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Oxford Investment Research is - unido

Oxford Investment ResearchEvaluating the quality of FDINicholas DavisOxford Investment ResearchNicholas DavisOxford Investment Researchwww.oxfordinvestment.org.ukAfrIPANet 12-14 June 2006


Oxford Investment ResearchEvaluating the quality of FDI1. About Oxford Investment Research2. The quality of FDI3. Identifying high-value FDI4. Capturing high-value FDI5. Resource issues6. Discussion points:a. Awareness of the impact of FDI: IPA experiencesb. Targeting policies: managing trade-offsc. Implementation issues: can we afford to assess FDI?7. Practical recommendationsNicholas DavisOxford Investment Researchwww.oxfordinvestment.org.ukAfrIPANet 12-14 June 2006


Oxford Investment Research1. About OIR“the end of the ivory tower”Oxford Investment Research is:A network of university economistsFocused on practical, policy-orientedquestionsEngaged in two-way interaction withinvestment practitionersResponsible for compiling managingthe IPL lead targeting databaseFunded by research grants &partnershipsNicholas DavisOxford Investment Researchwww.oxfordinvestment.org.ukAfrIPANet 12-14 June 2006


Oxford Investment Research2. The quality of FDI• Why is FDI quality important?• The debate over ‘spillovers’• Important factors in determining value• What is ‘valuable’ FDI?– Capital that sticks and grows– Employment that builds and upgrades skills– Technology & know-how that transfers– Competition that encourages efficiency• What is ‘mediocre’ FDI?– Capital that runs when times get tough– Employment that fails to train– Technology that stays in-house– Competition that crowds-out domestic firmsKey =LinkagesNicholas DavisOxford Investment Researchwww.oxfordinvestment.org.ukAfrIPANet 12-14 June 2006


Oxford Investment Research3. Identifying high-value FDI1. The difficulty of assessing high-value FDIa. How do we measure it?b. Conventional measures – capital and employmentc. ‘Sophisticated’ measures2. One possible method – a ‘desirability’ indexAverage realwagesperemployeeAveragenumberofemployees perfirmAverage ValueAdd peremployeeAveragecapitalinvestment perfirmTotalSectorSalesNumber offirms insectorSalesgrowthofsector(1999-2002)Foreignaffiliateassets /ParentAssetsR&D /SalesAll industriesRadio, television and communication equipment-0.160.61-0.270.46-0.17-0.30-0.33-0.414.40Office, accounting and computing machinery-0.552.20-0.140.470.16-0.35-0.523.02-0.49Aircraft and spacecraft0.03-0.11-0.23-0.69-0.42-0.410.75-0.292.11Medical, precision and optical instruments, watches andclocks-0.08-0.40-0.19-0.53-0.24-0.16-0.050.02-0.01Machinery and equipment, nec-0.16-0.47-0.27-0.81-0.050.37-0.500.08-0.07Pharmaceuticals0.40-0.060.290.530.17-0.060.172.132.19Nicholas DavisOxford Investment Researchwww.oxfordinvestment.org.ukAfrIPANet 12-14 June 2006


Oxford Investment Research3. Identifying high-value FDIApplying the UNIDO AfrIPANet survey dataa. An incredibly valuable new source of datab. The advantages of a network platform - IPLc. Stand-out sectors:a. Marketing, sales and distributionb. Financial intermediariesc. Transport and communicationd. Auto, machinery and equipmente. Electricity, gas & water supplyd. Stand-out investor characteristics:a. Regional-oriented investorsb. South-south investorsNicholas DavisOxford Investment Researchwww.oxfordinvestment.org.ukAfrIPANet 12-14 June 2006


Oxford Investment Research4. Capturing high-value FDI1. Linking assessment to targetinga. The trade off between desirability and attainability2. Identifying likely investorsa. Assessing comparative advantageb. Know what investors are doing - e.g. IPL Database3. Building capabilitiesa. Using intermediate targets – industries and firms4. Targeting successa. Developing and using a targeting databasea. AfrIPANet database – existing investorsb. IPL – future investorsNicholas DavisOxford Investment Researchwww.oxfordinvestment.org.ukAfrIPANet 12-14 June 2006


Oxford Investment ResearchNicholas DavisOxford Investment Researchwww.oxfordinvestment.org.ukAfrIPANet 12-14 June 2006


Oxford Investment Research5. Resource Issues• Evaluating FDI is data intense– General lack of empirical data at industry- and firmlevel– AfrIPANet survey information invaluable– Increasing availability of project-tracking platformsand databases like IPL• Need a clear, practical methodology– Appropriate for countries at various stages ofdevelopment, different priorities and endowmentsNicholas DavisOxford Investment Researchwww.oxfordinvestment.org.ukAfrIPANet 12-14 June 2006


Oxford Investment Research6. Discussion pointsa. Awareness of the impact of FDI: IPA experiencesb. Targeting policies: managing trade-offsc. Implementation issues: can we afford to assessFDI?Nicholas DavisOxford Investment Researchwww.oxfordinvestment.org.ukAfrIPANet 12-14 June 2006


Oxford Investment Research7. Practical recommendations1. Develop a practical, low-cost targeting methodology2. Make the most of the UNIDO dataa. The database of firmsb. The impact data and further results3. Extend UNIDO’s work at homea. Build a targeting database and track firms4. Co-operate and share knowledge on impact5. Panel and audience recommendationsNicholas DavisOxford Investment Researchwww.oxfordinvestment.org.ukAfrIPANet 12-14 June 2006

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