How Effective is Investment Promotion?: Firm-Level Evidence
Peer Reviewed
Date issued
January 2020
Subject
Investment;
Investment Policy;
Investment Attraction Policy;
Investment Promotion Policy;
Investment Promotion Agency
JEL code
F14 - Empirical Studies of Trade;
F23 - Multinational Firms • International Business;
F13 - Trade Policy • International Trade Organizations
Country
Uruguay;
Costa Rica
Category
Discussion Papers
In this paper we present evidence on the impact of investment promotion activities on multinational firms location decisions using -for the first time to our knowledge- firmlevel data. In particular, we carry difference-in-differences estimations on data on the establishment and location of affiliates of multinational firms and assistance to these firms by the national investment promotion agency in Costa Rica and Uruguay over the period 2000-2016. Estimation results suggest that investment promotion has been effective in attracting affiliates of multinational firms. Further, this effect is stronger on
firms headquartered in developed home countries.
firms headquartered in developed home countries.
