Investment Promotion in the Visegrad Countries: A Comparative Analysis
The chapter examines whether the investment promotion agencies (IPAs) of the V4 countries follow a similar approach when trying to attract FDI into their economies. After a brief overview of the relevant literature on the factors influencing the IPAs’ per
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uction and Basic Concepts of FDI Promotion The aim of this chapter is to reveal the existing differences and similarities between the investment promotion agencies (IPAs) of the Visegrad Four (V4) countries. Hungary, Slovakia, Poland and the Czech Republic are all capital-scarce emerging economies; therefore, it is imperative for them to attract foreign capital. They also share a common history, all of them joined the EU in 2004, and they are considered regional competitors
Á. Tőrös (*) Economic Analyst, Budapest, Hungary Á. Mészáros International Business Research Centre, Corvinus University Budapest, Budapest, Hungary Á. Dani Economic Analysis Department, Hungarian Investment Promotion Agency, Budapest, Hungary © The Author(s) 2017 B. Szent-Iványi (ed.), Foreign Direct Investment in Central and Eastern Europe, DOI 10.1007/978-3-319-40496-7_9
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when it comes to attracting foreign investors. Thus, it makes sense to engage in comparative analysis of their investment promotion policies. The main question the chapter aims to answer is whether the IPAs of the region make use of similar sets of tools (e.g. sector targeting, investment incentives or national image building) while trying to attract foreign direct investment into their economies. There is a fierce competition between countries for foreign direct investment (FDI), especially for the jobs it can create and the technologies countries can acquire through it. Investment promotion can be generally defined as marketing activities through which governments aim to attract FDI inflows. These activities include advertising, investment seminars and missions, participation in trade shows and exhibitions, distribution of literature, direct marketing efforts, matching prospective investors with local partners and so on (Wells and Wint 2000, 8). In this approach, investment promotion excludes the granting of incentives to foreign investors, the screening of investors and negotiation with foreign investors. In short, investment promotion activities can be divided into four areas: national image building, investment generation, investor servicing and policy advocacy (Harding and Javorcik 2011). In this chapter, investment promotion is defined in a broader sense to involve activities through which governments intend to make the host country more attractive for foreign direct investors. It consists of the usual marketing tools detailed above, as well as financial incentives. The latter is included in the definition because most IPAs are involved in providing financial incentives. IPAs play an important role in managing and monitoring the process of financial incentives, as well as in planning the composition of the most suitable financial incentive package for potential investors. Although financial incentives are set by the government and regulated by EU law, they are none the less inseparable from investment promotion activities. In order to carry out investment promotion activities, the majority of states have set up IPAs. The economic rationale behind thei
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