| Evaluation | Feedback mechanisms | Surveys |
| Listening sessions | ||
| Data analysis |
Governments can put procedures in place to evaluate the effectiveness of their HCMs in increasing OFDI flows and enabling the generation of home-country effects. The coordinating institution for OFDI is a particularly suitable agency to manage the processes involved in evaluation.
Feedback mechanisms could be employed to examine the extent to which the HCMs are endorsed by MNEs, have the intended effects and are cost-efficient (Stephenson and Perea 2018). At least two types of feedback mechanisms have been employed:
- Surveys of companies investing overseas could uncover the extent to which investors are satisfied with available HCMs, have taken advantage of them and have experienced associated benefits. Indicators could be developed for the analysis of the survey results to evaluate the extent to which HCMs have fostered the generation of home-country effects.
- Listening sessions could be organized involving representatives from the MNEs who are knowledgeable about their companies’ overseas investments. Listening sessions are a good qualitative tool to ascertain the views of the businesspeople involved, and to hear their views on whether their investments have generated home-country effects.
In addition, evaluation can be undertaken through data analysis of quantitative and qualitative indicators, at both firm- and macroeconomy-level. Relevant data for analysis could include corporate indicators such as profitability, operational performance, asset quality and solvency; growth potential such as market share, sales and labour efficiency; and benefits to the home country such as the generation of home-country effects. More reliable conceptual and practical tools may however need to be developed for the effective measurement of such effects (UNESCAP 2020, Sauvant and Chen 2014).
Although the purpose is somewhat different, these efforts at data analysis can be combined with the monitoring of the overseas conduct of MNEs through appropriate regulatory activities (see 2) Regulations). For example, the data could be used to prepare evaluations on the overseas performance of MNEs in areas such as corporate social responsibility and sustainability.
Key insights
- Evaluation is important to verify how HCMs are working and whether they have the intended effects in increasing OFDI flows and generating home-country effects. It provides an opportunity to find out what companies want and identify any HCMs that need to be changed.
Interactions
Section D: Targeting: Evaluation can be used to check and verify whether the approach to targeting taken by the government is appropriate, effective and fulfils its purpose in promoting OFDI and generating home-country effects. It is an opportunity to identify which aspects of the existing targeting strategy need to be changed.
D1) Company characteristics: Because SOEs are under greater state control, evaluating their overseas activities may be easier for a government and could be used to ascertain responsible and fair corporate conduct of SOEs when abroad.
Existing Country Practices
Evaluation efforts are an internal government activity and thus their responsible agencies are not frequently publicised. Below is some evidence from available studies:
Evaluation by China: The Chinese government has put supervision procedures in place to evaluate the overseas performance of Chinese investments (Luo, Xue, and Han 2010, 77, Sauvant and Chen 2014, 150-151).
Evaluation by Thailand: The TOI Promotion Division under the Thai Board of Investment organizes listening sessions as part of its training activities and seminars (UNESCAP 2020, 58).