Foreign Direct Investment Promotion

A large percentage of the literature available dwells on the rationale behind companies engaging in foreign investment, the factors influencing the probability of companies investing in an economy, among other aspects of foreign investment. Additionally, research has revealed that the most successful organizations, currently, are those that have achieved globalization. As a result, many businesses look to venture into more foreign markets as it helps in subsidization (“Aid for Trade, Foreign Direct Investment and Export Upgrading in Recipient Countries, 2015”). The failure of one market does not affect the profitability of the organization as it can depend on other economies. Many countries compete to increase the foreign direct investments thus the development of variations of investment promotion. Many, probably more suitable, countries are not placed on the list.

Investment promotion, on the other hand, helps in making the investment opportunities in a country more explicit thus improving the possibility of consideration. Recent research revealed that for every $1 invested in investment promotion, there was a return of $4 (Harding & Beata, 2011). This comes as a result of countering the unfair consideration for investment possibilities. Promoting investment through IPA’s helps countries in overcoming the asymmetry of information. It also leads to the sealing of gaps in supply, especially in developing countries. The competitive advantage of a country in the international market also increases with the introduction of foreign investment. Local investors also have increased numbers of possible investment partners. Multinational companies are usually highly dependent on technology. As a result, FDI leads to technology transfer (Biglaiser, 2010).

An enabling framework would be necessary to facilitate the entry of foreign investors. The enabling factors include macroeconomic policies, supply. These are important in the formation of positive attractiveness for foreign investment. The level of economic sustainability of a country is also an important aspect. Transnational companies put into consideration the inward investment policies in a country, which influence the restrictions on foreign direct investment (Harding & Beata, 2011). Competitive positioning is, similarly essential for the success of a strategy. Competitive positioning is greatly dependent on research and market planning. Other aspects of the investment promotion framework also play a major role in the process. Lead generation mainly involves marketing of the available opportunities to multinational companies. Company targeting is also part of the lead generation process.