Publication: Investment Linkages and Incentives: Promoting Technology Transfer and Productivity Spillovers from Foreign Direct Investment
Date
2020-05-01
ISSN
Published
2020-05-01
Author(s)
Sabha, Yassin
Liu, Yan
Douw, Wim
Abstract
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.
Link to Data Set
Citation
“Sabha, Yassin; Liu, Yan; Douw, Wim. 2020. Investment Linkages and Incentives: Promoting Technology Transfer and Productivity Spillovers from Foreign Direct Investment. © World Bank, Washington, DC. http://hdl.handle.net/10986/33760 License: CC BY 3.0 IGO.”