Innovations in Foreign Direct Investment Attraction

2. The local level is critical for economic development: It is the level were sup-

ply-chain linkages, cluster development, and skills development take place

16

 and

3. Each subnational region has unique strengths to promote:  Most countries, 

except the smallest ones, have diverse economic regions with strengths in different 

sectors, with specific investment opportunities for investors, and often with differ-

ent economic development objectives reflecting the economic and social situation 

of each region. It is challenging, if not impossible in large countries, for a national 

IPA to have comprehensive and constantly updated information on every region and 

investment opportunity across the country and to be able to promote all the regions 

16  For example, see 

https://hbr.org/1998/11/clusters-and-the-new-economics-of-competition

.

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and opportunities to potential investors. Typically, most national IPAs tend to pro-

mote their strongest regions and those that align with their national sector targeting 

strategy, as this will secure the strongest results for the IPA. Very few national IPAs 

have specific targets for the regional dispersion of FDI (one of few examples would 

be IDA Ireland). Regions and cities within a country therefore often need their own 

investment promotion capacity to be able to complement the activities of the nation-

al IPA and directly promote their location to investors.

A challenge for most national IPAs and governments is how to support regional and 

local IPAs to promote and facilitate FDI. The success of the country in attracting FDI 

and maximizing the benefits of FDI may depend on the capacity of regional and local 

IPAs.