector 83%
Impact on Job Creation 79%
Size of Investment 75%
Impact on Exports 58%
Sustainability 54%
Impact on the Image of the Country 50%
Impact on Competition 46%
Impact on National Firms Production 46%
Impact on Regional Development 46%
Size of the Company 46%
Mode of Entry 42%
Egagement of the Company in FDI 38%
Investment Horizon 38%
Priority Country of Origin 38%
Nationality 33%
Type of Investor 33%
Impact on Wages 25%
Impact on Tax Revenue 21%
Others 14%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
In general, these criteria appear broadly consistent with the criteria used to target specific
countries or sectors, described earlier. For example, the interest in attracting investors from
countries that can be a source of high technology and supporting sectors with a positive
impact on employment corresponds to the top criteria used to prioritise projects, relating to
impact on innovation and job creation. Most IPAs also support projects that belong to a
priority sector (83%), making their prioritisation strategy consistent across different levels. It is
also worth mentioning that while criteria for prioritisation of projects appear well-
established, the criteria for exclusion of specific projects appear somewhat less well-
defined. Only 25% of OECD IPAs that exclude investment projects (i.e. 39% of all IPAs –
see start of the chapter) have pre-established criteria for exclusion. This may potentially be
linked to de facto infrequency of such cases. 18
Priority investors
The situation with priority investors appears somewhat more complex. Among the agencies
that target specific investors (47% of total), the majority also do not have clear criteria to
identify such clients; mostly relying on an ad hoc approach and judgment of their

management. 19 Sometimes specific types of investors are also excluded – for example,
state-owned firms or those that are in breach of the recognised legal commitments on
human rights or codes of conduct on RBC – albeit this is the case in only 6% of IPAs. For
example, Business Sweden follows the government’s Action Plan for Business and Human
Rights, and may decide not to assist certain investors in breach of the UN Guiding
Principles on Business and Human Rights, the principles of the UN Global Compact or the
OECD Guidelines for Multinational Enterprises in its activities (Government of Sweden,
2015). Most of the IPAs explain that they do not have pre-established criteria to exclude
particular investors. As in case of excluded investment projects, a natural question relates
to the relative share of projects that de facto are excluded.
Other elements
As illustrated above, prioritisation strategies can have different levels of depth achieved
through explicit targeting or exclusion of countries and sectors, projects and investors.
Within these priorities, additional factors can also play a role de facto. For example, nearly
two thirds of agencies target greenfield FDI (i.e. new investment projects) and only few
IPAs prioritise explicitly re-investments and expansions (e.g. United Kingdom, Portugal,
France and Hungary). Meanwhile, none of the respondents target non-equity forms of FDI
(e.g. contract manufacturing, franchising) or mergers and acquisitions (M&A). Still, as
revealed during the discussions during the OECD workshop on investment promotion and
facilitation, many agencies assist M&A deals in practice, even if not seeking such
investments actively, recognising the importance of acquisitions within total FDI inflows.
Only some M&A tend to be excluded, such as hostile takeovers of domestic targets.
Considering that only 45% of agencies mention the mode of entry as a factor relevant to
target specific projects, it appears that such criteria may be used in practice without being
always explicitly embedded in the agencies prioritisation criteria.
How does prioritisation work?
While all agencies prioritise activities in one way or another, so far little is known about
how this is done in practice. Who decides about priorities and how? How do agencies use
their resources to prioritise and what services do they offer? And, last but not least, how do
agencies ensure that prioritisation is effective and achieves the intended results?
How is it decided?
The survey used in this report reveals that the process of deciding on the agency’s priorities
is relatively complex and involves a wide range of actors and sources of information
(Figure 3.5). Besides the IPA’s internal decision-making, and in particular the management
views (identified by 71% of IPAs) and staff views (63%), the agencies rely on a decision
or a strategy set by the lead ministry (63%), market studies of different type (e.g. on the
country’s relative position vis-à-vis its competitors 55%) as well as insights from
international experts (61%) and international investors (61%). A series of different
stakeholders is also consulted in the process, including different ministries (53%); domestic
firms (39%); universities, technical institutes and research centres (37%); specialised
government bodies (34%); and local governments (29%), among others. It is worth noting
that various methods may be complementary and used interdependently by different
agencies. 20 In addition, some categories may not easily fall into one category only. 21 While
it appears that usually political considerations are translated into the IPAs’ prioritisation
strategies via a formal decision or a strategy set by a ministry or through the national

development plan, ad hoc political considerations (13%) can also play a role. The
identification of existing market failures is not an oft reported aspect (15%). Overall,
methods used for prioritisation are complex and involve an art of balancing and
compromise, whereby the views of the IPA’s experts and information gathered via market
studies and other sources are corroborated by consultations with, and inputs from, other
stakeholders.
Figure 3.5. Elements of a process of selecting country and sector priorities by OECD IPAs
Note: The size of the bubble corresponds to the importance of the factor, i.e. the frequency with which it has
been mentioned by the IPAs, as does the relative position vis-à-vis the central axis within each quadrant.
In terms of the formal decision-making, the lead ministry that oversees the agency plays a
key role in setting the IPA’s prioritisation strategy (Figure 3.6); 41% of respondents report
that the ministry approves the sectoral and country targets of the agency, and in case of
some agencies several ministries are involved (e.g. Australia, Israel, and Netherlands). The
IPA’s management is responsible for approval in 35% of cases and the board approves the
targets of about one quarter of the OECD agencies. In terms of the legal basis, the IPA’s
prioritisation strategy is often enshrined in the overall IPA’s strategy (63%) or the country’s
national development plan or other government-wide strategic document (50%). 22 For
example, in the case of Australia, investment priority sectors are set and agreed by federal
and state and territory ministers, and later embedded in the IPA’s strategy. In the case of
Ireland, the IPA’s strategy builds on the Irish Government’s Enterprise 2025 strategy
document outlining the country’s strategic objectives for economic development and
growth for 2015-2025. 23 Generally, the list of priority sectors is set every few years and nearly
half of the agencies review their sectoral priorities annually and one-third every 2-3 years.

Figure 3.6. Government bodies responsible for approval of the prioritisation strategy
A Ministry 41%
IPA's Management 34%
IPA's Board 25%
Several Ministries 9%
IPA's Staff 9%
A Specialised Government Agency 6%
Other 3%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
How is it implemented?
Besides the actual priorities and the process of their selection, agencies also differ in how
they execute their targeting activities, i.e. how they allocate staff and resources and what
services they offer as part of their prioritisation strategies. Some IPAs may choose to have
formal organisational structures – e.g. dedicated units – or dedicated staff for target sectors,
projects or clients; while others may rely on less formal approaches. Agencies may also
allocate differently their budget or perform a different total number or type of activities in
function of their prioritisation choices.
Table 3.2. Existence of a dedicated organisational unit for priority sectors/countries among
OECD IPAs, by country
Formal unit No formal unit

Australia Austria
Canada Finland
Chile Iceland
Czech Republic Latvia
Denmark Netherlands
Estonia New Zealand
France Norway
Hungary Poland
Ireland Portugal
Israel Slovak Republic
Japan Slovenia
Korea Spain
Mexico Switzerland
Sweden United States
Turkey
United Kingdom

The agencies differ in the formal approaches to prioritisation. For example, just over a half
of OECD IPAs have formal organisational units devoted to targeted sectors and/or
countries while other agencies rely on less formal approaches (Table 3.2). Some agencies
shape their entire organigrams or internal reporting structures in function of the targeted
sectors, hiring accordingly staff with the profile, network and capacities in the targeted
sectors.
Similarly, large disparities exist among agencies in the share of investment promotion staff
assigned to priority sectors and countries (Figure 3.7). Some agencies dedicate all or large
proportion of their employees to priority sectors and countries (e.g. Mexico, United
Kingdom, Sweden, Canada) while other agencies (e.g. France, Netherlands, Chile, Czech
Republic) only small shares. 24 On average, 49% of IPAs staff is dedicated to priority sectors
and 37% have prior experience in the targeted sectors. 25 The choice of priority sectors,
therefore, affects heavily the profile of the agencies’ staff; and could provide fertile ground
for exchanges among IPA professionals.
Figure 3.7. Share of staff assigned to priority sectors by the OECD IPAs
In %
100%
100%
90% 86% 84%
77%
80%
70% 65%
60%
60%
50% OECD average (49%)
50% 47%
41%
40% 33%
30%
30% 24%
20%
20% 14%
10% 7%
0%
Note: The average is calculated for the 15 IPAs shown in the graph that provided the detailed information.
Some IPAs targeting specific investors (47% of all OECD IPAs) also offer specific tailored
services to their priority clients (Figure 3.8). The most frequent type of service is dedicated
staff (83%), e.g. in the form of account managers following a client. The account manager
may at times be charged with follow-ups with the client to identify if any assistance is
needed and learn about the experience of an investor and any future plans. Priority investors
may also benefit from faster replies to enquires and requests (67%) as well as tailored policy
advocacy activities (42%), which sometimes encompass fast-track programmes offered to
priority investors. Some IPAs mention explicitly that they tend to contact the authorities or
facilitate the resolution of problems on behalf of their priority clients, and some vary the
level of access to the government facilitated by IPA in function of the importance of the
investor (e.g. United Kingdom).

Figure 3.8. Type of services provided to priority investors by OECD IPAs
100%
90% 83%
80%
67%
70%
60%
50% 42%
40% 33% 33%
30% 25% 25% 25% 25%
17%
20%
8%
10%
0%
Last but not least, prioritisation strategies can also influence agency budgets and activities.
As explained in Chapter 2 on IPA functions and activities, providing information on
targeted sectors as well as organising or attending sector-specific events at home and
abroad is one of key activities that IPAs undertake. The sector-specific events alone
account, on average, for one tenth of all activities undertaken by OECD IPAs.
Unsurprisingly, sector-level information is also featured prominently on the IPAs’
websites, often in the form of sector-specific brochures with key information on the sector
and provision of contacts to the agency’s sectoral experts.
In addition, agencies that prioritise specific projects or investors have on average higher
budgets than those that do not (Figure 3.9). This may suggest that such targeting may be
relatively budget-intensive to provide the specific assistance (e.g. because it requires highly
specialised staff or resources) or that larger IPAs tend to perform such prioritisation more
frequently. It is, hence, an open question whether the budget intensity of prioritisation
efforts may be capturing the relative quality of the services provided. In turn, there are no
immediately observable differences in the total number of activities undertaken by IPAs
that prioritise projects and investors and those that do not. This suggests that prioritisation
does not necessarily lead to a slimming-down of activities that the agency performs,
i.e. there is a certain set of services that need to be provided to clients. What it may change,
however, is the type of activity tailored to a particular client.

Figure 3.9. Budget and activities of OECD IPAs according to prioritisation
Panel A. Budget
Projects Investors
Average budget for investment promotion - 2016 Average budget for investment promotion 2016
25,000,000 25,000,000
20,000,000 20,000,000
15,000,000 15,000,000
10,000,000 10,000,000
5,000,000 5,000,000
- 0
Does not prioritise Prioritise Does not prioritise Prioritise
Panel B. Activities
Projects Investors
Average number of activities Average number of activities
50 50
45 45
40 40
35 35
30 30
25 25
20 20
15 15
10 10
5 5
0 0
Does not prioritise Prioritise Does not prioritise Prioritise
How is it evaluated?
Given the interest of surveyed IPAs in prioritising investments with particular impacts –
notably on innovation and employment, it is worth considering whether the criteria used to
prioritise projects correspond to the evaluation criteria used by the agencies, discussed in
more detail in Chapter 4. In other words, do the agencies monitor if the projects that they
target actually deliver the intended results? If that was the case, IPAs would have a
consistent toolkit, allowing them to target what they care about, and evaluate the impact of
its targeting effort, to then improve the targeting itself over time.
The first step towards evaluating the contribution of sector-, project- or client specific
activities is their monitoring, including the rates of convergence into realised investment.
Despite the importance of sector-specific activities and the prioritisation strategies more

generally, it appears that their execution is not monitored systematically by agencies. For
example, even though investment generation activities in general, including sector-specific
activities, are one of the most monitored parts of the IPAs’ business (see Chapter 4), the
shares of Customer Relationship Management (CRM)-tracking for individual sector-
specific activities still does not surpass 50% (Figure 3.10).
Figure 3.10. The share of sector-specific investment generation activities tracked in the CRM
of the OECD IPAs
In %
Tracked in CRM Not tracked in CRM

100%
90%
80%
53% 50%
70% 57% 59%
60%
50%
40%
30%
47% 50%
20% 43% 41%
10%
0%
Attend abroad Attend at home Organise abroad Organise at home
In addition, as discussed in Chapter 4, the criteria used for prioritisation and evaluation do
not appear to correspond perfectly, which may complicate the task of IPAs wishing to
verify whether their prioritisation efforts bring about the desired effects. While the number
of projects and total FDI are the most commonly tracked metrics, the more specific
indicators linked to the prioritisation criteria, e.g. on innovation, exports, regional
development or wages, are less common and still pose a challenge to IPAs (see Chapter 4
for a detailed discussion of monitoring and evaluation tools and strategies employed by
IPAs). Potentially as a result of the above, agencies may face challenges in controlling the
impact of the investment that they assist, and using it to improve their prioritisation efforts
over time. For example, as shown in Chapter 4, while 71% of the OECD IPAs take an
action when their target is not achieved, slightly over one half do so when an investor does
not deliver on a promise, revealing existing asymmetries.
Conclusion
Overall, tools and methods for targeting specific sectors, countries and clients by IPAs are
varied and relatively complex. They involve a careful act of balancing between
specialisation and flexibility, non-discrimination and a strategic allocation of resources,
confidentiality and transparency, posing a dilemma to the IPAs’ management and staff. The
decision-making process is also layered, involving in part internal decisions, in part market
studies and expert views, and in part the views of other stakeholders and political pressures
that the IPAs need to manage – and it appears that agencies rely to varying degrees on these
various tools. In addition, there are various ways of implementing prioritisation, whereby
some agencies rely on formal institutional solutions and hire numerous specialised staff

while others rely on less formal approaches. Some offer specialised services to targeted
investors (e.g. dedicated staff or faster replies). Lastly, it appears that the choice of the
agency’s priorities, and its specific operationalisation, may affect the agency’s organisation
and internal resource allocation and, ultimately, the kind of investment that the agency
assists and FDI that the country attracts. This chapter has provided a broad overview of the
different methods, tools and outcomes of the prioritisation efforts of OECD IPAs. It also
raises several questions that can be addressed in future analysis, notably pertaining to the
methods used for selection of priority sectors and the impact that may have on the choice
of the targets, operationalisation of strategies for pro-active and reactive prioritisation and
exclusion, specific tools used for effective prioritisation by agencies and the impact of these
strategies on IPAs’ performance (see the last chapter of this report The way forward).

Annex 3.A. Overview of prioritisation and exclusion strategies

by OECD IPAs
Annex Table 3.A.1. Overview of prioritisation strategies by IPAs in OECD countries
# Country Priority sectors Priority projects Priority investors

1 Australia Yes Yes Yes
2 Austria Yes Yes No
3 Canada Yes No Yes
4 Chile Yes No No
5 Czech Republic Yes No No
6 Denmark Yes Yes No
7 Estonia Yes No No
8 Finland Yes Yes Yes
9 France Yes Yes Yes
10 Germany Yes No No
11 Greece Yes Yes Yes
12 Hungary Yes Yes Yes
13 Iceland Yes Yes No
14 Ireland Yes Yes No
15 Israel Yes Yes Yes
16 Japan Yes No No
17 Korea Yes Yes No
18 Latvia Yes No No
19 Mexico Yes Yes Yes
20 Netherlands Yes Yes No
21 New Zealand Yes Yes No
22 Norway Yes Yes Yes
23 Poland Yes Yes No
24 Portugal Yes Yes Yes
25 Slovak Republic Yes No No
26 Slovenia Yes Yes Yes
27 Spain Yes Yes Yes
28 Sweden Yes Yes Yes
29 Switzerland Yes Yes No
30 Turkey Yes Yes No
31 United Kingdom Yes Yes Yes
32 United States Yes Yes No
Source: OECD-IDB survey of Investment Promotion Agencies (2017)

Annex Table 3.A.2. Overview of exclusion strategies by IPAs in OECD countries
# Country Exclude Sectors/Countries Exclude Projects Exclude Investors

1 Australia No Yes No
2 Austria No No No
3 Canada Yes No No
4 Chile No No No
5 Czech Republic No Yes No
6 Denmark No Yes No
7 Estonia No No No
8 Finland No No No
9 France No No No
10 Germany No No No
11 Greece No No No
12 Hungary Yes No No
13 Iceland Yes No No
14 Ireland Yes Yes No
15 Israel No No No
16 Japan No No No
17 Korea Yes No No
18 Latvia Yes No No
19 Mexico No No No
20 Netherlands No Yes No
21 New Zealand Yes Yes No
22 Norway Yes Yes No
23 Poland No Yes No
24 Portugal No No No
25 Slovak Republic No No No
26 Slovenia No No No
27 Spain No No No
28 Sweden Yes Yes No
29 Switzerland Yes Yes No
30 Turkey No No No
31 United Kingdom Yes Yes No
32 United States No Yes No
Source: OECD-IDB survey of Investment Promotion Agencies (2017)

4. MONITORING AND EVALUATION │ 77
Chapter 4. Monitoring and evaluation
Ensuring the efficiency of public action is a constant preoccupation of governments,

and investment promotion is no exception. IPAs are expected to provide evidence and
documented reports of their results and performance in attracting FDI and generating
related economic benefits. According to some OECD IPAs, pressure to demonstrate
success has been growing in the past few years, as a result of tighter budgets and
increasing transparency expectations over public spending.
The purpose of monitoring and evaluating IPAs is two-fold. The first aim is to measure
the outcomes of an IPA’s action, that is to say assess its impact on the economy and
whether the underlying policy objectives for investment promotion are met, and the
second is to measure the outputs of an IPA, which means to assess the efficiency of an
IPA in conducting its activities. The first aim is the most challenging. Data on annual
FDI inflows and number of jobs created are easily accessible, but it is a complex task
to demonstrate economic benefits such as green growth or skill improvement as a direct
result of an IPA’s actions; this requires relevant and reliable data that are usually
unavailable. The second aim is more prosaic as it is common to most organisations, and
it essentially requires adequate management tools and processes. Key performance
indicators (KPIs) used to assess IPAs according to the two aims of monitoring and
evaluation can be subsequently classified into outcome indicators (relating to the first
aim) and output indicators (relating to the second).
Monitoring and evaluating are two complementary actions both relating to performance
assessment and improvement. Monitoring consists in verifying that an ongoing activity
or project’s status is in line with its schedule and intermediary objectives, and proposing
corrective measures if it is not. Evaluation, on the other hand, is an exercise consisting
in rating an organisation, an activity or a project’s performance against a set of criteria
within a time frame. When performance is not in line with expectations, a feedback
process is launched to remedy underlying causes.
This chapter shows that although OECD IPAs adopt different approaches to monitoring
and evaluation, there are some overall trends and common practices. Close to two thirds
of IPAs have a dedicated evaluation unit that reports to the IPA’s head, board or
management, and most use customer relationship management (CRM) systems to track
and monitor their activities. Overall, they rely more on qualitative evaluation
methodologies such as benchmarking, surveys and consultations than on quantitative
methodologies such as econometric studies. Among OECD IPAs, the most widely used
output indicators relate to investment projects, investing firms, assisted firms and client
satisfaction, and the most widely used outcome indicators relate to jobs and FDI
inflows. Conversely, only a minority of agencies calculate overall performance ratios.
This chapter starts by exploring the organisational setting, reporting and feedback
processes and data tracking tools of the investment promotion monitoring and
evaluation. It then describes the methodologies and indicators IPAs employ to
effectively assess and evaluate their actions and rate their performance.

78 │ 4. MONITORING AND EVALUATION
Organisational setting and reporting, data tracking tools and feedback processes
Investment promotion monitoring and evaluation relies on several organisational

dimensions: how is the evaluation work organised? What tools are available to track
and process the relevant data? How are results used to improve performance?
Answering these questions allows a better understanding of how OECD IPAs organise
the assessment and communication of their own performance.
Organisational setting and reporting processes

As discussed in Chapter 1, almost all IPAs (97%) work with target objectives, and a
large majority produce financial (88%) and activity reports (88%) that are submitted to
the board or to the government. The documents are most often published annually
(between 53% and 69% of cases), sometimes quarterly (19% to 28% of cases) and in
rare instances bi-annually or less than yearly (Figure 4.1). Close to half (47%) of IPAs
publicly share their activity reports and 53% publicly share their financial reports.
Whether these publicly available reports, which can be consulted on IPAs’ websites,
enable a true performance assessment of IPAs remains to be seen.
Figure 4.1. Frequency of objective-setting and report documents
Quarterly Every 6 months Annually Less than annually N/A
Target objectives 19% 6% 66% 3% 6%
Activity report 28% 9% 53% 9%
Financial report 22% 69% 9%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Close to two thirds of OECD IPAs (63%) also have a dedicated internal evaluation unit
(Figure 4.2). In most cases these evaluation units consist of one or two dedicated staff, with
the notable exceptions of IPAs in the United Kingdom (12 staff), Ireland (7 staff) and
Mexico (4 staff). In all surveyed IPAs, 50% or more of the dedicated evaluation staff holds
a Masters or a Doctorate (which is higher than the 40% average for all staff as mentioned
in Chapter 1). 58% of evaluation units report directly to the IPA’s head or to its board, and
another 37% more broadly report to the IPA’s management. Contrarily to activity reports
and financial reports, evaluation work from dedicated units does not appear to be directly
reported to the government.

Figure 4.2. OECD IPAs’ evaluation organisational setting
A. % of IPAs with a dedicated evaluation unit B. Reporting authority of dedicated evaluation units*
% Yes % No Head or board of the IPA IPA's management Other**
5%
37%
37%
58%
63%
Notes: (*) Among the 20 IPAs that have a dedicated evaluation unit and specified its nature; (**) Ministerial
department the IPA is part of.
Data tracking and processing tool: CRM

Customer relationship management (CRM) systems are very popular among sales and
marketing functions of public and private companies. This tool supports organisations in
managing their relationships with prospects and customers and in collecting and analysing
related data. These systems are also very useful to monitor and evaluate performance thanks
to their data collection, processing and analysis functions. IPAs can use CRM systems to
track their interactions with investors and ensure an end-to-end monitoring of each
promising relationship.
According to the OECD-IDB survey, 94% of surveyed IPAs use CRM software. The main
application of the CRM tool is by far the identification of the source of each project lead
(86%). IPAs thus widely use CRM systems to monitor the effectiveness of their investment
project channels and identify the most successful ones. To a lesser extent, IPAs use their
CRM tool to track response times (52%) and to trigger follow-up actions in case the
organisation has been slow to respond to an enquiry or a request (41%) (Figure 4.3). Only
a minority of IPAs, however, use their CRM systems to calculate the total costs of
successful projects (17%) or of lost and suspended projects (7%).

Figure 4.3. Possibilities offered by CRM systems
% of IPAs that have CRM systems
Identifying the Source of Each Lead/Opportunity 86%
Recording/Tracking Response Times to Each Inquiry/Request 52%
Sending Automatic Reminders to Officials If a Project Did Not Mover After

41%
Some Pre-defined Time
Computing the Total Costs of Each Established Investment Project and Their
17%
Individual Components
Computing the Total Costs of Each Non-Established Investment Project and

7%
Their Individual Components
Other 10%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Note: “Other” category includes “details on investment interest” and “tracking activities between an IPA and
an investor”.
Investment facilitation and investment generation are the two core functions that IPAs track
and monitor the most via their CRM systems. Among IPAs that have CRM tools, 60% of
investment facilitation and retention and 57% of investment generation activities are
tracked on average, while respectively 25% and 18% of image building and policy
advocacy activities are tracked. These results reflect that investment generation and
investment facilitation are the functions that involve most direct interactions with investors.
IPA services to support project definition and implementation, such as working meetings,
site visits, administrative assistance and problem-solving, are the most tracked activities,
along with request handling and direct marketing campaigns (Figure 4.4). Conversely, IPAs
hardly use their CRM tools to monitor analytical work, consultations and meetings for
policy advocacy purposes and media campaigns.

Figure 4.4. CRM-tracking of IPAs’ activities
In % of IPAs having a CRM system and performing the activity*
Ombudsman intervention 100%

One-to-one meetings initiated by the IPA 89%
Site visits 88%
Working meetings with local stakeholders 84%
Inquiry/request handling 80%
Assistance with business/tax registration 73%
Structured trouble-shooting with individual investors 73%
Information on local suppliers/customers 72%
Assistance to obtain licenses 71%
Mitigation of conflicts 67%
Assistance to obtain land and construction approvals 67%
Pro-active campaigns (email/phone) 67%
Assistance to obtain visas and work permits 63%
Assistance with legal issues 63%
Assistance with utilities 57%
Hosting sector- or investor-specific incoming missions 56%
Assistance with other business matters 56%
Assistance in obtaining financing 53%
Organising sector- or investor-specific missions abroad 52%
Cluster programs 46%
Attending general events at home 45%
Attending general events abroad 44%
Capacity-building support for local firms 42%
Database of local suppliers 41%
High-level missions abroad 38%
Incoming, high-level missions 30%
Raw data analysis 30%
Assistance in recruiting local staff 27%
Meetings with the private sector or business associations 26%
Website 25%
Surveys of domestic firms investing at home/abroad 22%
Surveys of foreign investors 21%
Participation in periodic meetings with the Private Sector 20%
Promotion material (e.g. general brochures) 18%
Surveys of expats 17%
Consultation with foreign offices, Embassies, Consulates 17%
Airport pick-ups 17%
Market studies 16%
Web services (e.g. GoogleAds, Social Media) 16%
Production of reports or position papers 12%
Meetings with the President / Prime Minister or other agencies 12%
Informal Feedback to the Government on Investment Climate 11%
Public awareness campaigns or events 10%
Inputs on Regulatory Impact Assessment (RIA) 8%
Participation in an intergovernmental council on investment climate reforms 8%
Domestic media (e.g. TV, print) 6%
International media (e.g. TV, print) 6%
Tracking of available rankings (e.g. WEF, World Bank) 0%
Training or educational programmes for local staff 0%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Note: (*) Percentages are calculated on the basis of IPAs that have a CRM system and perform a specific
activity. For example, among IPAs that have a CRM system and have established an ombudsman service, 100%
track this activity in their CRM system.

Feedback process
Generating and using feedback as a result of evaluation and monitoring is a critical process
without which a monitoring and evaluation function is incomplete. A feedback process
informs the management about identified problems and proposes corrective actions such as
readjusting strategic objectives, re-allocating resources or increasing specific capabilities.
Feedback processes also increase the overall institutional knowledge by formalising
information about performance and the underlying causes of successes and failures, thus
enabling learning curves. According to the OECD-IDB survey, a majority of IPAs use
feedback processes and take action not only when their own targets are not reached, but
also when they suspect irresponsible or problematic behaviours by investors.
The majority of OECD IPAs (71%) take action if their target objectives are not met. By
deduction, 29% of IPAs do not take action if they miss their objectives, which can seem
surprising. Corrective actions vary across IPAs that do take measures and according to the
situation. In some instances, IPAs revise their strategy; in others, they review their internal
operations and establish an improvement plan; they sometimes have to answer to their
board or to the government for not meeting their targets. There can also be financial
consequences: performance-tied bonuses can be affected, and sometimes governments can
decide to reduce budgets.
IPAs’ feedback processes are also designed to respond to problems originating from
investors’ behaviour (Figure 4.5): 72% of IPAs take action when investors are found in
breach with legislation; 57% when investors do not comply with RBC principles; and
another 53% when investors do not deliver on the terms and conditions of contracts and
agreements in the framework of their investment project. In the first two cases, IPAs or
relevant bodies usually undertake legal procedures and revoke their support to the
incriminated investor. When investors do not deliver on the terms and agreements of their
investment project, the most frequent consequences are grants and incentives withdrawal
(if any), and consultations or reviews with the investor.
Figure 4.5. Events triggering corrective action

In % of IPAs
An Assisted Investor is Found in Breach of National Legislation (e.g. Tax,

72%
Corruption, Environment, Labour, etc.)
Investor Has Been Found in Breach of Internationally Recognised

Responsible Business Conduct (RBC) Principles and Standards (e.g. 57%
Subject to an NCP Case)
An Assisted Investor Does not Deliver on the Promise (e.g., Number of Jobs
53%
Created, etc.) or the Contract Conditions
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Methodologies and indicators
To assess their performance and impact in attracting inward FDI, IPAs can rely on an array
of methodologies and indicators. While methodologies provide a comprehensive
framework to analyse specific IPA activities or aspects of the investment promotion (from
assisted investor satisfaction to economic impact assessment), indicators provide a measure
of a specific achievement and allow for comparison with target objectives. Depending on
the assessed activity or project, methodologies can be either quantitative or qualitative, rely
on internal or on external data, and even on external or internal assessment. Most of the
time, IPAs rely on different combinations of methodologies and indicators.
Evaluation methodologies
Overall, OECD IPAs appear to favour qualitative evaluation methodologies over
quantitative ones. The most widespread methodologies employed are benchmark
comparisons (78% of IPAs), client feedback and survey (75%), consultations with
stakeholders (69%) and, to a lesser extent, case studies (56) (Figure 4.6). On the other hand,
quantitative methodologies are less used, with only 38% of surveyed IPAs performing
quality-control assessments, 22% cost-benefit analyses and 16% econometric assessments.
Quality-control assessments could have been expected to be more widespread as almost all
IPAs use CRM tools.
Figure 4.6. IPAs’ evaluation methodologies
In % of respondents
IPAs without dedicated unit

IPAs with dedicated unit
Overall average
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
69%
Benchmarking (e.g. comparisons with other IPAs) 84%
78%
62%
Client feedback and surveys 84%
75%
54%
Consultations with stakeholders 79%
69%
46%
Case studies 63%
56%
Quality-control assessment (e.g. time to answer inquiries, quality of 31%
42%
responses, etc.) 38%
15%
Non-client feedback and surveys 42%
31%
23%
Cost-benefit analysis of assisted investment projects 21%
22%
15%
Econometric assessment 16%
16%
Other 16%
9%

IPAs that have a dedicated monitoring and evaluation unit tend to use more frequently the
different assessment methodologies than those that have no such unit. IPAs with dedicated
evaluation units perform significantly more non-client feedback collection and surveys,
consultations with stakeholders and client feedback and surveys. They conduct no more
cost-benefit analyses and econometric assessments than their counterparts without a
dedicated unit, however.
Behind the average figures, each methodology can be implemented in different ways.
Benchmarking can be conducted either on an ad hoc basis (for example in Iceland and
Canada), through informal discussions or formal peer exchanges during seminars and
conferences, or as a periodic exercise involving intelligence gathering and data analysis (as
in Australia). Benchmarks can cover IPAs’ operations to identify best practices in
promoting and attracting investment into the home economy, or they can consist in
gathering economic and policy indicators to compare investment climates. Similarly, client
feedback and surveys can be more or less formal, frequent and standardised. Some IPAs
such as JETRO systematically collect investors’ feedback after a project is implemented,
some like Select USA run annual surveys and others like Austrade rely on ad hoc exchanges
and meetings. The same goes for consultations with stakeholders, although formal meetings
and consultations are much more widespread than informal ones.
These survey results on evaluation methodologies highlight one of the problems often
reported by IPAs: the lack of reliable, consistent and quantitative information to
comprehensively assess the relevance and performance of their actions. As useful as they
are, competitor benchmarks and investors’ surveys alone may not be the most adequate
tools for regular and systematic evaluation. Thorough benchmarking requires access to
reliable and comparable information that is often not public, if at all available. Such
exercises are therefore often done with partial information and can provide incomplete or
ambiguous results. Investor surveys also have their limitations. Samples can easily be
biased, especially if IPAs rely on investors who already invested in their economy.
Investors may also not be willing to participate on a regular basis in such surveys.
Qualitative tools should thus ideally be complemented by more quantitative and systematic
approaches, whenever possible.
Monitoring and evaluation indicators

Monitoring and evaluation indicators – often referred to as key performance indicators
(KPIs) – are metrics that measure organisational performance and success in reaching target
objectives. They can measure performance at the level of an entire organisation, a unit, an
activity or a project. To be relevant, they should be consistent with the target objectives of
the organisation, unit, activity or project they relate to.
IPAs’ performance indicators can be divided into two sets following their two broad
monitoring and evaluation objectives. The first set of indicators, named output indicators,
focuses on the agency itself, its inputs (such as number of campaigns launched), processes
(such as time to respond) and results (such as number of assisted firms) and provides
effectiveness and efficiency measures. The second category, named outcome indicators,
focuses on the underlying policy objectives of investment promotion and measures the
benefits of IPA actions in the economy.
OECD IPAs rely on 9.8 different indicators on average including 4.9 output indicators
(such as number of investment projects, number of firms investing and time to respond to
enquiries) and 4.8 outcome indicators (such as size of FDI and number of jobs created), but
these figures hide wide disparities across IPAs (Figure 4.7). Five IPAs (from Latvia,

Germany, Hungary, Turkey and Slovak Republic) use more than 15 different monitoring
and evaluation indicators, while at the other end of the spectrum IPAs of Chile, Austria,
Korea, Poland and Norway use fewer than five different indicators. The existence of a
dedicated evaluation unit does not have an impact on the number of indicators used by
IPAs: the average number of indicators used by IPAs with a dedicated unit (9.8) is the same
as for IPAs without one.
Figure 4.7. Number of indicators used by IPAs
Outcome indicators Output indicators
25
20
14 11
15
11 12
12 3
10
7 6
6 6 5 4 2
5 4 2 4.8
7 5 5 5 4 2
5 10 10 2
9 8 4
7 6 6 6 6 7 6 6 3 3 2
5 5 5 5 4 4 5 4 4 5 4 4 2 4.9
3 2 2 2 2 3 1
0 1 1
According to the OECD-IDB survey, output indicators that OECD IPAs use the most relate
to investment projects (91%), investing firms (66%), client satisfaction (66%) and number
of assisted firms (63%) (Figure 4.8). Apart from the number of assisted firms, which is
directly tracked in CRM systems most of the time, specific approaches to build these
indicators can vary considerably. For example, IPAs can measure volume of investments
(such as the number of projects), value (such as the total amount of investment in USD or
in local currency), or both. The number of projects can take all facilitated projects into
account including reinvestments or focus on new projects only. They can also measure
specific projects according to priority criteria, such as greenfield investments. Some
indicators measure project leads or number of launched projects, while others consider only
those that are effectively implemented. A majority of IPAs rely on surveys and rating
systems to measure client satisfaction, but these can vary considerably across IPAs.

Figure 4.8. Output indicators used by IPAs
In % of surveyed IPA
% tracked in CRM % tracked but not through CRM Split not available
Investment Projects 91%
Investing Firms 66%
Client Satisfaction 66%
Number of Assisted Firms 47% 16%
Time to Respond 28% 22%
Replies to Requests/Inquiries Subject to Assesment 16% 28%
Costs 9% 28%
Time to Organize Visits 13% 16%
Market Studies Subject to Peer Review 3% 22%
Return on Investment (ROI) on IPA's Activities 17%
Total Cost per Job 7%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Output indicators relating to internal process performance that measure IPAs’ time to
respond (50%) and quality and accuracy of responses to inquiries and requests (42%) are
relatively widespread. To a lesser extent, IPAs also monitor their time to organise visits
(26%). These three productivity indicators are monitored via CRM systems half of the time.
Although just over one third of IPAs use indicators relating to costs (36%), only 14%
calculate their activities’ return on investment and 7% measure the total cost per job
created.
Among outcome indicators, job- and FDI-related ones are by far the most favoured (by
respectively 88% and 81% of IPAs). When comparing the shares of outcome indicator
usage with the importance of prioritisation criteria discussed in Chapter 3 of this report, the
gap between relatively simple FDI metrics (jobs and total FDI indicators), on the one hand,
and all other indicators, on the other hand, appears disproportionately wide (Figure 4.9).
For example, innovation and R&D related indicators are used by only 53% of IPAs despite
their prevalence in many agencies’ mandates (discussed in Chapter 1) and their importance
in prioritisation efforts (in Chapter 3). The same goes for the other indicators relating to
exports, wages, regional development, sustainability and RBC (or responsible investment
in general) that are relatively less frequently used by IPAs.

Figure 4.9. Outcome indicators used by IPAs
Jobs 88%
Total FDI 81%
Innovation / R&D 53%
Regional Development 41%
Exports 34%
Wages 28%
Country's Image 28%
Business Climate Reforms 28%
Green Investment 23%
Capacity of Domestic Firms 22%
Sustainability 19%
Competition 19%
Tax Revenue 16%
Investors Record on RBC 6%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
This is most visible when comparing the criteria mentioned by agencies as important in
their prioritisation efforts with the evaluation indicators outlined in this section. As argued
in Chapter 3, one could expect IPAs to monitor and evaluate outcomes consistently with
their prioritisation criteria. As shown in Figure 4.10, however, these two sets do not
necessarily correspond, except for core FDI indicators. For example, while the majority of
IPAs target innovation, only 60% of agencies prioritising innovation monitor innovation
and R&D-related activities. Similarly, only half of agencies targeting exports monitor
export performance of the assisted firms or related proxies and only one fifth of agencies
that prioritise sustainable investment projects gather any information in this area.
Meanwhile, 93% and 83% of IPAs that report to consider the size of investment look at the
total number of projects and total FDI, respectively, which may be considered as proxies;
similarly, 84% of agencies that report to prioritise job creation do indeed monitor the
number of jobs created (while only 26% that claim to prioritise wages gather information
on this aspect).
The observed gaps between economic prioritisation criteria and economic impact indicators
can be explained by data availability, as IPAs consistently report that one of their main
challenges for impact assessment is the lack of reliable and relevant statistics. A wide range
of national statistics on employment and FDI are usually readily available whereas statistics
on innovation and R&D can be scarcer and potentially more difficult to link with an IPA’s
actions to attract FDI. The same reasoning can be applied to indicators for regional
development (used by 42% of IPAs), which require developing statistics at sub-national
level, exports (35%) and other economic benefits from FDI such as green investment and
capacity of domestic firms. There could be room to further develop national and local data
that would enable IPAs and policy-makers to better monitor and evaluate the economic
benefits of investment promotion.

Figure 4.10. Correspondence between project prioritisation and evaluation criteria used by
OECD IPAs
100%
94%
90% 84% 83%
80%
70%
60%
60%
50%
50%
40%
30% 26%
23%
20%
10%
0%
Investment Projects Jobs Total FDI Innovation / R&D Exports Wages Sustainability
Note: The figure shows the share of IPAs that report to track indicators relating to a particular prioritisation
criterion, In particular, the graph shows the share of IPAs reporting to prioritise 1) the size of investment that
use investment projects and total FDI evaluation indicators; 2) job creation and use jobs evaluation indicator(s);
3) innovation and use innovation and R&D evaluation indicator(s); 4) exports and use exports evaluation
indicator(s); 5) wages and use wage evaluation indicator(s); and 6) sustainability and use sustainability
evaluation indicator(s).
To overcome data availability challenges, IPAs using innovation, export or regional

development indicators rely on their project data. For example, IDA Ireland and Select
USA calculate the R&D expenditures in investment projects that they facilitate. IDA
Ireland also tracks the number or the amount of investment projects in the regions, while
Select USA and the United Kingdom’s Department for International Trade calculate the
share of exports from foreign companies. Tracking these indicators requires adequate
internal processes. There is also a risk that such indicators capture essentially short-term,
direct effects while falling short of taking long-term and indirect ones into account. To
avoid this, IDA Ireland monitors both short-term direct effects and long term indirect
effects of FDI through surveys conducted by the agency’s parent ministry.
Beside socio-economic impact, IPAs’ actions can have additional benefits such as
improving a country’s image (tracked by 29% of IPAs) and influencing reforms to enhance
the business climate (26%). These indicators can rely on qualitative assessments such as
surveys, rankings and ratings and are a good way to assess the benefits of the image
building and policy advocacy functions of an IPA. Such indicators are only used by a
minority of IPAs however.

5. CO-OPERATION AND CO-ORDINATION │ 89
Chapter 5. Co-operation and co-ordination
Given the nature of their activity, IPAs operate in a dense and complex network of
stakeholders – both public and non-public. They operate at the cross-roads of policy and
business: they have a public sector-driven agenda to generate economic and social benefits,
but they primarily serve private companies and that requires a good understanding of
business models and firm-level motivations. Their activity is also very dependent on the
overarching investment policy framework, which they contribute to design and improve.
As examined in the second chapter of this report, their operations entail a wide range of
activities that can often involve third parties.
This dense and complex stakeholder network requires strong co-operation and co-
ordination skills and processes. In some instances, relationships are formalised, either
through organisational links or through some form of agreement (such as a Memorandum
of Understanding): their nature is thus considered here as “co-ordination”. In other cases,
IPAs need to interact with other stakeholders in the absence of any formal relationship
definition: in such instances, the relationship is qualified as “co-operation”. Relationships
with sponsor authorities and with entities formally affiliated to the IPA typically involve
co-ordination. In addition, co-ordination and co-operation can be needed with other public
institutions as well as private sector representatives, civil society, academia and
international organisations.
IPAs’ institutional co-ordination requires operating at three different geographical levels:
international, national and sub-national (Table 5.1). To reach out and interact with foreign
investors, IPAs can rely on a network of overseas entities in charge of national
representation abroad. At the national level, they need to align with the overarching
investment policy agenda and co-ordinate or co-operate accordingly with other agencies
involved in investment promotion. At the sub-national level, their mission often
supplements regional development agencies’ missions. They also sometimes need to co-
operate with local governmental bodies and agencies, notably for investment facilitation
activities.
This chapter shows that OECD IPAs’ most strategic relationships involve institutional co-
ordination with their sponsor minister, the ministry of foreign affairs and diplomatic
missions abroad, sub-national agencies (affiliated or not to the IPA), and local authorities
and governments. Industrial groups and associations are the only stakeholders from the
private sector that rank among IPAs’ most important relationships. Over three quarters of
IPAs have a network of offices abroad, but the great majority also rely on diplomatic
missions to promote their country as an attractive investment destination. At the sub-
national level, the situation is different as IPAs mostly co-operate with local government-
related agencies (only 38% of IPAs have some affiliated offices at sub-national level) to
attract and retain foreign investors.

90 │ 5. CO-OPERATION AND CO-ORDINATION
Table 5.1. General framework of IPA institutional co-operation and co-ordination
Strategic alignment Operational co-operation and co-ordination
International level • Investment promotion co-ordination with

• Strategic marketing alignment (“one voice” /
(representation diplomatic missions and governmental
clear messaging) with authorities abroad
abroad) missions abroad
• Co-ordination with other national promotion

agencies (e.g. innovation and export
• Overarching national investment policy and promotion agencies) and with industry-specific
National level other national economic policies (e.g.
(central government initiatives
industrial development policies) • Co-ordination with national administrative
and other national
• National branding strategy bodies for facilitation services
agencies and
administrations) • Strategic reporting and planning to the Head
of Government and Sponsor authorities • Co-operation and co-ordination for
troubleshooting (can require strong
interactions with different Ministries)
• Investment promotion at sub-national level

Sub-national level • Attraction and promotion strategy formulation • Investment facilitation services (e.g. site visits)
(sub-national / offering definition • Aftercare (e.g. local cluster programmes)
authorities and • Strategic marketing alignment (“one voice” / • Local administrative procedures (e.g. for local
agencies) clear messaging) incentives)
• Troubleshooting at sub-national level
Source: OECD.
This chapter describes the networks of OECD IPAs and the hierarchy of their relationships,
provides information and insights on how national IPAs structure their representations
abroad and co-ordinate with overseas offices involved (including – but not limited to – their
own) and looks into institutional co-operation dynamics at the sub-national level.
IPA’s co-operation network
Overview of strategic partnerships

Figures from the OECD-IDB survey confirm the density of IPA networks: on average, an
IPA interacts with 25 different organisations (Figure 5.1). There are variations among IPAs,
but apart from three agencies (Japan, Finland and Estonia) they all interact with more than
10 organisations, and 10 IPAs interact with more than 30 organisations. On average IPAs
qualify 13 organisations as “strategic partners”, which is more than 50% of their total
number of relationships.

Figure 5.1. Number of organisations with which OECD IPAs interact, by country
Strategic relationships Non-strategic relationships
50
45
40
35
30
25
20
15
10
5
0
Note: Data is not available for Austria.

Nine out of the ten IPA relationships considered as most strategic are with the public sector
(national administration and public or semi-public organisations), which highlights the
prominence of IPAs’ co-ordination with their institutional environments (Figure 5.2).
Figure 5.2. OECD IPAs’ ten most strategic relationships
strategic non-strategic don't interact
Ministry Responsible for Investment 94% 3% 3%
Embassies and Consulates 69% 17% 14%
Ministry of Foreign Affairs 60% 14% 26%
Subnational or Local Governments 54% 17% 29%
Industry Groups / Associations 54% 31% 14%
Subnational IPAs 54% 6% 40%
Inter-Ministerial Investment Committees 54% 6% 40%
President / Presidential Administration or Prime Minister 49% 20% 31%
Chambers of Commerce 49% 31% 20%
Agency/Entity Responsible for Investment Incentives 46% 6% 49%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Note: The figure shows the top ten out of 52 organisations. This ranking only takes into account institutions
with which more than 25% of IPAs interact.
In this top ten ranking, the organisations with the highest shares of “non-strategic”
responses are industry groups and associations and chambers of commerce, whereas the
strategic nature of relationships with the other organisations – mostly governmental
agencies – appears less disputed. This could be explained by the fact that IPAs, even if they

share similar interests with the private sector, ultimately fulfil public policy objectives.
Whether IPAs are public, joint public-private or private organisations does not have an
impact on these results: the share of public organisations in IPAs’ strategic relationships is
the same (81%), regardless of their legal status.
Co-operation and co-ordination with IPAs’ broader institutional framework

Relationships with the public sector are the most widespread and the most frequent: 74%
of the relationships qualified as “strategic” by IPAs are relationships with public and semi-
public organisations. This can be partly explained by the organic link between IPAs and
governments as most of them are public organisations and depend on government funding,
as detailed in Chapter 1. This result also seems in line with the very nature of IPA work,
which makes them dependent on and integrated into their public institutional environment.
This level of dependency stems from the systemic nature of economic policies, including
investment, as well as their implementation, including their most practical aspects (such as
permit delivery). As a result, a “whole-of-government” approach is considered as a good
practice for effective policy design and implementation, but requires a high degree of co-
ordination.
IPAs need to co-operate and co-ordinate with their institutional environment in three main
areas: investment policy, investment promotion and investment facilitation. A number of
public bodies are involved in investment policy formulation: the ministry in charge of
investment and agencies in charge of FDI attraction are obvious but also other bodies such
as those responsible for domestic investment, investment treaty negotiators, tax policies
and special economic zones. Trade and industrial policies also affect investment policies
(through trade and investment agreements, for example). Investment promotion requires
consistency among the different spokespersons interacting with foreign investors, at
international, national and sub-national levels. Investment facilitation requires a high level
of co-ordination with administrative bodies to ensure a smooth investment process in the
host country. All these interactions require that proper co-ordination and co-operation
mechanisms are well established and formalised when necessary.
The mapping of IPA interactions with public and semi-public institutions highlights the
importance of IPA relationships with their sponsor ministry, with the ministry of foreign
affairs and with sub-national agencies and local authorities (Figure 5.3). The prominent
positioning of these stakeholders on the upper right quarter of the figure reflects their high
scores on the two variables on which the mapping is based: the share of OECD IPAs that
interact with them and the frequency with which they interact.
The role of the ministry in charge of investment appears significant for OECD IPAs. For
two thirds of them, a single ministry in charge of investment is the highest reporting
authority, while 44% report directly to the minister. The minister is often in charge of the
strategic oversight of the IPA and sometimes responsible for its budget (see Chapter 1).
Many IPAs (for example in Estonia, Greece and Israel) highlight this supervisory role. In
Iceland and Poland, the working relationship between the ministry and the IPA is defined
in a contract. The most frequent types of outputs of the relationship with the minister
mentioned by respondents are strategic plans and joint work plans as is the case of
Austrade, IDA Ireland and the Netherlands Foreign Investment Agency. To a lesser extent,
the relationship with an inter-ministerial taskforce or committee, reported by 61% of OECD
IPAs, is of a strategic nature and leads to work plans or specific co-ordinated initiatives
(e.g. “fast-track” programme for targeted investors in Greece). Such a task-force or
committee nonetheless appears as a reporting entity for only 25% of respondents.

Figure 5.3. Mapping of IPA interactions with government, public and semi-public
institutions
Share of interactions vs. frequency
4.5
4
Ministry responsible for
Export promotion agency
3.5 investment
Subnational IPAs
3 Ministry of Embassies and consulates
Innovation
Ministry of Foreign Trade Foreign Affairs
Tourism promotion agency promotion agency
2.5 Other Ministry Inter-ministerial investment OECD average: 2.3
Other national IPAs Investment incentive Subnational governements
Business developement committee
agency Chambers of Commerce
promotion agency National statistics
2 Immigration agencies
Ministry of Finance SEZ agency Tax agency Embassies of foreign countries
Ministry of Infrastructure / Sectoral / Other Presidential
Competition Authority Customs regulatory body Ministry of administration
1.5 Central Bank / PM
Finance
Ministry of Education
0.5
0
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Note: the x-axis represents the share of IPAs that interact with the organisation (in % of respondents) and the
y-axis represents the average frequency of interactions on a scale from 1 (= very low) to 5 (= very high).
As reflected in Figure 5.3 and examined in further detail in the next section of this report,
relationships with embassies and consulates as well as with the ministry of foreign affairs
also rank high in the mapping of interactions. These relationships are of critical importance
as investment promotion requires maintaining very strong ties with economic diplomacy,
including foreign trade policy. At ministerial level, relationships are first and foremost
policy-oriented (including for policy advocacy purposes as examined in Chapter 2),
whereas the co-operation is more operational at embassy and consulate level, consisting for
example in local promotion activities. IDA Ireland, for example, shares local market plans
and teams with embassies abroad. The co-operation can sometimes entail facilitation
activities: ICEX-Invest in Spain collaborates with embassies not only for promotion but
also for visa-related issues. While IPAs emphasise the importance of a strong co-ordination
with embassies and consulates, they also underline the difficulties of such co-ordination,
notably as the investment promotion mandate sometimes competes or overlaps with other
foreign policy mandates such as foreign trade.
As also addressed further in this chapter, a large share of IPAs interact frequently with sub-
national governments and agencies in charge of investment promotion and facilitation.
These interactions can consist of strategic and operational co-ordination to take regional or
local development into account when leading investment promotion actions at the national
level. They could also entail co-operation in the framework of investment facilitation and
aftercare services, especially for site visits and local incentives. Sub-national agencies can
either be affiliated to the national IPA (and be one of its secondary offices), or they can be

local agencies of various natures, such as regional development agencies, city promotion
agencies or other local government-related agencies. Whatever the setting, IPAs emphasise
that a clear distribution of roles and responsibilities is pivotal and that tools and processes
such as a shared CRM tool, a “code of conduct” and other systematised communication
processes can greatly facilitate exchanges.
According to the mapping presented on Figure 5.3, agencies responsible for investment
incentives and agencies in charge of innovation promotion are the two types of national
agencies with which IPAs interact the most and the most frequently. Co-ordination needs
with the agency in charge of investment incentives are quite obvious. If a host country
offers investment incentives, IPAs should be able to communicate the relevant information
to foreign investors and be able to liaise with the agency in charge to facilitate the
application and approval processes. The prominence of innovation agencies in the mapping
is noteworthy and is evidence of the strong relationship between investment promotion and
innovation, as already discussed in Chapter 1 on the different mandates of agencies and in
Chapter 4 on prioritisation strategies. ICEX-Invest in Spain, for example, reports that co-
operation with the national innovation agency primarily entails R&D investment
incentives. In other countries such as Mexico, agencies collaborate on joint projects.
Some stakeholders that one could have expected to be strategic do not appear as such in
the mapping. For example, only 35% of IPAs interact with the ministry of foreign trade,
although for those that interact, the frequency of interaction is high. This relatively low
figure comes as a surprise given the strong relationship between trade and investment
policies, in a context where international trade and FDI are intertwined drivers of economic
integration. Another example is education, as less than half of IPA respondents (45%)
reported to interact with the ministry of education, and the frequency of these interactions
is comparatively low (1.5 vs. an overall average of 2.3). 26 This can seem contradictory with
the emphasis IPAs put on the importance of skills and the relationship between a qualified
workforce and the ability to attract foreign investors, especially in innovative sectors.
Co-operation and co-ordination with the private sector, academia and

international organisations
The network of OECD IPAs’ partners across the private sector, academia and international
organisations is not as dense as their public institutional environment. The average
frequency of interactions with the civil society, academia and international organisations is
rated at 1.6 as compared to 2.3 for government, public and semi-public institutions
(Figure 5.4). 27 Only one type of organisation (industry associations) shows up in the top
ten ranking of IPAs’ strategic relationships. The mapping on Figure 5.4 also indicates that,
overall, relationships with these organisations tend to be either both widespread and
relatively occasional at the same time (lower right quarter), or limited to a few IPAs but
with comparatively high frequencies of interactions (upper left quarter).

Figure 5.4. Mapping of IPA interactions with the private sector, academia and international
organisations
Share of interactions vs. frequency
4.5
3.5
3
African Developement Bank
2.5 Inter-American Developement

Bank
Industry groups
2 ITC Asian Developement Bank World Bank
Financial institutions OECD average: 1.6
Workers' associations
UNCTAD
1.5 NGOs EU
FIAS OECD Universities Private service providers
Influencers
1 WAIPA Other academic or scientific
organisation
0.5
0
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Note: the x-axis represents the share of IPAs that interact with the organisation (in % of respondents) and the
y-axis represents the average frequency of interactions on a scale from 1 (= very low) to 5 (= very high).
The most prominent relationship is the one with industry groups and associations, which is
consistent with its ranking among the top ten most strategic relationships of OECD IPAs
(Figure 5.2). Some IPAs, like Enterprise Greece and ICEX-Invest in Spain, consult with
these associations to feed market research and strategic planning of investment promotion
and generation, including when designing and launching promotion campaigns or
initiatives in targeted industries. IPAs can also discuss with industry groups and
associations to feed their policy advocacy reports and recommendations, as in the case of
Invest in Iceland.
Overall, IPAs interact more with partners from the private sector and from academia than
with international organisations. Half of OECD IPAs report that they work with
organisations from the private sector and from universities, compared to 30% with
international organisations.
Co-operation and co-ordination with agencies and representations abroad
As discussed in Chapter 1 on institutional choices and organisational characteristics,

representation abroad is very important for IPAs and for investment promotion in general
because it spearheads the efforts of a country to promote itself and establish relationships
in foreign countries. Co-ordination between an IPA’s headquarters and investment
promotion networks abroad can contribute to ensure consistency in the country brand
messaging and information delivered. It also involves establishing the proper

communication processes to enable follow-up on investment project leads or requests and

collecting feedback for policy advocacy purposes.
Effective co-ordination will first and foremost depend on the different types of foreign
office settings. The most widespread are affiliated offices to the agency (63% of all IPA
foreign offices for which the data is available), 28 while other set-ups are shared offices with
another agency (25%), personnel located in embassies and consulates (11%) and, to a much
lesser extent, consultant contracts (1%). Several countries rely on a mix of different set-ups
(Figure 5.5). 70% of IPA offices abroad have another mandate in addition to investment
promotion, the most common being trade promotion. This is not only the case of shared
offices but also of affiliated ones since IPAs are often part of agencies with multiple
mandates, as detailed in the first chapter of this report.
Figure 5.5. OECD IPA offices abroad performing investment promotion
Total number, split by type of office
Personnel located in Embassies / Consulates Shared with another agency Affiliated Total¹
80
70
60
50
40
30
20
10
0
JPN GBR MEX ESP PRT AUS KOR CAN FRA NLD IRL LVA DNK GER SWE FIN TUR CHE CZE NZL POL EST CHL ISR
Note: (1) For countries where the split is not available.

Diplomatic missions in foreign countries play a key role in investment promotion abroad,
whether national IPAs have overseas offices or not. Invest in Canada, for example, in
addition to its network of 35 offices abroad, relies on some 140 diplomatic missions around
the world with commercial programmes. Among them, 24 are located in strategic markets
and are tasked to actively attract FDI, whereas other missions are given “reactive”
mandates. Similarly, in addition to its single fully-fledged office located in New York,
Invest in Israel can also count on 45 economic missions that conduct investment promotion,
among other tasks. Co-ordination with missions abroad seems to be relatively widespread.
Figure 5.6 shows that there are proportionally almost as many IPAs with offices abroad as
IPAs without offices abroad that interact with embassies and consulates, and that the
average frequency of interactions is slightly higher for the former than the latter. These
results highlight the complementarity of the two networks for IPAs.

Figure 5.6. Interactions of IPAs with embassies and consulates depending on the presence of
affiliated foreign offices abroad performing investment promotion
A. Share of interacting IPAs B. Average frequency of contacts

100% 5
90% 86%
83%
80% 4
70%
2.9
60% 3
50% 2.2
40% 2
30%
20% 1
10%
0% 0
Share of IPAs without foreign Share of IPAs with foreign offices Average contact frequency with Average contact frequency with
offices that interact with that interact with embassies and embassies and consulates of IPAs embassies and consulates of IPAs
embassies and consulates consulates with no affiliated offices abroad with affiliated offices abroad
Note: Frequency of interactions is expressed on a scale from 0 (= none) to 5 (= very high).

The overall picture provided by the survey results suggests that international co-ordination
can be complex for national IPAs as they often involve several networks or types of
representation abroad. Investment promotion is rarely the sole mandate of these
organisations, which can create a form of competition or overlap between investment
promotion and other mandates, or a lack of adequate skills by the staff. Several IPAs report
that although they have formal or informal tools to manage these networks, there remains
room to clarify roles and responsibilities, improve stakeholder alignment and enhance
efficiency in handling relationships with foreign investors abroad.
Co-operation and co-ordination with sub-national agencies
Co-ordinating and co-operating with sub-national entities is another important topic when
considering interactions of IPAs with their broader environment. National IPAs can be
formally charged with attracting and facilitating investment in regions. Even when it is not
the case, they might have to address this topic when discussing potential investment project
locations with foreign investors. OECD IPAs consider that the top three obstacles to direct
FDI outside of their country’s capital city or to different regions are the distance to suppliers
and clients, the lack of local skilled workforce and poor infrastructure or connectivity to
important hubs (Table 5.2). To address and overcome these challenges, national IPAs and
sub-national agencies in charge of the local economic development ideally need to work
hand in hand.

Table 5.2. Obstacles to the attraction of FDI in the regions according to IPAs
(Ranking from the most to the least important factor)
Ranking Obstacles
1 Distance to suppliers and clients
2 Lack of adequately skilled labour or difficulty of attracting it into the region
3 Poor infrastructure or connectivity to important hubs
4 Image problems (e.g. security, lifestyle, etc.)
5 Difficulties in interacting with the local government
6 Lack of dedicated State support (e.g. special economic zones, etc.)
Note: IPAs responded to the following question: “What obstacles do you see as most important for attracting
investors outside of the capital city / to the different regions?”.
According to the OECD-IDB survey, IPA interactions with agencies at the sub-national
level are overall very different from those with national representation abroad, first and
foremost because in a majority of cases these agencies are external organisations. As
illustrated in Figure 5.7, 14 OECD IPAs have sub-national offices that are affiliated to their
headquarters, and 11 have more than one affiliated sub-national office (respectively 44%
and 34% of the total sample). A majority of IPAs work with external local stakeholders
such as regional development agencies, local chambers of commerce and other promotion
agencies at various sub-national levels (e.g. regional or city level).
Figure 5.7. Number of IPAs’ affiliated sub-national offices performing investment promotion
50
45 43
40
35
32
30
30
25
20
15 13
10
7
6 6
4 4
5
2 2
1 1 1
0
JPN ESP MEX CZE IRL AUS DNK FIN GBR NZL SVK DEU ISL TUR
OECD IPAs’ responses to the survey suggest that co-operation at sub-national level
primarily focuses on the provision of facilitation and aftercare services for foreign investors
(Figure 5.8). Austrade, for example, qualifies sub-national IPAs as “key partners in delivery

of facilitation services”. The same goes for Business France, which relies on a strong co-
operation with regional development agencies for the delivery of investment facilitation
services. Over half of OECD IPAs contact sub-national agencies or local authorities for
assistance during investors’ establishment phase or aftercare services in the region or city
(74%), to organise co-ordinated discussions (including missions) with interested investors
(71%) and when local investment incentives are allocated to a project (52%). To a lesser
extent, they co-operate on regulatory changes (48%), dispute resolution (42%) and impact
evaluation of investment projects (39%).
Figure 5.8. Reasons why IPAs contact sub-national agencies
In % of respondents
For installation assistance or aftercare services in the region/city 74%
To accompany the IPA in conversations with investors (e.g. missions) 71%
When an incentive is allocated for investment in the region/city 52%
When a regulatory or administrative change is required by a local body 48%
When a complaint has been raised by the investor (dispute resolution) 42%
For evaluation of an investment project implemented in the region 39%
Never 16%
Other* 13%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Note: (*) The category “Other” includes information sharing, investment promotion strategy / offering
development, marketing and customer care.
In addition to purely transactional relationships, some IPAs also nurture strategic links with
sub-national agencies. They consult them to integrate local economic development plans
and objectives into their own national FDI attraction strategy (Chapter 4 explores how
national IPAs take regional priorities into account in their prioritisation strategies). They
can also carry out joint investment promotion activities such as Invest in Denmark, and
Invest in Canada that follows this approach to promote specific sectors or to attract specific
investors. Some IPAs also rely on local authorities to collect feedback from the field to feed
their policy advocacy work. SelectUSA follows a very different approach as the IPA
charges its services to economic development organisations, treating them as client
organisations.
Co-operation with sub-national agencies brings a number of challenges. The network of
sub-national agencies can be heterogeneous and composed of organisations with different
levels of skills and competencies and various scopes of activities. Geographical zones
themselves can have very different levels of attractiveness due to their economic wealth,
sectoral competitiveness, workforce attributes and other local ecosystem characteristics.
Interests are not always aligned. As inter-regional competition often exists, national IPAs
can be deliberately excluded from locally identified opportunities or, on the contrary,

become arbitrators and face difficult decisions: should they cater to the desires of foreign
investors, make the case for the best location according to the agency’s own criteria or
focus on bringing investment in less endowed zones that need it the most? How to strike
the right balance between having a single point of entry and decentralising power and
initiative? How to make sure that relevant information reaches the national level?
Co-ordination tools help partly to overcome these challenges. In Sweden, a code of conduct
agreement among the national IPA and the 15 regions was established to better
communicate on opportunities and encourage exchange of information. The IPA also uses
software that allows sharing information with external partners, which requires some
upstream work to define a common information sharing framework (and decide who
accesses what information). In Latvia, a system was designed to incentivise people at the
local level to share information about potential investment projects. Business France has
designed a formal information-sharing process to increase the efficiency of the
collaboration with France’s 13 regions. The agency created a “marketplace” of investment
projects and shares information weekly with its regional partners. The aim is to organise
joint efforts to respond efficiently to foreign investors’ demands and needs, and to increase
chances to win projects.

6. THE WAY FORWARD │ 101
Chapter 6. The way forward
This report has provided a mapping of existing practices among IPAs in OECD countries
and presents different profiles of agencies. It draws some conclusions on existing trends
and highlights similarities and differences across agencies. While the report aims to
complement existing research in the field of investment promotion, it also raises several
key questions that remain to be answered by future research and paves the way for future
OECD work. These questions are outlined below:
Examining the linkages between IPAs’ institutional characteristics and their

investment promotion strategies
The report adopts various approaches to categorise IPAs – based on their institutional
settings, resource allocation and prioritisation strategies, among others – which highlight
differences and similarities in practice. The results of these analyses and the extent to which
they can explain different investment promotion patterns could be an interesting area for
further research. For example, it has been found that IPAs that are part of the government
(as opposed to more autonomous ones) appear to be more involved in policy advocacy and
that their boards are less implicated in management and supervision than other agencies.
Exploring further the impact of an IPA’s legal status on their activity mixes could help shed
light upon how and to what extent institutional choices drive operational execution of
investment promotion. For example, is the scope of IPA activities affected by the number
of mandates and to what extent can investment promotion operations benefit from
synergies?
Similarly, internal organisational characteristics affect the way IPAs interact with other
government agencies and stakeholders. Future analysis could explore the performance and
mechanisms of vertical co-ordination with embassies abroad, on the one hand, and sub-
national IPAs within the country, on the other hand. To what extent does it affect an IPA’s
tendency to focus on particular functions such as investment generation or investment
facilitation? The aim would be to develop case studies and identify good practices. The
typology of agencies suggested in Chapter 2 could also be further developed to enhance its
relevance through discussions with practitioners and further analysis. Studying the extent
to which these profiles lead to different approaches in the different aspects of investment
promotion – not only activities but also prioritisation, monitoring and co-ordinating with
other organisations – could help develop an IPA’s taxonomy.
Exploring how to foster investment policy reforms through better linkages between
investment promotion and investment policy making
There are different channels through which investment promotion practitioners and
investment policy makers interact and complement each other’s work. As discussed in this
report, IPAs respond to a double objective: attracting and serving private investors’
interests, on the one hand, and meeting public policy objectives, on the other hand. The

102 │ 6. THE WAY FORWARD
latter include measures to maximise the benefits of investment, such as promoting quality
jobs and green growth. IPAs can either undertake specific activities to influence the
investment policy framework (e.g. policy advocacy and investment facilitation) or adopt
measures that respond to the country’s socio-economic objectives (e.g. prioritising specific
investments, such as green and responsible ones). Investigating the relationship between
investment promotion and such policy objectives could be an area for future work.
For example, as discussed in Chapter 2, IPAs undertake different approaches to policy
advocacy and, thus far, little is known about the precise way in which IPAs undertake these
activities and their relative effectiveness. There is room to identify different formal policy
advocacy programmes as well as informal mechanisms and produce case studies to identify
good practices in this area. The aim would be to provide trends and ideas of co-operation
models that can reap the benefits of IPAs’ direct access to potential investors and
investment project successes and failures in feeding the policy-making process.
Investment facilitation is another area that touches upon the broader investment policy
framework. Investment facilitation goes beyond attracting new investors and consists in
supporting businesses when establishing in the country, embedding them in the local
economy and encouraging reinvestments. It requires a whole-of-government approach to
provide new and existing investors with a transparent, predictable and efficient policy and
administrative framework for investment. The role of IPAs could be further explored,
including the ground-level tools they provide to facilitate investment and its retention.
What are the mechanisms and processes they use to ensure a whole-of-government
approach in solving problems and in attracting investment projects in the host economy?
The way IPAs are structured can also influence their role in investment policy decisions.
For example, to what extent are IPAs’ governance policies and characteristics influencing
their role in investment climate reforms (e.g. are more autonomous agencies collaborating
more closely with the private sector to identify policy bottlenecks)?
Going beyond investment climate reforms, it would also be interesting to explore the role
of investment promotion in promoting socio-economic progress in society, notably by
focusing on attracting green and responsible investments. As reflected in the OECD
Guidelines for Multinational Enterprises and Policy Framework for Investment, the role of
governments in promoting RBC and enabling businesses to act responsibly is a key element
of a sound investment climate. While respecting social and environmental rules is mostly
a regulatory aspect, IPAs can decide to systematically target investors that have strong RBC
records and adapt their investment promotion strategy accordingly.
Reviewing and analysing IPAs’ prioritisation methods and the choice of priorities
As shown in Chapter 3, the process of selecting priority sectors and countries is relatively
complex. This aspect could be explored further, including the factors that determine the
specificity, scope and nature of the sectors targeted and analysis of the different niches in
which IPAs specialise. For example, do the methods used for selection of sectors play a
role in determining the breadth or nature of the IPA’s targets? Do IPAs using certain or
more complex methodologies arrive at a shorter or more focused list of targets? How do
these specific sub-sectors differ? More generally, a better understanding of what constitutes
a solid basis for selection of targets, and which elements are crucial, could provide useful
insights to IPAs in this area. For example, as relatively little attention appears to be paid to
whether or not the agency is correcting for a particular market failure (15% of IPAs), there
may be scope for considering possible methodologies to guide pro-active and re-active

6. THE WAY FORWARD │ 103
interventions of IPAs. Inspiration could be drawn from other public agencies that need to
prioritise their efforts (e.g. border control or competition authorities).
Agencies also differ in the ways they operationalise their prioritisation efforts. For example,
about half of OECD IPAs have dedicated organisational units for priority sectors and
countries. Some agencies allocate high shares of their staff to priority sectors and recruit
staff with experience in the priority sectors while others keep the staff profile more general.
Some IPAs also offer tailored services to priority investors, in particular via dedicated staff
as well as faster replies and assistance. There also appears to be a link between budget
intensity and the level of prioritisation, whereby agencies that prioritise more appear to
have larger budgets but do not necessarily undertake more or less activities. It could be
explored whether the higher budgets of Prioritisers translate into higher quality of services
provided or are associated with higher intensity of certain activities; and more generally,
how prioritisation affects the type of activities offered and resource-allocation of IPAs. Last
but not least, the link between different IPA’s features and the effectiveness of prioritisation
could be established. For example, do agencies locating their offices in priority countries
attract more FDI from these countries or in prioritised sectors? Does the breadth or
specificity of the sectors targeted influence the relative effectiveness of FDI attraction?
Exploring how IPAs can improve their monitoring and evaluation tools to measure
both their activities and the impact of FDI
As shown in Chapter 4, monitoring and evaluation of investment promotion activities are

an area that may merit further attention of IPAs. The first step to any evaluation effort is
better monitoring. As such, agencies could consider how to better track their activities to
assess the relative time and cost of different activities including their pronounced priorities
– as in some areas the coverage in the CRM remains low – as well as their convergence
into investment projects. If data collection is an obstacle, it could be explored how
information could be procured from other government bodies or the IPAs’ clients without
undue burdens to the agency. Considering the necessity of a feedback loop to improve
activities and prioritisation efforts over time, it could also be explored further how
evaluation and prioritisation activities can be better aligned. For example, activities in
priority areas (e.g. sectors, countries) could be tracked separately in the CRM systems.
Progress in this area could help strengthen the toolkit of IPAs to improve the effectiveness
of their prioritisation efforts and the relevance of their services over time.
The real litmus test of any promotion and prioritisation exercise is whether it brings the
desired results. As such, future analysis could consider in greater detail the link between
different IPA profiles and strategies as well as the effect in terms of the amount and type
of FDI attracted or retained. For example, do agencies that have particular characteristics
(e.g. a particular legal status, set of mandates or activities, or that prioritise more intensely)
or fall into particular categories outlined in various chapters achieve better results? Which
specific differences across IPAs affect their effectiveness most intensely, and why? Do
agencies that prioritise relatively more intensely attract higher or different type of FDI? Do
IPAs that allocate relatively more employees to specific activities or recruit more staff with
relevant experience achieve better results? Does the composition of activities influence the
amount or type of FDI attracted? What is the impact of the number and location of IPA
offices abroad or of its co-operation with other public bodies on the activities of the IPA –
and their success? The exploration of these and other questions may permit a better
understanding of the impact of investment promotion on IPA effectiveness.

BIBLIOGRAPHY │ 105
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Mimeo, London.
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Harding T. and B. Javorcik (2012), "Investment Promotion and FDI Inflows: Quality
Matters," Economics Series Working Papers 612, University of Oxford, Department of Economics.
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106 │ BIBLIOGRAPHY
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World Bank Group.

NOTES │ 107
Notes
1
The following list of positive contributions of FDI draws on OECD (2002) – which also provides
a summary of the relevant academic literature – and is supplemented by OECD (2015a) and OECD
(2015b).
2
The Guidelines for Multinational Enterprises are recommendations addressed by governments to
multinational enterprises and include principles and standards for RBC in a global context consistent
with applicable laws and internationally recognised standards. For further information, visit:
http://mneguidelines.oecd.org.
3
A wide literature exists on the reasons why firms may decide to extend their operations and locate
abroad. Dunning (1993) has synthesised it in a comprehensive framework known as the OLI
paradigm referring to the advantages of ownership, location and internalisation. Ownership
advantages refer to the assets that allow MNEs to compete successfully in foreign markets (e.g.
technology, know-how); location advantages include the benefits that firms can find in host
economies; and internalisation advantages consist in the reduction or elimination of transaction
costs, which can occur when a firm opts for FDI instead of export.
4
The OECD is currently analysing the full range of cross-border corporate relationships in global
value chains to provide new information on MNE decisions in a global production reality (OECD,
forthcoming).
5
The PFI is a comprehensive, systematic and multilaterally-backed approach for improving
investment conditions. It was developed in 2006 and updated in 2015, and considers 12 policy areas
affecting investment. It eschews one-size-fits-all solutions and encourages policy makers to ask
appropriate questions about their economy, their institutions and their policy settings. The PFI
recognises that a sound investment climate includes expectations that investors act responsibly and
are enabled to do so. For further information, visit: http://www.oecd.org/investment/pfi.htm.
6
All OECD countries have established a national IPA with the exception of Belgium, which has
only sub-national IPAs.
7
Several academic studies provide evidence suggesting that investment promotion is positively
associated with higher FDI inflows. See for example Charlton and Davis (2006), Harding and
Javorcik (2012), Hornberger et al. (2011) and Morisset (2003).
8
Among the 363 offices for which the data is available.
9
135 staff and 5 mandates represent the median of each category and have been chosen for this
reason in this typology.
10
Resource allocation to policy advocacy activities could be slightly underestimated as this function
may imply more informal conversations and exchanges as well as implication of the executive
management level that can be difficult to quantify precisely.
11
These discrepancies can be explained by the IPA different samples and timescales as the sample
in the Morrisset and Andrew Johnson study contains 58 IPAs, including a high share of emerging,
non-OECD countries. The data comes from a survey administered in 2002.
12
Data are presented for Image builders but they are excluded from the discussion on the possible
explanations and qualifications of strategic profiles as the sample is very small (2 IPAs) and key
data are missing.

108 │ NOTES
13
The Facilitators category comprises IDA Ireland, the Department for International Trade of the
United Kingdom and the Australian Trade and Investment Commission, which are all in the top five
agencies with the highest budgets for investment promotion.
14
The activity mix analysis should be considered with caution for Image builders as only two IPAs
fit this strategic profile.
15
The study uses information on sector prioritisation for 97-124 agencies, depending on the
specification, and the data on outward FDI outflows from the United States.
16
E.g. Morisset and Andrews-Johnson (2004) and UNCTAD (2001).
17
For instance, Ireland has a system of choosing priority projects involving thresholds on about
twelve criteria (e.g. minimum capital spending, number of jobs, salary, investment time horizon and
several regional targets). Denmark, Hungary, Iceland, Netherlands, Portugal, Slovenia, Spain and
the United Kingdom also report specific thresholds used to identify priority projects.
18
It may also be that agencies are unwilling to share the criteria used. Among the factors mentioned
are the propensity to invest or reinvest and a “strategic nature” of the investor. There are certain
exceptions, e.g. Hungary reports to use specific thresholds relating to the size of employment (at
least 1 000 employees), export performance and the investor’s presence in the country to classify an
investor as strategic and put in place support measures to encourage continuous investment. There
are currently 76 strategic investors in Hungary, according to the IPA benefitting from dedicated IPA
experts (account manager and/or team), the opportunity to meet high-level officials via working
groups and participate in policy formulation processes.
19
For example, some agencies use a combination of market studies consultations with clients (e.g. via
surveys or feedback via the account managers). The decision of the lead ministry itself may be based on
different factors, including studies, views of other government bodies and other stakeholders.
20
For example, some agencies use a combination of market studies consultations with clients (e.g. via
surveys or feedback via the account managers). The decision of the lead ministry itself may be based on
different factors, including studies, views of other government bodies and other stakeholders.
21
For example, consultations with other ministries may be a means of learning about studies
undertaken by other governmental agencies and obtaining expert view and may also be a means of
integrating political considerations.
22
Some agencies that have government-wide strategic orientations do not have a dedicated IPA
targeting strategy (e.g. Finland, Netherlands, New Zealand) while other agencies rely solely on the
IPA’s strategy for their targets (e.g. Denmark and Czech Republic).
23
In one-fifth of cases of the OECD IPAs, the strategy is embedded in a law and sometimes a decree
containing additional information is also passed (e.g. Korea, Iceland and Hungary).
24
Some IPAs adopt general rules of thumb for the allocation of staff to the targeted sectors: e.g. Australia
allocates on average 3-4 employees per sector in headquarters and 2-3 per sector per office abroad.
25
Average calculated for the 14 OECD IPAs reported in Figure 3.8.
26
Average frequency score calculated from the sample of responding IPAs on a scale from 1 (= very
low interaction frequency) to 5 (=very high interaction frequency).
27
Average frequency score calculated from the sample of responding IPAs on a scale from 1 (= very
low interaction frequency) to 5 (very high interaction frequency).
28
Out of a total of 363 offices for which the information is available.

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Mapping of Investment Promotion Agencies

In collaboration with the Inter-American Development Bank

Investment is central to growth and sustainable development. It expands an economy’s

MAPPING OF INVESTMENT PROMOTION AGENCIES IN OECD COUNTRIES © OECD 2018

Executive Summary ...................................................................................................................................... 9

MAPPING OF INVESTMENT PROMOTION AGENCIES IN OECD COUNTRIES © OECD 2018

Table 1. Summary typology of OECD agencies ........................................................................................... 11

Annex Table 1.A.1. Snapshot of IPAs’ main institutional characteristics..................................................... 35

Figure 1. Global FDI inflows, 2005-2017 ..................................................................................................... 14

MAPPING OF INVESTMENT PROMOTION AGENCIES IN OECD COUNTRIES © OECD 2018

Box 1. The OECD-IDB survey of IPAs ........................................................................................................ 17

MAPPING OF INVESTMENT PROMOTION AGENCIES IN OECD COUNTRIES © OECD 2018

Acronyms and abbreviations

CEO Chief Executive Officer

MAPPING OF INVESTMENT PROMOTION AGENCIES IN OECD COUNTRIES © OECD 2018

Recognising the positive effects of investment in supporting economic growth and

MAPPING OF INVESTMENT PROMOTION AGENCIES IN OECD COUNTRIES © OECD 2018

MAPPING OF INVESTMENT PROMOTION AGENCIES IN OECD COUNTRIES © OECD 2018

Table 1. Summary typology of OECD agencies

Size, mandates, profiles and prioritisation of IPAs

Large Specialist Large Generalist Small Specialist Small Generalist

Australia*** Czech Republic*

MAPPING OF INVESTMENT PROMOTION AGENCIES IN OECD COUNTRIES © OECD 2018

The role of foreign direct investment in OECD countries

In market economies, private investment is central to economic growth and sustainable

MAPPING OF INVESTMENT PROMOTION AGENCIES IN OECD COUNTRIES © OECD 2018

Figure 1. Global FDI inflows, 2005-2017

Source: OECD International Direct Investment Statistics (database).

What drives investors’ location decisions?

To better apprehend the rationale for investment promotion, it is essential to first

MAPPING OF INVESTMENT PROMOTION AGENCIES IN OECD COUNTRIES © OECD 2018

The rationale for investment promotion and the role of IPAs

MAPPING OF INVESTMENT PROMOTION AGENCIES IN OECD COUNTRIES © OECD 2018

Purpose of the OECD IPA mapping report

The purpose of this mapping report is to complement existing research on investment

MAPPING OF INVESTMENT PROMOTION AGENCIES IN OECD COUNTRIES © OECD 2018

Box 1. The OECD-IDB survey of IPAs

MAPPING OF INVESTMENT PROMOTION AGENCIES IN OECD COUNTRIES © OECD 2018

The mapping report is divided into five chapters, as follows:

MAPPING OF INVESTMENT PROMOTION AGENCIES IN OECD COUNTRIES © OECD 2018

Chapter 1. Institutional choices and organisational characteristics

Institutional environment and governance of IPAs

IPAs’ establishment and recent reforms

MAPPING OF INVESTMENT PROMOTION AGENCIES IN OECD COUNTRIES © OECD 2018

Figure 1.1. Creation of IPAs and recent organisational reforms

Number of recent organisational reforms Number of IPAs

Source: OECD-IDB survey of Investment Promotion Agencies (2017).

Table 1.1. Average number of organisational reforms in recent years

No reform 1 reform 2 reforms 3 reforms 4 or more reforms

Source: OECD-IDB survey of Investment Promotion Agencies (2017).

MAPPING OF INVESTMENT PROMOTION AGENCIES IN OECD COUNTRIES © OECD 2018

Legal status and reporting line

Figure 1.2. IPAs’ legal status

Source: OECD-IDB survey of Investment Promotion Agencies (2017).

MAPPING OF INVESTMENT PROMOTION AGENCIES IN OECD COUNTRIES © OECD 2018

Figure 1.3. IPAs’ reporting lines

Sub-ministerial level 44%

Board of directors 41%

Several ministers or inter-ministerial taskforce 25%