Finance, Competitiveness, and Innovation in Focus

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The series captures the experience, innovative approaches and solutions for development of the World Bank Group covering financial sector topics of relevance to both the public and private sectors. The series is comprised of short knowledge notes, policy notes, case studies, lessons learned or a combination therein. This series was formerly known as Finance in Focus.

Items in this collection

Now showing 1 - 10 of 12
  • Publication
    Institutions for Investment: Establishing a High-Performing Institutional Framework for Foreign Direct Investment
    (World Bank, Washington, DC, 2021-02-18) Heilbron, Armando; Whyte, Robert
    A well-functioning institutional framework can result in higher levels of foreign direct investment. It requires several factors such as a shared strategic vision, solid institutions capable of delivering on their specific mandates and collaborating beyond their walls, and a strong political and financial support for all. The note describes key government functions for investment, suggests a process and principles for creating optimal institutional structures to deliver them, and provides examples. In particular, it examines the role of investment promotion agencies (IPAs) the agency usually tasked with operationalizing government FDI goals as well as the dilemmas that governments face in the context of institutional specialization versus function consolidation.
  • Publication
    Attracting Foreign Direct Investment into Tunisia through Outreach Campaigns
    (World Bank, Washington, DC, 2020-09-01) Sabha, Yassin; Hamden, Mouna; Heilbron, Armando
    After the Arab Spring, Tunisia urgently needed to create productive jobs and economic opportunities for its young population. Attracting foreign direct investment (FDI) in priority sectors was a key pillar of the Government’s strategy to deliver this job agenda. With the support of the World Bank Group, the Investment Promotion Agency of Tunisia engaged in proactive outreach campaigns which resulted in 21 investment leads and three announced FDI projects, including a manufacturing plant by Japan’s Sumitomo. This case study shows that well-planned and executed investor outreach campaigns can lead to concrete investment results and contribute to a country’s development objectives. It provides key success factors useful to other countries wanting to engage in outreach. More than ever before (in a post-COVID-19 world), outreach can play a key role for countries in their efforts to reposition and take advantage of new investment opportunities from near shoring and emerging sectors. The paper provides examples of IPAs continuing their outreach efforts virtually by leveraging technology.
  • Publication
    Policy Options to Mitigate Political Risk and Attract FDI
    (World Bank, Washington, DC, 2020-08-12) Kher, Priyanka; Chun, Dongwook
    Political risks covers a wide range of issues, and this note focuses on a subset of political risk: the risks that arise from government actions, whether political or regulatory, that can affect the profitability of an investment in a foreign country. Policies adopted and implemented by governments can directly mitigate these risks. Bad governance and economic crises are two big drivers of political risk. Both are currently prevalent globally, but especially in developing countries. The purpose of this note is to summarize how political risk caused by government actions can impact foreign investment, and what tools countries can use to manage and mitigate such risks.
  • Publication
    Investment Linkages and Incentives: Promoting Technology Transfer and Productivity Spillovers from Foreign Direct Investment
    (World Bank, Washington, DC, 2020-05-01) Sabha, Yassin; Liu, Yan; Douw, Wim
    This note seeks to provide an overview of investment incentive policy as a tool for Governments seeking to promote technology transfer and productivity spillovers by multinational enterprises (MNEs) in the host economy to local firms and suppliers. It summarizes international experiences to demonstrate what has worked and what has not worked, as well as the advantages and disadvantages of different investment incentive schemes. Evidence suggests that backward linkages between MNEs and local suppliers are the most important channels for technology and productivity spillovers to local firms (Jordaan et al, 2020). Furthermore, backward linkages offer an important avenue for ambitious local firms to integrate into Global Value Chains (GVCs). However, several market failures and challenges often prevent backward linkages from materializing. Policy makers can use investment incentives and other policy tools to help address these challenges. This note highlights examples of investment incentive schemes used by Governments, as well as their pros and cons.
  • Publication
    Foreign Direct Investment, Backward Linkages, and Productivity Spillovers: What Governments Can Do to Strengthen Linkages and Their Impact
    (World Bank, Washington, DC, 2020-05-01) Jordaan, Jacob; Douw, Wim; Qiang, Christine Zhenwei
    This note provides an up-to-date summary of the academic evidence around the drivers and channels for technology transfer and productivity spillovers by multinational corporations (MNC) operating in host economies. Foreign direct investment (FDI) is a major contributor to development. Besides the direct benefits FDI brings in terms of increased capital, employment and exports, the presence and operations of MNCs can also help improve the productivity of local firms through backward linkages and offer an important channel for the integration of local firms into global value chains (GVC). However, several market failures exist that get in the way of these linkages and spillovers fully materializing. This note highlights the main challenges as well as some policy recommendations for host economy Governments to consider.
  • Publication
    Strengthening Service Delivery of Investment Promotion Agencies: The Comprehensive Investor Services Framework
    (World Bank, Washington, DC, 2020-03) Heilbron, Armando; Aranda-Larrey, Yago
    Research shows that investment promotion agencies (IPAs) may be the best public institutions to meet government objectives for attracting, establishing, retaining, expanding, and linking productive private investment. As part of this, IPAs need to provide relevant, high-quality services to investors at different stages of the investment life cycle. Informed by its research and experience in global operations, the World Bank Group introduces the Comprehensive Investor Services Framework (CISF), a catalog of specific services to meet investor needs. IPAs can use this investor-centric framework to design service offerings in line with their strategic focus and promotion capacity.
  • Publication
    Institutions for Investment: Establishing a High-Performing Institutional Framework for Foreign Direct Investment
    (Washington, DC: World Bank, 2019-12-31) Heilbron, Armando; Whyte, Robert
    A well-functioning institutional framework can result in higher levels of foreign direct investment. It requires several factors such as a shared strategic vision, solid institutions capable of delivering on their specific mandates and collaborating beyond their walls, and a strong political and financial support for all. The note describes key government functions for investment, suggests a process and principles for creating optimal institutional structures to deliver them, and provides examples. In particular, it examines the role of investment promotion agencies (IPAs) the agency usually tasked with operationalizing government FDI goals as well as the dilemmas that governments face in the context of institutional specialization versus function consolidation.
  • Publication
    How Countries Can Fully Implement the New York Convention: A Critical Tool for Enforcement of International Arbitration Decisions
    (World Bank, Washington, DC, 2019-12-30) Forneris, Xavier; Mocheva, Nina
    The year 2018 marked the 60th anniversary of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, the most important international convention in the area of international commercial arbitration. The Convention is also said to be the most successful international treaty in the area of private international law. This note primarily targets policy makers and their legal advisors in countries looking at ways to improve their business environment, to become more attractive locations for trade and investment, through better dispute resolution options for international transactions. First, the note explains that international commercial arbitration, as part of countries' legally recognized dispute resolution options, is critical to cross-border contract enforcement. As countries strengthen their international arbitration regimes, they improve their competitiveness in international markets and increase investment and trade by reducing transaction risks and the cost of new infrastructure projects. Countries can improve their international commercial arbitration systems by passing modern legislation consistent with international best practice, ratifying international arbitration conventions, strengthening judicial capacity to enforce arbitral awards, and investing in local arbitration centers.
  • Publication
    Tanzania and Implementation of East Africa Mutual Recognition of Veterinary Medicines
    (World Bank, Washington, DC, 2019-03) Baregu, Solomon; Wigenge, Raymond; Shrader, Hans; Thendiu, Isaac
    Tanzania has the third largest livestock population in Africa (after Ethiopia and Sudan), but the competitiveness of Tanzania’s livestock sector faces many challenges, including lack of access to good-quality, effective, safe veterinary drugs and vaccines, especially for smallholders. Availability of good-quality, affordable, effective inputs (including veterinary drugs, vaccines, and compound animal feed) in the market is critical to increasing productivity and ensuring the safety of the animals. Taking these challenges into consideration, in 2017, the government asked the Tanzania Food and Drugs Authority (TFDA) and the Ministry of Livestock and Fisheries to establish measures and mechanisms to increase the availability of drugs and vaccines in the country. The TFDA has entered into a memorandum of understanding with the Tanzania Veterinary Council to minimize overlap of functions between them and to increase the availability of quality regulatory services. Effective implementation of the mutual recognition procedures (MRP) will enhance faster registration and availability of good-quality, safe, effective immunological veterinary products (IVPs) and may lower IVP costs.
  • Publication
    Albania: Trade Impact of CEFTA
    (World Bank, Washington, DC, 2018-12) World Bank Group
    Regional free trade agreements (FTAs) have a sizable effect on exports and foster economic growth. While reducing tariffs in member countries, regional FTAs harmonize trade policy across regions and reduce regulation uncertainty for exporters. They are particularly important for supporting trade in isolated countries such as Albania, a transition economy in the Western Balkans. This policy note looks at the impact of membership in the Central European Free Trade Agreement (CEFTA) on Albania's export growth. It finds that Albanian exports to CEFTA members have grown much faster than its exports to other countries. A large share of this growth is contributed by firms that did not export to CEFTA countries previously and via new exports that were among the least traded to CEFTA countries. We also measure the impact of CEFTA on Albanian exports using a gravity equation, which finds that CEFTA increased Albanian exports to member countries between 34 percent and 144 percent.