Government Investment Policy

1. Government Investment Policy

Prepared by:Tibilova Diana
Bragina Kristina

2. Developing an Investment Policy

The key feature of foreign direct investment is that it
is an investment made that establishes either
effective control of, or at least substantial influence
over, the decision making of a foreign business
Foreign direct investment frequently involves more
than just a capital investment. It may include
provision of management or technology as well.
Foreign direct investment (FDI)
is an investment made by a
company or individual in one
country in business interests in
another country, in the form of
either establishing business
operations or acquiring
business assets in the other
country, such as ownership or
controlling interest in a foreign
company.

3.

4. The World Bank Group developed an investment reform map, which offers three basic concepts to help governments clarify the

position of their countries in the world economy, set priorities
and implement a country’s long-term vision:
1. Investment policy is not about
choosing between foreign and
domestic investment. It is about
connecting them both through
local, regional and global value
chains.
This means regulatory
reform should not only
focus on domestic laws
but also pursue
coherence between the
latter and international
investment agreements
which are increasingly
governing domestic and
international production.
2. An investment is not a
transaction; it is a
relationship.
An investment policy strategy
needs to go beyond attracting
initial investments – this is just
one small part of the story. The
real benefits to the state come
later on in the relationship,
when a country successfully
retains investment and builds
strong linkages with domestic
businesses.
3. Not all types of
investment are the same.
Different types of
investment have
different effects on
socio-economic
development, and thus
require different
policies…Countries who
can apply this
framework to their
investment policies and
vision will have a
logical backbone for
implementing an
investment strategy

5. Countries who can apply this framework to their investment policies and vision will have a logical backbone for implementing an

investment strategy that could lead to measurable results.
For instance, Mexico’s aerospace
industry was essentially nonexistent in the year 2000, but now
has grown to a $5 billion export
industry that employs around
31,000 people.
The Ministry of Economy is coordinating a
national plan based on the strengths of
particular regions 118 in the country.
In addition, state universities are ramping up their
aerospace design and engineering programs:
Mexico now graduates 100,000 engineers annually,
providing a skilled population of potential employees
to power the businesses…

6. Conclusion:

There is no one-size fits all solution to developing effective investment
policies. An approach that works within one country for one type of
investment at one particular time may need to be continually revised,
revamped, and reworked to take into account the changes or unique
circumstances in an economy. By using and adapting a framework such as
the investment reform map, governments can develop policies that work
for their own countries.