Home-country measures (HCMs) comprise all policies, regulations, measures and institutional arrangements implemented by home countries that seek to regulate, support, facilitate, promote and encourage OFDI flows to other countries (UNESCAP 2020, UNCTAD 2001). HCMs can help governments leverage OFDI for economic development and seek to maximize the positive home-country effects (Stephenson 2018b, UNESCAP 2020). Advanced economies have made regular use of a variety of HCMs. While developing countries have focused primarily on regulating OFDI, they are also increasingly adopting a greater variety of HCMs (Sauvant et al. 2014, Stephenson 2018b, UNESCAP 2020).
Table 3 provides an overview of HCMs as covered in this Toolkit. HCMs can be implemented to form part of a country’s broader development strategy, as is often practiced with inward investment and trade (Stephenson and Perea 2018, Sauvant et al. 2014, Knoerich 2016). HCMs have wide applicability to many countries and economies, yet to maximize developmental outcomes, they should be tailored to fit the contexts of individual home countries, their national companies and OFDI characteristics (UNESCAP 2020). HCMs should be operationalised to meet a country’s economic, social and sustainable development objectives.
It should be noted that indirect measures that may affect but are not directly targeted at OFDI, such as trade policies or foreign aid (Sauvant et al. 2014), are not considered HCMs in this Toolkit.
Table 3 List of home country measures
| Category | Measure | Sub-category |
| Institutional arrangements |
Government departments and ministries | |
| Investment and/or trade promotion agencies (central and local, domestic and abroad) | ||
| Export credit agencies (e.g., export-import banks) | ||
| Development finance institutions | ||
| Special purpose institutions | ||
| Coordinating institution or mechanism | ||
| Regulations | Restrictions | Investment approval |
| Foreign exchange controls | ||
| Requirements | Requirements for corporate conduct overseas | |
| Reporting requirements | ||
| Monitoring of OFDI projects | ||
| Early support services | Information | Provision of information on host countries |
| Provision of information on OFDI | ||
| Provision of information on HCMs | ||
| Investment missions | ||
| Matchmaking services | Connecting with governments/business overseas | |
| Maintaining business matchmaking databases | ||
| Education and training | ||
| In-depth consultancy and advice | ||
| Financial support | Grants | Pre-investment feasibility studies and research |
| Establishment of offices overseas | ||
| Training and human capital development | ||
| Consultancy | ||
| Work placements (for training purposes) | ||
| Loans | Concessional loans | |
| Non-concessional loans | ||
| Structured financing options | ||
| Risk-sharing arrangements | ||
| Financial guarantees | ||
| Equity participation | ||
| Fiscal support | Tax reductions | Exemptions from corporate income tax |
| Tax deductions | ||
| Corporate tax rate relief | ||
| Tax deferrals | ||
| Tax credits | ||
| Allowances | ||
| Investment insurance |
Political risk insurance | |
| Treaties | International investment agreements (IIAs) | Bilateral investment agreements (BITs) |
| Trade agreements with investment provisions | ||
| Membership in dispute resolution institutions | ||
| Market entry negotiations | ||
| Double taxation treaties | ||
| Operational support |
Dealing with policies overseas | Facilitating establishment in the host country |
| Political and diplomatic backing | ||
| Policy coordination with host governments | ||
| Mobilize domestic support | Inter-firm collaboration on OFDI | |
| Encourage banks to finance OFDI | ||
| Auxiliary services overseas | Mobilising OFDI-associated service providers | |
| Establish centres or parks in host countries | ||
| Maximizing benefits |
Enhancing home country prerequisites | Measures to boost absorptive capacity |
| Measures to promote competitiveness | ||
| Promoting domestic inter-firm linkages | ||
| Improving transmission channels | ||
| Encouraging generation of effects | ||
| Evaluation | Feedback mechanisms | Surveys |
| Listening sessions | ||
| Data analysis |
Source: UNESCAP (2020), based mostly on Sauvant et al. (2014), and on Stephenson and Perea (2018) and Kuźmińska-Haberla (2012) (for restrictions).
Interactions
D9) Time since investment: HCMs differ in terms of their relevance to different phases of the investment process.
E3) Competitive neutrality: Excessive or inappropriate use of some HCMs might undermine competitive neutrality.
Resources:
Sauvant et al. (2014) for an overview of HCMs and a survey of the most important HCMs in ten advanced and ten emerging economies (this chapter on HCMs draws significantly from this study’s findings).
UNESCAP (2020) for an overview of HCMs, with a focus on the Asia-Pacific region and case studies of Thailand, Malaysia and the Philippines.
Stephenson and Perea (2018) for a six-step guide for policymakers.
Sauvant and Chen (2014) for an overview of HCMs in China.
Luo, Xue, and Han (2010) for a discussion of HCMs in China.