Putting it to Work in Developing Countries - Nathan Associates

Investment promotion agency (IPA). Government or
quasi-government organization set up to increase a
country’s inward investment through image-building,
promotion, investor services, and improving the investment
climate.
Investment promotion intermediary (IPI). Any of the
various public, private, and civic organizations involved
in investment promotion (e.g., investment promotion
agencies, export processing zones, chambers of commerce,
commercial attaches).
Investor roadmap. A USAID tool for identifying policy
and administrative barriers to investing and operating
a business in developing countries by four stages:
entry, establishment, location, and operation.
“Ladder Effect.” Moving up the production value
chain of the same or for new products through additional,
higher-value use of technology or human capital
as input. Reflects dynamic location advantage.
Liberalization, investment. National or regional policy
that aims to reduce regulatory controls and legal
restrictions on the movement of investment capital.
Liquidity. The ability, access, and flexibility of converting
economic assets into cash.
Location advantage. Similar to comparative advantage
but incorporates the entire package of favorable policy,
incentives, strategic opportunity, and other tangible
and nontangible benefits making a country or region
attractive to foreign investors.
Majority-owned foreign affiliate (MOFA). Branch of a
multinational corporation in which the parent company’s
equity stake exceeds 50 percent.
Market-seeking FDI. Investment undertaken to produce
for and serve a domestic or regional market, to
access a large consumer market (i.e., China), or sometimes
to circumvent barriers to serving the target market
through exporting from the home country.
Multilateral Agreement on Investment (MAI). Accord
proposed at the OECD to provide binding rules governing
foreign investment. International negotiations
were suspended in 1998.
Multi-Fibre Arrangement (MFA). A quota system for
the textiles and apparel industry that for many decades
permitted developed countries, predominantly the
United States and the European Union, to restrain
imports of covered products from low-cost production
sites abroad. As a result of quotas on the most competitive,
large-scale producers, producers in other low-cost
sites (primarily poorer developing countries) were able
to attract foreign direct investment to the apparel
sector. Elimination of the quotas was agreed in 1995
under the World Trade Organization Agreement on
Textiles and Clothing, and phased in over a ten-year
period. Quotas were abolished in January 2005. Many
countries that had developed significant apparel industries
as a result of quota-skirting foreign direct investment
are worried about disinvestment in the postquota
world.
Multilateral Investment Guarantee Agency (MIGA).
An arm of the World Bank facilitating foreign investment
in developing countries by providing political risk
insurance for investors and investment promotion
capacity building for member countries.
Multinational corporation, multinational enterprise
(MNC or MNE). A company with productive operations
in many different countries, as distinguished from
international companies that operate in one country
and export to others.
National treatment. The handling of foreign goods,
services, or investment no less favorably than competing
local goods, services, or investment.
Natural-resource-seeking FDI. Capital investment for
the exploration or exploitation of raw materials such as
petroleum, precious minerals, and forestry products.
Newly Industrialized Economies (NICs). Former
developing countries that have experienced such rapid
and sustained economic growth that they are now
viewed as developed. The term was originally used in
reference to East Asian countries, such as Taiwan,
South Korea, and Singapore, but it is sometimes used
in reference to countries outside that region.
Network trade. Trade within a given product supply
chain, featuring flow of parts, components, and other
intermediate items to produce a final good. A key characteristic
of global production chains. Contrasts with
more traditional trade in final goods. See global production
chains.
Organization for Economic Co-operation and
Development (OECD). Paris-based organization comprising
30 member countries (primarily developed)
committed to democratic government and the market
economy. The OECD is best known for its publications
and statistics on globalization, corporate governance,
investment promotion, sustainable development,
and other global economic issues.
Offshoring. The practice of relocating a production
activity, task, or process to a foreign country to cut production
costs (e.g., a French car manufacturer relocates
auto parts production to Morocco). The enterprise usually
maintains ownership of foreign facilities.
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