ECONOMIC DEVELOPMENT QUARTERLY
Analysis of 30,000 Foreign Direct Investment
projects by the World Bank (1) demonstrated that
government-provided assistance significantly
influenced investor decisions to locate in one
economy or another. A University of Oxford
study (2) showed “one dollar spent on investment
promotion increases Foreign Direct Investment
inflows by $189 and that $78 spent on investment
promotion created an additional job by a foreign
affiliate” (estimates).
Right here in Australia, a research project by
Southern Melbourne RDA (undertaken by AEC
Group) looked at the Casey-Cardinia region of
Victoria. The report concluded that investment
attraction activities over a 20-year period had
provided additional GRP of $1.7billion per annum,
an additional 32,405 jobs, a reduction of residents
leaving the region to work, an increase in self-
sufficiency (12.4% to 75.7%) and a reduction in
costs to the community by reducing the commute to
employment, detailed as:
1) $61 million saved in personal worker travel
costs
2) 2.26 million worker days saved, personal time
that could be reinvested into the community
3) Less impact on infrastructure, due to fewer
commuters (not valued)
4) More time with family resulting in better social
cohesion (not valued)
5) Other benefits to personal health and wellbeing
(not valued).
I think the answer is even simpler. If you can
demonstrate that you can invest a dollar of
community funds into a project which delivers
a positive, measurable impact on net economic
benefit for that community, why wouldn’t you do
it? The numbers are without question, as is the
positive press for our community leaders for their
commitment to investing rates into these activities
and the long-term career opportunities they are
creating for their constituents. This would appear to
be better than the return on investment than can be
achieved in most financial institutions currently.
WHAT IS BEST PRACTICE FOR
INVESTMENT ATTRACTION?
It concerns me when organisations who pursue
Investment Attraction initiatives go hot and cold
on their commitment. It is not good for the long
term professional development of the people
who do the work, who need the career paths to
build experience. We don’t expect our doctors
to go from taking temperatures to doing major
surgery overnight, nor can we expect those
who are charged with undertaking investment
attraction to do the job without clear career paths
with support through training and other resources
provided for the job to be undertaken. It also goes
without saying that lack of long term support by
organisations who are charged with undertaking
investment attraction activities will create uncertainly
in the minds of investors leading to less investment
outcomes for the affected communities.
I understand that in North America there are
well over 300 well-funded and highly motivated
investment attraction agencies trying to source
investment and jobs for their cities and regions.
Australia’s efforts to win investment against
these, as well as others based in the Asia-Pacific
and even Europe, who may have larger staffing,
budgets, tax free zones and other tools at their
disposable is hard enough. Chopping and changing
our commitment about whether to be in or out of
the business makes our task that little bit more
challenging, perhaps much more challenging, so we
need to commit wholeheartedly and seek to deliver
best practice.
To achieve best practice, the World Bank
recommends developing comprehensive sector
profiles, responding effectively to investor enquiries,
fostering partnerships to develop sector specific
knowledge and undertaking activities to promote
investor confidence, all of which takes money. If you
don’t have the financial resources, you can’t have
a professional approach to winning investment.
Budgets will differ from agency to agency; only you
will know whether your organisation is serious about
wanting to be in this space based on the budget
allocated to the activity. Size is not the determining
factor, but budget allocation in comparison to the
revenue of the organisation is a good starting point,
as is the commitment to the length of funding.
The activities mentioned above do not even begin
to address the issues of investment lead generation,
the ongoing lead management process from
generation to closure, nor the training required
to upskill staff to give them a commercial sales
focused mindset to be able to compete in a highly
competitive and aggressive space. It is imperative to
manage those who expect quick wins, as the more
complex the project is (with arguably the biggest
returns), the longer the gestation of the project will
generally be. Companies don’t generally uproot
and shift or expand into a new location overnight.
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