Frustration with the lack of good information about economic development incentives is not limited to the US. The “dramatic rise” in the use of incentives to attract foreign direct investment around the world along with the lack of “systematic monitoring, reporting, analysis and regulation” has spurred an upcoming conference designed to advance understanding of the costs and benefits of incentives at the country level.
The Vale Columbia Center for Sustainable International Investment will hold a free conference addressing the use of incentives to attract foreign direct investment (FDI) November 13-14 at Columbia University in New York.
It looks like a great program with the following sessions scheduled:
- Taking stock of FDI incentives: what in the world is going on?
- Do foreign direct investment incentives work? Do they attract FDI?
- Do foreign direct investment incentives cost more than they are worth? Conducting a proper cost-benefit analysis
- What are the alternatives? Attracting and benefiting from foreign direct investment
- The way forward: policy options for the governance of FDI incentives
Speakers from multiple countries (including Mauritius, Ireland, India, Cameroon, Portugal) and organizations such as the World Bank, European Commission, IMF, WTO, OECD and the UN Conference on Trade and Development (UNCTAD) will take on several topics of interest:
- How responsive is the locational decision of FDI to incentives that raise the return on capital?
- Do incentives only divert investment or can they increase overall investment flows?
- Is there enough consensus to set the ground for general guidelines on when, how and which incentives ought to be used?
- What are the types of costs and benefits that enter into the cost-benefit matrix of analysis? Who bears the costs and who receives the benefits? How do costs and benefits change with the time period of analysis?
- How do costs and benefits vary by the type of FDI incentive – fiscal, financial, regulatory, and other incentives? Which is the most affordable and effective?
- What alternative strategies are available to developing economies wanting to attract or retain capital while minimizing fiscal costs or complex oversight requirements?
- Which countries have been most successful in attracting and benefiting from FDI? What role have cluster strategies, regional integration, and investment in the institutional and enabling environment played?
- How should FDI incentives be legislated, monitored, and evaluated in a manner that is transparent and done through the proper legislative channels?
- Are global governance measures needed? Are broader multilateral solutions needed? What would they look like and what would be the content?
I hope to attend this program and will share what I learn. The questions are too big and too complex to generate immediate solutions, but I expect the free flow of ideas and quality of thought behind the program will provide guidance for all of us interested in the better use of incentives.