Our Editor-In-Chief, Ana Grujovic, spoke with the departing Chair of the OECD IPA Network and discovered the main challenges Investment Promotion Agencies are facing today.
ABOUT THE OECD IPA NETWORK
The OECD IPA Network was created in 2016 and is currently chaired by Achim Hartig, Managing Director at Germany Trade and Invest, and closely advised by a Steering Group composed of IPA representatives from Costa Rica, Denmark, France, Germany, Ireland, Israel, the Netherlands, Sweden and the United Kingdom.
Q1: Mr. Nijland, you were appointed the first Chair of the OECD IPA Network: could you explain the main objectives of the OECD Investment Promotion Agency Network?
The OECD IPA Network brings together senior IPA representatives from OECD countries and, in selected meetings from partner countries as well. Its objectives are:
- to gather a community of like-minded practitioners that are willing to engage in discussions and experience sharing with their peers;
- to benefit from the OECD expertise to gather, build and use evidence-based analysis on investment; and
- to engage with experts and policymakers from different areas and, in some cases, with IPAs from other regions.
The OECD IPA Network has established itself as an important forum for exchange and networking among practitioners from IPAs across the OECD area – and sometimes beyond. The Network provides access to OECD expertise and research, and to tailored analysis and advice to IPAs.
The Network started a few years ago, and I feel honored to have served as its first Chair. In the recent situation, where IPAs have to work in a context with geo-political challenges, rapid technological changes, disruptive business models and significant climate related issues I see the challenges for IPAs are getting more complex, and hence the need to have this Network for reflection, research and exchange of best practices will continue to grow.
Q2: What are the main challenges IPAs face today?
The main challenges I would identify at the moment include:
- A significant drop of FDI globally (40% to 50% see OECD’s latest FDI in Figures report);
- The need to respond effectively and rapidly to new investors’ needs, adapting to (and informing about) changes of government policies on investment (e.g. screening); and
- Pressure on public budgets (including for IPAs), rapidly evolving priorities for IPA intervention (less FDI attraction, more focus on aftercare), adapting and taking advantage to evolving strategies by multinational enterprises (e.g. reshoring, nearshoring).
Q3: We are witnessing the increased digitalization of IPA’s activities, services and operations. In your opinion, which IPAs activities can benefit most from going digital?
- The COVID response has drastically accelerated the earlier trend towards greater digitisation of IPAs.
- First, many services provided in person may need to be provided digitally in the medium to long term. As direct visits may be cancelled and lead generation via traditional means rendered more difficult or costly, digital means will allow IPAs to continue servicing and identifying future clients.
- This will require access to different ICT tools, ranging from videoconferencing and virtual site-visit facilities, robust CRMs and communication tools and relevant data and AI-business solutions. For example, digital client prospecting, capable of correctly identifying potential leads, and virtual-reality solutions for site visits can gain in importance.
- IPAs are already planting the seeds of, or speeding up, this transformation. Just to name a few examples, CINDE Costa Rica has accelerated its digital plans, including AI-based marketing, providing services and products online. Business Sweden provides investors with access to online interactive maps of different industrial clusters and proximity of key infrastructure.
- Investment facilitation will also have to enter the digital age. As illustrated by COVID, there is a benefit to having paperless and automated procedures. This may stress the need for one-stop shops and, more generally, government facilities that do not require physical visits to obtain relevant information, licenses or permits.
- Yet, progress on investment facilitation and retention as well as digitisation of procedures lies far beyond the responsibility of IPAs. As exemplified by Invest in Estonia and the government-wide e-Estonia initiative, or the case of many Nordic IPAs, it takes a concerted and long-term government effort to implement the necessary regulatory adjustments to make public services available online.
Q4: Exchanges among peers on experiences and lessons-learned can be critical for IPAs long-term development. How does the OECD IPA Network facilitate the dialogue between its members?
- The thematic discussions, which take place most of the time during annual meetings every October, advance collective understanding on issues of joint interest and facilitate exchanges on best practices.
- The process is very inclusive and bottom-up, as the very topics of the meetings are based on the interests expressed by IPAs.
- The OECD usually provides background information, statistical evidence, comparative analysis, and we discuss and share our experiences on that basis. The OECD also identifies relevant speakers and experts, invites relevant IPAs to present their case, and provides background information and comparative analysis on which we can base our discussion.
- Some meetings gather a large audience with IPAs from many different countries and other investment policy participants, some other meetings are small interactive sessions dedicated to peer-learning amongst practitioners. The dedicated sessions can sometimes relate to the specific functions of IPAs, such as monitoring & evaluation or policy advocacy. And sometimes go beyond our usual scope of activities with, for example, a very useful strategic foresight workshop for IPA practitioners organised by the OECD last October.
Q5: In your opinion, are IPAs facing profound changes? What can we expect to see in the future?
- IPAs are indeed facing profound changes. Understanding changes and preparing accordingly for the future will help us navigate, adapt and shape our future through better decisions. Here are examples of important changes facing IPAs:
- As explained earlier, the COVID-19 crisis has drastically accelerated the need to adopt greater digitisation by IPAs – this will be key for IPAs to survive and succeed.
- IPAs – like their governments – are increasingly focusing on maximising the positive impact of FDI: they will need to develop tools to better identify and support FDI projects that can have the highest impact on the local economy and support sustainable and green growth.
- In their FDI attraction activities, IPAs will need to reconsider their prioritisation strategies. New sectors are being considered in priority (health, digital and green in particular). Some IPAs are taking advantage of new strategies by multinational companies while others are focusing on SMEs.
- IPAs will need to continue reinforcing their aftercare services, as new investments are -or will continue- declining. IPAs will need to put further emphasis on investor retention and expansion in their long term investment promotion strategies as well.
- Investment climate/policy improvements will become ever more important in a context of uncertainty. IPAs have a key role to play through policy advocacy, which many already perceive will become more important in the long run. As FDI declines, sound business environments will become even more salient for investors.
Finally, to meet these objectives, IPAs will need to continue being flexible and innovative to increase their resilience and capacity to adapt to new situations. They have to be ready to undergo organisational reforms to better meet new objectives.
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Source/Image Credit. Trade and Investment Promotion