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5 - Facilitating Sustainable Investment

The Role and Limits of Investment Promotion Agencies

from Part II - Top-Down: Public Approaches to Achieving the Sustainable Development Goals

Published online by Cambridge University Press:  18 September 2020

Cosimo Beverelli
Affiliation:
World Trade Organization
Jürgen Kurtz
Affiliation:
European University Institute, Florence
Damian Raess
Affiliation:
World Trade Institute, University of Bern
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Summary

Today almost every country in the world has an investment promotion agency (IPA) to attract and retain foreign investment. In principle, IPAs could be an important tool in advancing the sustainable development agenda, as they provide a country-led, domestically legitimate means of catalyzing new foreign investments. We argue that IPAs’ governance structures condition their potential contribution to sustainable development, by leading them to privilege certain ideas and interests over others. Specifically, IPAs that are more autonomous from the government bureaucracy tend to prioritise activities to increase overall inflows of foreign investment, while IPAs that are more integrated into the government bureaucracy are more likely to structure their activities in ways that prioritise their countries’ industrial policy goals. Evidence from World Bank surveys of IPA officials and a case study of Costa Rica’s IPA demonstrate how agencies’ governance structures incentivise them to approach their mandates in different ways, which in turn influences their contribution to sustainable, inclusive development. This research enriches our understanding of investment promotion as a tool for sustainable development and contributes to ongoing debates on how states manage economic globalisation.

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Publisher: Cambridge University Press
Print publication year: 2020

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