Investment promotion agencies: do they work?

Kazunobu Hayakawa, Hyun-Hoon Lee and Donghyun Park

No 272, IDE Discussion Papers from Institute of Developing Economies, Japan External Trade Organization(JETRO)

Abstract: In this paper, we examine the role of investment promotion agencies (IPAs) in promoting outward FDI from Japan and Korea. Looking at two home countries enables us to control for both country-pair time-invariant characteristics and host country time-varying characteristics. Our empirical results suggest that home-country IPAs tend to be more effective in promoting outward FDI in politically risky host countries.However, this finding depends on whether the home-country firm is listed or unlisted. More specifically, we find that the positive effect of home country IPAs on outward FDI in politically risky countries is limited to unlisted home- country firms, which are widely assumed to be less competitive and productive.

Keywords: FDI; Multinational firm; Firm heterogeneity; Investment promotion; Firm behavior; Foreign investments; International business enterprises; Administrative organization (search for similar items in EconPapers)
JEL-codes: D22 F21 F23 (search for similar items in EconPapers)
Date: 2010-12
New Economics Papers: this item is included in nep-ifn and nep-int
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Published in IDE Discussion Paper = IDE Discussion Paper, No. 272. 2010-12

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