Attractiveness for Innovation
Location Factors for International Investment
Attractiveness for investment in innovation is high on the policy agenda in many countries as innovation is a key factor of growth and competitiveness in OECD countries. Virtually all governments are keen to attract international investment by multinational enterprises (MNEs) as a means to promote growth and employment, create new jobs and bring in new technologies.
While all countries and regions have some policy measures in place that are aimed at increasing their attractiveness for innovation, it is less clear if these policies are effective.
This report analyses the current trends in international investment in innovation and the attractiveness policies already implemented. These are often based on the more traditional instruments for attracting international investment. The book also explores in more detail the role of investment incentives that governments tend to give to international investors: their rationale, their impact and their usefulness.
The evidence presented in this report raises clear policy issues and questions existing policies. A number of policy principles are formulated to guide policy makers.
Executive summary
International investment has been an important driver of globalisation and has grown quickly over the last decades due to the rapid emergence of global value chains. Production processes have become increasingly fragmented as goods are produced sequentially in stages across different countries following the strong decline in communication and co-ordination costs. Firms seek to optimise the production process by locating their various production stages across different sites according to the most optimal location factors across countries. While distribution, sales and production activities were the first to lead the way, research and development (R&D) and decision-making activities have also become increasingly (re-)located internationally.