In their recent paper Sauvant and Gabor focus on how countries can increase levels of FDI geared toward projects likely to contribute as much as possible to sustainable development. The paper attempts to answer 4 crucial questions on the topic, one of which is: what role can home countries play in facilitating outward FDI flows, especially the flow of sustainable FDI?
The authors find that a growing number of home countries already have various measures in place to support their outward investors, including by providing fiscal incentives such as tax exemptions, relief, and deferrals as well as tax credits and allowances for qualifying activities. However, it is typically not one institution in a given home country that is centrally responsible for outward FDI facilitation efforts, which creates communication frictions, especially with SME investors.
The authors conclude that in order to facilitate sustainable FDI flows, home countries should, among others, make the incentivizing measures, and institutions that provide them, more transparent and accessible. To read the full article, follow the link.
