Publication:
Divestment Drivers and FDI Retention

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dc.contributor.authorPriyanka, Kher
dc.contributor.authorGriffin, Carlos
dc.date.accessioned2023-09-13T20:53:33Z
dc.date.available2023-09-13T20:53:33Z
dc.date.issued2023-09-13
dc.description.abstractAffiliates of foreign multinationals offer potential growth and benefits through years of successful operation and successive expansions, including through job creation, new skills and technologies, and deeper participation in global value chains. In fact, reinvestment has become an increasingly important part of global foreign direct investment flows. This is evidenced by the share of reinvested earnings in global foreign direct investment (FDI) growing from 30 percent in 2005 to more than 40 percent since 2018. The need to address the issue of divestment is made more urgent by extraordinary crises. The COVID-19 pandemic, the war in Ukraine, inflation, growing geopolitical tension, volatile energy prices, climate change, an acceleration in the emergence of disruptive technologies, resurgent protectionism and related challenges in global value chain integration, the possibility of a global minimum corporate tax, have led to disruptions in business plans of multinationals. The need to address the issue of divestment is urgent, given the extraordinary crises and trends that now present investors and policymakers with extreme economic uncertainty. The aim of this note is to fill that gap and ultimately help host country investment agencies with more timely identification of potential divestment risks. Based on a literature review and the World Bank’s operational experience, this note explores the following three questions: (1) what are the drivers of divestment decisions, including the cancellation of expansion plans; (2) are there any early warning signs of divestment likelihood that could be discernible to retention agencies (that is, agencies leading government efforts to better retain investment); and (3) how can retention agencies leverage this knowledge to enable better FDI retention This note aims to serve as a starting point, documenting available literature on the topic. It ultimately aims to support retention agencies in taking more informed steps and decisions to better retain investment.en
dc.identifierhttp://documents.worldbank.org/curated/en/099090823160521679/P1755380f72a400b20b136007a5c61ac2b4
dc.identifier.doi10.1596/40344
dc.identifier.urihttps://openknowledge.worldbank.org/handle/10986/40344
dc.languageEnglish
dc.language.isoen_US
dc.publisherWashington, DC: World Bank
dc.relation.ispartofseriesEquitable Growth, Finance and Institutions Insight - Trade, Investment and Competitiveness
dc.rightsCC BY-NC 3.0 IGO
dc.rights.holderWorld Bank
dc.rights.urihttps://creativecommons.org/licenses/by-nc/3.0/igo
dc.subjectDIVESTMENT DRIVERS
dc.subjectFDI RETENTION
dc.subjectAFFILIATES
dc.subjectINVESTORS
dc.titleDivestment Drivers and FDI Retentionen
dc.typeReport
dspace.entity.typePublication
okr.crossref.titleDivestment Drivers and FDI Retention
okr.date.disclosure2023-09-13
okr.date.lastmodified2023-09-11T00:00:00Zen
okr.doctypeEconomic & Sector Work
okr.docurlhttp://documents.worldbank.org/curated/en/099090823160521679/P1755380f72a400b20b136007a5c61ac2b4
okr.guid099090823160521679
okr.identifier.docmidP175538-f72a4093-c7a1-4cb2-b136-07a5c61ac2b4
okr.identifier.doihttp://dx.doi.org/10.1596/40344
okr.identifier.externaldocumentum34159135
okr.identifier.internaldocumentum34159135
okr.identifier.report184840
okr.import.id1759
okr.importedtrueen
okr.language.supporteden
okr.pdfurlhttp://documents.worldbank.org/curated/en/099090823160521679/pdf/P1755380f72a400b20b136007a5c61ac2b4.pdfen
okr.region.geographicalWorld
okr.sectorOther Industry, Trade and Services
okr.themeBusiness Enabling Environment,Investment and Business Climate,Human Development and Gender,Disease Control,Private Sector Development,Pandemic Response,Regulation and Competition Policy
okr.topicInternational Economics and Trade::Foreign Direct Investment
okr.topicInternational Economics and Trade::Trade Finance and Investment
okr.unitEFI-FCI-TIC-Investment Climate (ETIIC)
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