Investment Linkages and Incentives
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.
| Main Authors: | , , |
|---|---|
| Format: | Brief biblioteca |
| Language: | English |
| Published: |
World Bank, Washington, DC
2020-05-01
|
| Subjects: | INVESTMENT INCENTIVES, FOREIGN DIRECT INVESTMENT, FDI, BACKWARD LINKAGE, GLOBAL VALUE CHAIN, INVESTMENT CLIMATE, |
| Online Access: | http://documents.worldbank.org/curated/en/354781589316916550/Investment-Linkages-and-Incentives-Promoting-Technology-Transfer-and-Productivity-Spillovers-from-Foreign-Direct-Investment-FDI https://hdl.handle.net/10986/33760 |
| Tags: |
Add Tag
No Tags, Be the first to tag this record!
|
| Summary: | 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. |
|---|