HCMs can be targeted at different phases of the investment process, such as the pre-investment phase, the investment phase or the post-investment phase in which the investment is operational in the host country. Early support services are made available to investors already at the pre-investment phase and efforts to improve home-country absorptive capacity would also need to begin at an early stage. Regulations and financial support usually address the investment phase itself (or the expansion of an existing investment). Fiscal support, political risk insurance, treaties, operational measures, maximising benefits and evaluation are primarily relevant to the post-investment stage although they can affect the decision on making an investment. In other words, promoting, facilitating and supporting OFDI through the right HCMs at the right time plays a role in enhancing the effectiveness of HCMs in supporting OFDI that generates home-country effects.
Key insights
- Governments can make different HCMs available at different phases of the investment process. A good combination of HCMs over the entire process of investment, from pre-investment to operational phase, will increase the possibility that OFDI generates appropriate home-country effects.
Interactions
B9) Time since investment: Home-country measures can be targeted at specific phases of an investment.
Section C: Home-country Measures: HCMs differ in terms of their relevance to different phases of the investment process.
C3) Early support services: Early support services focus on the pre-investment phase.
C4) Financial support: Financial support measures set out timeframes for the financing of investments, which can extend to many years or even decades.
C8) Operational support: Operational support measures support MNEs and their investments over longer periods of time, thereby helping ensure their long-term success and survival.
C9) Maximizing benefits: Measures to maximise the benefits from OFDI focus on the long-term generation of benefits from investments for the home country.
Existing Country Practices
Most HCMs by their very nature apply to specific timeframes within the investment process. Below are only a few examples of practices in which HCMs explicitly set out particular time frames:
Setting time frames by Italy: Equity participations by SIMEST have a maximum duration of eight years.
Setting time frames by Spain: ICO’s direct financing scheme requires investment operations to be formalised within the medium to long term, preferably between 2 and 25 years.