Search results

In an ongoing process of globalization and technology improvements and due to an increase in worldwide actors in the economic sector, commercial diplomacy is an important tool for countries to support their business community during the internationalization process and afterwards. Nevertheless, commercial diplomacy literature is still in its infancy. Therefore, this chapter reviews existing research on the topic and develops a framework, which integrates the topics examined so far and provides the reader with a more complete picture of the topic at hand.

By means of a literature review, this chapter shows that the body of literature involving research of both disciplines, International Relations and International Management, is still rather limited. As a consequence, we determine a future research agenda and call for more empirical studies, especially in the field of (political) economy.

Government, business support organisations (BSOs), support services and client business firms constitute the key actors involved in the business–government interaction within commercial diplomacy. While businesses are interested in support in their international operations, commercial diplomats (CDs) work towards both objectives: supporting individual firms and promoting the home country's national economy in general. BSOs, public or private or mixed such as bilateral chambers of commerce, sector associations, investment promotion agencies and other self-help business organisations, complete the CD's offer, and are often referred to, and participate directly and indirectly in the home country's trade promotion effort.

The nature of the CD's service to beneficiaries is highly people based, and contains both a consistent amount of government instruction and CD's own personal judgment and initiative in promoting various sectors/sub-sectors and spotting business opportunities. The ‘intermediary’ function of the CD between the beneficiary business and its potential future business partner is important. The interaction may start on either side: the business firm may approach the CD or vice versa. To a large extent, export issues remain the most important enquiries from business to CD vs. other issues such as foreign direct investment, joint venture and debt issues.

From a business perspective the main advantages to use the CD's service are threefold. The CD appears to business firms as the central platform, the starting point to promote bilateral business. Second, CDs enjoy trust as an institution: they are considered credible and neutral (credibility and neutrality). Last but not the least, CDs are found useful in helping out firms in their first steps in foreign markets (not necessarily first exporters but for the firms to which the host country market only is new). The transaction between CD and beneficiary business firm has a material price: some services such as market research are for fee and are often subcontracted. Others being part of a ‘basic service’ of diplomats are free of charge.

In the enlarged European Union (EU) with 25 members, the free movement of capital, coupled with the free movement of goods and services should be a major direct attraction for both intra-EU and external foreign direct investment (FDI) inflows. EU membership does not, however, lead to a linear increase in FDI inflows as many analysts suggest (ECE, 2001). With EU accession, the structure of FDI may change substantially (Hunya, 2000; Dyker, 2001). Activities based on the existence of closed domestic markets (e.g. food and beverages) and on cheap labour (e.g. assembly activities) might be reduced, or even closed down, giving way to more knowledge-intensive activities in the new EU member countries (Kalotay, 2004a). FDI in the new EU member countries is not yet on an uninterrupted growth path. In the pre-accession phase (1995–2003), the relative importance of new EU members in global FDI flows when compared to that of the “old” members of the EU, was actually shrinking. Thus, if new members want to use FDI as one channel for catching up, they have to reverse this trend and increase their inward FDI quite rapidly.

Rapid digital transformation underway represents both a risk and an opportunity for both policymakers and firms. This can address the risk and seize the opportunity by leveraging FDI to grow digital capabilities and competitiveness through a three-part strategy. First, launching Digital FDI enabling projects (DEPs) to create “digital friendly” investment climates through enabling policies, regulations, and measures. Second, using a “SMART” test as a heuristic before a full-fledged DEP is launched, which benchmarks their economy’s digital Skills, Market functioning, Access through connectivity, Restrictions, and Trust, and provides tools to tackle limiting factors. Third, reviewing FDI trends in six sectors that are important to grow the digital economy (two of which are proposed as essential, namely Communications and Software & IT services), with graphical evidence that can guide policymakers to prioritize policy reforms and investment promotion where they are relatively weak. Throughout, particular attention should be paid to growing the digital capacity of small and medium-sized enterprises (SMEs). A Sustainable Technology Board – modeled after the Financial Stability Board but oriented to cooperation over new technologies – could further help address techno-competition and other concerns over Digital FDI.

Purpose – This chapter examines the extent to which public support for internationalization can be considered as a determinant of foreign direct investment (FDI).

Design/methodology/approach – The chapter examines the traditional determinants of FDI and the capability-building argument; and augments this by testing a set of public support measures as complement of the firm's internal needs, using a probit model.

Findings – The chapter shows that a special theory is clearly required to explain the particular circumstances of the use of public support for internationalization activities. However, the received theory relying on capability-building argument performs well.

Practical implications – The importance of specific characteristics related to competencies and the use of certain types of public support that improve competencies lead us to consider that public support matters for capability-building. Despite this issue, the analysis of the FDI determinants can be explained by standard theory. However, the impact of public policies on FDI suggests new models capable of capturing the behaviour of foreign direct investors in presence of public incentives.

Originality/value – This research provides useful information to understand the role of intrinsic characteristics of the firms and how they bridge their internal gaps with external support in carrying out demanding activities. External support provides a good test of the general theory of FDI, and a special theory nested within this gives a great deal of insight into current issues of FDI in the link between the home-country government and the firm's needs. This study goes beyond the traditional analysis of the effects of public support on exports. It uses a uniquely rich data set to evaluate the importance of public support as FDI determinant.

To analyze the industrial development of South, East, and Southeast Asian nations in terms of investment and trade and how the institutional environment – in particular, the government policy with regard to outward foreign direct investment (OFDI) – has played a role in this respect.

The chapter puts OFDI policy and industrial upgrading in newly industrialized, emerging, and developing Asian economies (NIEDAEs) in historical perspective to attempt to draw inference from their past behavior.

The chapter provides information about each NIEDAE’s experience with OFDI policy through a comparative analysis of OFDI promotional policy.

A useful source of information about each NIEDAE’s OFDI policy approach, the chapter attempts to draw recommendations for OFDI policy.

This chapter fulfills an information need and offers practical help to government policy makers.

Introduction: The Indian insurance sector has a large number of insurance companies. More than 20 companies are in the life insurance business, and nearly 35 are non-life insurers – only one public sector company among the life insurers (Life Insurance Corporation (LIC)). However, there are six public sector insurers in the property insurance division. The government policies have recently increased the foreign direct investment (FDI) share from 49% to 74%.

Purpose: The purpose of the study is based on the latest decision by the Government of India (GOI) to increase the FDI in the insurance sector, which was earlier 49% and now increased to 74%. The study will have objectives that impact change in FDI and its effect on customers’ decisions.

Methodology: This chapter is based on secondary information collected from the Insurance Regulatory and Development Authority and Articles from various journals for objectives 1 and 2. Qualitative analysis is done with the use of NVIVO software. There are primary two objectives taken under consideration in this chapter: objective 1: regulatory framework of insurance sector post-FDI change in limits by GOI and objective 2: customer awareness regarding changed limits of FDI in the insurance sector and its various factors. Fifty-four interviews were conducted, out of which a total of 40 responses have been considered for final analysis. An incomplete and unclear answer has been excluded from the study.

Findings: In the study’s findings, it was found that in accordance with the first objective, GOI changes policies according to time to time. Foreign Direct Investment (FDI) in the insurance sector recently increased by GOI Earlier, it increased in the year 2015 and recently this year, it increased by 49% again to 74%. In the second objective findings, the awareness about changes in FDI in the insurance sector respondent’s sentiments is positive and constructive. A maximum of respondents has said that they are aware of the insurance sector and the participation of various foreign international players in the insurance industry.

The aim of this study is to determine whether Tunisia could expect an increase in Foreign Direct Investment (FDI) flows in response to the establishment of a Free Trade Agreement (FTA) with the European Union (EU). While the conditions necessary to stimulate the flow of FDI have received considerable attention from economists in recent years, the relationship between trade policy and FDI has not been the subject of in-depth research. The study finds that the partnership agreement between Tunisia and the EU can play a catalytic role in increasing not only the openness of the Tunisian economy, but, subsequently, increasing FDI to Tunisia.

Does the rise of foreign direct investment (FDI) in Central and Eastern Europe lead to supraterritoriality? The analysis of FDI flows between world investor countries and Central and East European (CEE) hosts between 1989 and 2000 shows that the majority of FDI flows into CEE in this period do not exemplify a trend of undifferentiated transcendence of post-communist borders. Rather, FDI flows continue to be based in territoriality and embedded in existing social relations between investor and host countries: migration and trade flows, historical ties, political alliances, and cultural affinities. Nevertheless, the rhetoric supporting the opening of post-communist countries to FDI is widespread and consistent with the neoliberal credo, which has acquired a supraterritorial character. Ultimately, we see that embeddedness and supraterritoriality co-exist but they manifest themselves for distinct FDI phenomena: the concrete economic practice and the economic rhetoric, respectively.