According to the World Bank’s Global Investment Promotion Best Practices (GIPB) 2012 report, 80% of investment promotion agencies (IPAs) are failing to respond to investor enquiries. This is the second consecutive annual decrease in the proportion of IPAs responding to investor requests for business information to assist in their location research.

This poor performance stood in stark contrast to the strong performance of IPA websites. The GIPB report found that more than 60% of IPAs implemented best practices when developing their investment promotion websites, up from 59% in the last report. Additionally, one-fifth of the world’s IPAs were found to have made some improvements to their investment facilitation efforts. The most notable improvers were the IPAs in Mali, Morocco, Yemen and the Dominican Republic.

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The Middle East and north Africa was identified as the only region that made significant progress in improving the overall quality of its IPAs. The performance of IPAs in Latin America and the Caribbean as well as in sub-Saharan Africa was flat, while those in east Asia and the Pacific, non-Organisation for Economic Co-operation and Development Europe, central Asia and south Asia were identified as the worst performers. Average performance in these regions decreased by between three and five percentage points.

Highlighting the strong positive correlation that exists between a country’s investment facilitation efforts, as reflected in its GIPB score, and its FDI inflows, the World Bank called on all IPAs to step up their efforts to attract foreign investors. According to the University of Oxford, a 1% increase in GIPB performance is associated with a 1.5% increase in a country’s FDI inflows.

Information asymmetry was identified as a significant obstacle to capital flows across international borders. Furthermore, the World Bank emphasised that FDI flows are substantially more sensitive to information frictions than investments in portfolio equity and debt securities, and the high transaction costs related to information asymmetries was a key reason why investors displayed a higher tendency to invest in home markets rather than foreign regions.

The GIPB maintained that although the circumstances in which IPAs were perceived as implementing best practice strategies varied widely, the two core characteristics shared by all of them was a customer-oriented approach and preparedness. According to the report, access to good-quality information gives investors the ability to quickly and directly plug data into their cost-benefit analyses.

The best performing IPAs were recognised as having information available on their websites. Additionally, text, maps, databases and downloadable spreadsheets were other resources that were identified as making information easier to understand and manipulate by prospective investors. Aside from websites, the GIPB recommended that country and sector-specific information should be accessible offline in electronic form, with branded communications templates and promotional text. In this way, IPAs can effectively tailor information in a way that answers investors’ questions.