metadata: authors: 0: author: Kusek,Peter
1: author: Silva,Andrea Antonia Lim
count: World
docna: 0: docna: What investors want : perceptions and
            experiences of multinational corporations in developing countries
docty: Policy Research Working Paper
subtopic: Investment and Investment Climate,Food & Beverage Industry,Common Carriers Industry,Construction Industry,Business Cycles and Stabilization Policies,General Manufacturing,Textiles, Apparel & Leather Industry,Pulp & Paper Industry,Plastics & Rubber Industry,International Trade and Trade Rules
teratopic: Industry,International Economics and Trade,Macroeconomics and Economic Growth
abstracts: cdata!: This paper discusses the results of a
            survey of multinational corporations with affiliates in
            developing countries. The paper explores corporate
            perspectives and decision making across the stages of the
            investment cycle: attraction, entry and establishment,
            operations and expansion, linkages with the local economy,
            and, in some cases, divestment and exit. Through interviews
            with 754 executives, the survey finds that political
            stability and a business-friendly regulatory environment are
            the top two factors influencing multinational
            corporations' investment decisions in developing
            countries. Investors seek predictable, transparent, and
            efficient conduct of public agencies. The survey results
            also show that investors are heterogeneous, and their
            perceptions vary with motivation and size. Multinational
            corporations that are involved in efficiency-seeking
            investment are more selective than investors motivated by
            other considerations, and that relatively smaller
            multinational corporations are more sensitive to host
            country characteristics and investment climate factors than
            large firms.
repnme: repnme: What investors want : perceptions and
            experiences of multinational corporations in developing countries
display_title: What investors want : perceptions
            and experiences of multinational corporations in developing countries
listing_relative_url: /research/2018/03/29759355/investors-want-perceptions-experiences-multinational-corporations-developing-countries
topicv3: Education, Skills Development and Labor
            Market m1326135 1484,Manufacturing Sectors m1326521 1281,Trade m1326924 698,Investment Climate(IC) m1327235 401,Investment Incentives m1327702 1284
publishtoextweb_dt: 2018-03-28T00:00:00Z
historic_topic: Industry,International Economics and Trade,Macroeconomics and Economic Growth
no_of_pages: 30
author_keys: 0: author_key: 904518
1: author_key: 1491281
model_extractions: WPS8386 Policy Research Working Paper 8386

# What Investors Want

Perceptions and Experiences of Multinational Corporations in Developing Countries _Peter Kusek Andrea Silva_ Macroeconomics, Trade and Investment Global Practice March 2018
Policy Research Working Paper 8386

# **Abstract**

This paper discusses the results of a survey of multinational corporations with affiliates in developing countries. The paper explores corporate perspectives and decision making across the stages of the investment cycle: attraction, entry and establishment, operations and expansion, linkages with the local economy, and, in some cases, divestment and exit. Through interviews with 754 executives, the survey finds that political stability and a business-friendly regulatory environment are the top two factors influencing multinational corporations’ investment decisions in developing countries. Investors seek predictable, transparent, and efficient conduct of public agencies. The survey results also show that investors are heterogeneous, and their perceptions vary with motivation and size. Multinational corporations that are involved in efficiency-seeking investment are more selective than investors motivated by other considerations, and that relatively smaller multinational corporations are more sensitive to host country characteristics and investment climate factors than large firms.

This paper is a product of the Macroeconomics, Trade and Investment Global Practice. It is part of a larger effort by the World Bank to provide open access to its research and make a contribution to development policy discussions around the world. Policy Research Working Papers are also posted on the Web at http://econ.worldbank.org. The authors may be contacted at pkusek@ifc.org and asilva5@ifc.org.

_The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent._ Produced by the Research Support Team
# What Investors Want: Perceptions and Experiences of Multinational Corporations in Developing Countries

Peter Kusek and Andrea Silva Global Investment and Competition Unit Macroeconomics, Trade and Investment Global Practice World Bank Group Key words: foreign direct investment, multinational corporation, business survey, investment climate, international business, globalization, global value chains, investor perceptions JEL classification: International Economics, Industrial Organization, Microeconomics
# **I. Introduction**

Developing countries compete to attract foreign direct investment (FDI) because of its potential benefits for the local economy, which include technology transfer, stronger managerial and organizational skills, increased access to foreign markets, and export diversification. FDI can enhance productivity, increase investment in research and development, and create better-paying and more stable jobs in host countries. But these benefits are not guaranteed, nor do all types of FDI have the same potential impact. Thus, host governments must adopt the right policies to maximize their gains from different types of FDI.

The _Global Investment Competitiveness Survey_ (GIC Survey)—whose aggregate results were first reported in the Global Investment Competitiveness Report 2017-2018—offers practical evidence to help policy makers design policies and prioritize reforms that investors value. Through interviews with 754 executives of multinational corporations (MNCs) that have investments in developing countries, the survey measures the role in influencing FDI decisions of such investment climate variables as investment incentives, promotion, FDI regulations, and administrative processes. By identifying variables that are most valued by investors, the survey provides practical guidance to where policy makers in host countries can focus their efforts to attract and retain FDI and maximize its gains for development.

Policy reform initiatives must consider that FDI is heterogeneous, driven by different motivations and having different economic, environmental, and social impacts. MNCs possess different characteristics that influence their perspectives and decisions. One such characteristic is based on an FDI typology that builds on a framework proposed by Dunning and Lundan (2008). The framework contends that MNCs are lured to a particular location with a predominant motivation in mind: accessing domestic markets, seeking increased efficiencies of production, taking advantage of natural resources, and acquiring strategic assets. This paper extends the use of this typology to explore how various policy instruments influence investors differently depending on their FDI motivation, and how the impact of investment on the host economy varies by type of FDI.

This paper provides a corporate perspective on the investment decision making of MNCs across the stages of the investment cycle: attraction, entry and establishment, operations and expansion, linkages with the local economy, and in some cases, divestment and exit. The survey reveals how MNCs decide on FDI and how they identify and select a country for investment. It also looks at MNCs’ operational, reinvestment, and expansion experiences, as well as their encounters with political risks and their decisions to shut down foreign affiliates.

This paper investigates difference in perceptions and behavior between relatively smaller MNCs and larger ones. Foreign investments by relatively smaller firms play an increasingly important role in the global economy. Despite relatively small amounts invested, they represent a large number of investment projects. As this paper shows, relatively smaller MNCs also source more of their inputs from local companies compared to large investors, thus enhancing FDI’s benefits for the local economy. Governments, particularly in low-income countries, are encouraged to attract such FDI to contribute to need and opportunities in host countries such as economic diversification (UNCTAD 2011).

The remainder of the paper is structured as follows. The next section describes the survey data and methodology. Section III includes descriptive statistics of the sample. Section IV discusses the heterogeneity of FDI and how it affects MNCs’ perceived importance of the legal and regulatory environment relative to other country characteristics, and of various investment policy–related factors. Section V presents the results of the survey, and is organized according to the life cycle of investments— 2
selecting a location, entering a country and establishing an investment, running and expanding operations, and considering divestment. Concluding remarks and policy implications are offered in Section VI.

# **II. Data and Methodology**

The data used in this study are from the _Global Investment Competitiveness Survey_ . The GIC Survey captures perceptions of international business executives on the role of investment climate factors in their FDI decisions. The World Bank Group commissioned Kantar Public, a global survey firm, to conduct 30minute computer-assisted telephone interviews with 754 business executives involved with the operations of their MNC in developing countries. The sample frame consisted of nearly 8,000 eligible companies in the commercially available Dunn and Bradstreet database. The 754 respondents were investors with existing affiliates in at least one developing country. The interviews consisted of a screener phase, to ensure the eligibility of respondents. Respondents were a combination of executives at the global headquarters and executives at a foreign affiliate.

The interviews were conducted in 13 languages: Arabic, Bahasa Indonesia, Chinese, English, French, German, Italian, Japanese, Korean, Portuguese, Russian, Spanish, and Turkish. The interviews were conducted between February and June 2017.

The survey complemented other existing investor surveys by focusing on investment climate variables, such as administrative and legal barriers, rather than broader economy-wide factors. These specific investment climate variables were areas actionable for policy makers.

The survey was composed of four sections:

1. _General information on the company and respondent_ , including sector, number of employees, and position of the respondent in the company.

2. _Importance of factors in investing in a developing country_ , where respondents rated the importance of country characteristics and investment policy factors on a scale from 1 to 4 from “not at all important” to “critically important.” “Critically important” means it is a dealbreaker—by itself, it could change the company’s decision about whether or not to invest in a country.

3. _Political risks and investment exit_ , where respondents identified experiences of political risks and the company’s course of action. They were also asked whether they had shut down a foreign affiliate in a developing country and their reasons for doing so.

4. _Investment in a specific developing country_ , where respondents selected a specific developing country where they were most familiar with the process of establishing an affiliate. Questions on the specific investment included sector, activity, motivation, reinvested earnings, efficiency of government agencies, incentives received, sources of inputs, and corporate programs for suppliers.

The survey was designed to provide a broad understanding of corporate perspectives and investor behavior and was not intended as a benchmarking tool to compare countries. Results are not representative at a country level.

3
Home economies of investors by region and income level <!-- Start of picture text --> Developed, 73.2 Developing, 26.8<br>Latin America &<br>Caribbean, 9.2<br>East Asia &<br>Pacific, 9.8<br>Europe & Sub-<br>Central Saharan<br>Asia, 6.9 Africa, 6.1<br>North America,<br>88<br>Europe & Central Asia, 54.2 % South24 Asia, | csctPacific, asia2.0<br><!-- End of picture text -->

@ Developed @TM Developing
<!-- Start of picture text --> Share of respondents per sector (percent)<br>@ Primary @ Manufacturing mTM Services TM@ Other<br><!-- End of picture text --> @ Primary @ Manufacturing mTM Services TM@ Other
<!-- Start of picture text --> Less than 100<br>Don't employees,<br>know/refused, 7<br>2<br>More than<br>10,000<br>employees,<br>13 100 to 250<br>employees,<br>15<br>= 251 to 1,000<br>employees,<br>26<br>1,001 to 10,000<br>employees,<br>27<br><!-- End of picture text -->
<!-- Start of picture text --> a. Motivation b. Most important motivation<br>Market-<br>seeking,<br>Access new markets or new customers 87 71<br>Lower: production costs or 51<br>establish a new base for exports<br>Coordinate company’s value chain, 39 None of<br>such as being closer to suppliers the above,<br>5<br>Acquire another firm that will provide the 15 Strategic<br>company new technologies or brands asset-seeking,<br>F<br>Access 1 Natura Efficiency-<br> natural resources and raw materials, 2 faSB UNE SAMINGLCSSI NSE seeking<br>such as oil, gas, or agricultural products 4 ig: GooralnateGVC, 13<br>6<br><!-- End of picture text -->
<!-- Start of picture text --> Importance of country characteristics<br>Political stability and security<br>Legal and regulatory environment<br>Large domestic market size<br>Macroeconomic stability and favorable<br>exchange rate<br>Available talent and skill of labor<br>Good physical infrastructure<br>Low tax rates<br>Low cost of labor and inputs<br>Access to land or real estate<br>Financing in the domestic market<br>& Critically important @ Important TM Somewhat important TM# Not atallimportant TM® Don't know<br><!-- End of picture text -->
<!-- Start of picture text --> Importance of country characteristics<br>- - ___<br>Political Efficiency-skg<br>stability and security Non-eff-skg<br>Legal - Efficiency-skg<br> and regulatory environment Non-eff-skg<br>Large - __ Efficiency-skg<br> domestic market size Non-eff-skg ala<br>Macroeconomic stability and_Efficiency-skg i<br>favorable exchange rate _ Non-eff-skg<br>Available Efficiency-skg<br> talent and skill of labor Non-eff-skg Stal<br>Good Efficiency-skg<br>physical infrastructure Non-eff-skg oe<br>Lowtaxrates Efficiency-skg<br>lon-eff-skg seid<br>Low cost of labor and inputs Efficiency-skgNonseff'ska Sal<br>Access to land or real estate Efficiency-skgNon-eff-skg ae<br>es F Efficiency-skg<br>Financing in the domestic market Non-eff-skg we<br>& Critically important TM@ Important MTM Somewhatimportant MTM Notatallimportant TM® Don't know<br><!-- End of picture text -->
<!-- Start of picture text --> Importance of country characteristics<br>7 my Sioaler<br>st aca smaller<br>Smaller<br>Macroeconomic stability and favorable [Larger<br>exchangerate Simafer iiiAONMSUas 4°05) ER ---<br>Available talent and skill of labor Sruter<br>Coodphscalinasrare Larger SL<br>ge ESS 9<br>Low tax rates Smadar Pre<br>Low cost of labor and inputs Smaller<br>Smaller<br>Larger<br>8 Critically important © Important = Somewhat important § Not at all important = Don't know<br><!-- End of picture text --> <!-- Start of picture text --> Importance of investment climate factors<br>Transparency and predictability in<br>the conduct of public agencies<br>Investment protection guarantees<br>provided in the country’s laws<br>Ease of obtaining government approvals to start<br>a business and to own all equity in the company<br>Investment incentives such as tax holidays<br>Having a preferential trade agreement<br>Having a bilateral investment treaty<br>© Critically important @ Important MH Somewhat important MM Notatall important TM Don’t know<br><!-- End of picture text -->
<!-- Start of picture text --> Importance of investment climate factors<br>Transparency and predictability in the conduct of _Efficiency-skg<br>public agencies —_ Non-eff-skg<br>Investment protection guarantees provided in _ Efficiency-skg *<br>the country’slaws —_Non-eff-skg<br>Ease of obtaining government approvals to start a _Efficiency-skg Moe<br>business and to own all equityinthe company _Non-eff-skg<br>Investment incentives such as tax holidays Efficiency-skeyes HK<br>Non-eff-skg<br>Havingoea preferential trade a agreement Efficiency-skgNon-eff-skg bie<br>Having a bilateral investment treaty Efficiency-skyond ad<br>Non-eff-skg<br>& Critically important important TM® Important Mi Somewhatimportant Mi Notatall important © Don't know know<br><!-- End of picture text --> & Critically important important TM® Important Mi Somewhatimportant Mi Notatall important © Don't know know
<!-- Start of picture text --> Importance of investment climate factors<br>ree<br>agencies Smaller<br>ye ne cies Sater eT aa<br>a en country'suns, laws Smallereet<br>Puneszandto.ownalequtytnthe<br><!-- End of picture text --> <!-- Start of picture text --> Investmentincentvessuchastaxhoiays safer llMgGuu 34.) MSASOUNINER-..<br>A . Larger 41 ial<br>js i is Larger<br>© Critically important e Important @ Somewhat important @ Notat all important = Don't know<br><!-- End of picture text -->
<!-- Start of picture text --> Importance of incentives<br>Duty-free imports<br>Tax holidays<br>VAT exemption<br>Technical or business support incentives<br>Direct subsidies<br>Subsidized loans<br>Accelerated depreciation<br>Subsidized land<br>& Critically important TM Important M Somewhat important M Not at allimportant TM Don’t know<br><!-- End of picture text --> <!-- Start of picture text --> Importance of incentives<br>Duyeimports <tr<br>Acted decton 2<br>@ Critically important Important Somewhat important ls Notatallimportant © Don'tknow<br><!-- End of picture text -->
<!-- Start of picture text --> Importance of ease of entry factors<br>Quickly obtain investment approvals and permits<br>to starta business<br>Own all equity in the foreign affiliate<br>Easily bring in expatriate staff and get visas and<br>work permits<br>Import production inputs instead of being<br>required to purchase them from local suppliers<br>& Critically important TM Important TM Somewhat important important M Notatallimportant TM Don’t know know<br><!-- End of picture text --> & Critically important TM Important TM Somewhat important important M Notatallimportant TM Don’t know know
<!-- Start of picture text --> andObtainpermits investmentto start a approvalbusiness pole)<br>Obtain a land lease - | ——<br>Obtain workexpatriate permitsstaff for 15<br>0 5 10 15 20<br>Months<br><!-- End of picture text -->
<!-- Start of picture text --> Imported<br>23<br>Sourced locally<br>43<br>Sourced within<br>company<br>34<br><!-- End of picture text --> <!-- Start of picture text --> Importance of factors related to linkages<br>Capacity and skills of local suppliers<br>Information about the availability<br>of local suppliers<br>Proactive government role in<br>upgrading potential suppliers<br>Incentives from government to<br>invest in supplier upgrading<br>Government-organized matchmaking<br>events with potential suppliers<br>®@ Criticallyimportant © Important M@ Somewhatimportant MTM Not atall important TM® Don't know<br><!-- End of picture text -->
<!-- Start of picture text --> Prevalence of corporate programs to promote linkages<br>Internal “talent scouts” to<br>seek out local suppliers<br>Vocational or training programs<br>to upgrade local suppliers<br>Equipment-financing programs<br>for local suppliers<br>@ Yes MNo ® Don't know<br><!-- End of picture text -->
<!-- Start of picture text --> Smaller Larger<br>“<br>“e Imported23 Sourced<br>Sourced locally<br>locally ae<br>48<br>+<br>Sourced Sourced<br>withi within<br>company company<br>27 36<br>ee +e<br><!-- End of picture text -->

# Corporate programs to promote linkages

<!-- Start of picture text --> Internal "talent scounts" to seek outsuppliers local —SmL a llrg er Sa . ma *<br>Vocational orupgt r ainingade local programssuppliers to —_SmL a llrg er Ca - ¢ we<br>Equipment-financing programs for local Larger<br>suppliers Smaller il<br>m@Yes @No — © Don'tKnow<br><!-- End of picture text -->
<!-- Start of picture text --> Importance of factors related to linkages<br>i ; ; Larger<br>Information about the availabilitySuppliers of local —_SaterLarger eaan<br>Proactive government role in upgrading potentialsuppliers —_SmL a llrg er -. : .<br>Incentives from government to invest inupgrading supplier —_SmL a llrg er Ee °°: a *<br>Government-organizedwithmatchamking potential suppliers events —_SmallerLarger Ba *;s “oT :<br>= Critically important elmportant &Somewhatimportant mNotatallimportant © Don't know<br><!-- End of picture text -->
<!-- Start of picture text --> Reinvested earnings<br>40<br>347<br>35<br>2<br>S 30<br>= 2s ng<br>=2<br>& a8 137<br>£4<br>2 40 a 77<br>ws<br>o<br>0 1-25 26-50 51-75 76-99 100<br>Shareof profits reinvested (percent)<br><!-- End of picture text --> <!-- Start of picture text --> Reinvested earnings<br>= = Smaller m Larger 38<br>35<br>ra<br>9 30 27<br>32 25 _<br>g - 0<br>i= 20<br>£15 12<br>‘S<br>2 6 6 8 8<br>& 10<br>5<br>0<br>0 1-25 26-50 51-75 76-99 100<br>Share of profits reinvested (percent)<br><!-- End of picture text -->
<!-- Start of picture text --> Lack of transparency and predictability 24<br>in dealing with public agencies (50%)<br>Sudden change in the laws and regulations 25<br>with a negative impact on the company (49%)<br>Delays in obtaining necessary government permits 7<br>and approvals to start or operate a business (47%)<br>Restrictions in the ability to transfer 20<br>and convert currency (42%)<br>Breach of contract by the government (13%) | (NH) 23 [ii26<br>Expropriation or taking of property SGSeee 550Ge10 Sn<br>or assets by the government (5%)<br>Don'tknow MM None — Considerdelay or TM® Significantly delay M Cancel planned Mm Withdraw existing<br>cancellation investment investment investment<br><!-- End of picture text -->
More severe cases of political risk occur less frequently but with far worse impact. Only 13 percent of respondents experienced breach of contract by the government but the impact was much greater—35 percent of those investors canceled a planned investment or withdrew an existing one. Expropriation was even more extreme: while only 5 percent of respondents experienced it, almost half of them canceled or withdrew an investment.

Investments in services tend to be more affected by political risk than manufacturing. Firms in the services sector experienced more disruptions related to political risk, particularly restrictions in transferring and converting currency, breach of contract by the government, and expropriation. Services—such as energy, telecommunications, or finance—are more tightly regulated than manufacturing, and thus more exposed to potential political interference. In particular, according to the survey results, companies in the utilities sector—including electricity, gas, alternative energy, and telecommunications—experience more frequent adverse regulatory changes and expropriation and more delays in obtaining permits. Construction and business services sectors report more frequent experiences of breach of contract by the government and lack of transparency and predictability in dealing with public agencies.

Governments should more adequately manage investor grievances **.** According to the survey, governments often do not effectively address grievances related to political risks. Only about one in five affected investors felt that their grievances were promptly resolved by the government, that the process of complaint was clear and efficient, or that the government introduced a systematic solution to address or prevent such grievances in the future.

# **Fourth Phase in the Investment Life Cycle: Potential Divestment**

# **_Why Do MNCs Divest from Developing Countries?_**

**Some 29 percent of investors surveyed had shut down at least one of their company’s affiliates in a developing country (Figure 24). The most common reasons were changes in the company’s strategy and unstable macroeconomic conditions, including an unfavorable exchange rate. Increased policy or regulatory uncertainty was the third most common reason, which occurred in about a third of the divestment cases (**

Figure 25). Arbitrary government conduct, sudden restrictions on currency transfer, and breach of contract by governments are reported as factors by more than 20 percent of investors. These results confirm that companies value transparency and predictability in the conduct of public agencies, as well as investment protections. Foreign investors in services divest more frequently than manufacturing MNCs, possibly because they are more highly regulated and thus vulnerable to political interference. Among the surveyed services companies, 35 percent had shut down an affiliate, versus just 23 percent of manufacturing firms.

Although some reasons for exiting investments are beyond the control of governments of host countries, many are avoidable. While governments cannot do much about changes in investor firms’ corporate strategies or about global economic conditions, they can influence factors in their own countries. In particular, maintaining an appropriately valued exchange rate, managing macroeconomic stability, and ensuring transparent, consistent, and predictable policies and regulations are critical in keeping investors from exiting.

22
<!-- Start of picture text --> Shut down an affiliate in any developing country<br>No<br>65<br>Don't know<br>6<br>Yes<br>29<br><!-- End of picture text --> <!-- Start of picture text --> Reasons for exiting an investment<br>Change in company strategy 45<br>Unstable macroeconomic conditions 41<br>and unfavorable exchange rate<br>Increased policy or<br>regulatory uncertainty: 32<br>Global economic downturn 29<br>Arbitrary government conduct 23<br>Breach of contract by the 17<br>government<br>Sudden restrictions on transferring 16<br>and converting currency<br>Cost increase of labor<br>and materials: 10<br>Expropriation 8<br>Sudden restrictions on 5<br>hiring expatriate staff<br>Withdrawal of tax incentives 5<br><!-- End of picture text -->
affiliate in a developing country. Shares do not add up to 100 because respondents could select up to five of the most relevant reasons.

# **VI. Conclusion and Policy Implications**

To maximize the gains from foreign investments, developing country governments must adopt effective reform strategies, champion reform at the highest political levels, and strengthen interagency coordination. They must also balance the public interest with investor preferences to ensure that the host country truly benefits from FDI. The results of the survey of MNC executives highlight several priorities for policy makers in developing countries seeking to create a conducive business climate for FDI: _Targeting policies and reforms to relevant types of investors can maximize effectiveness and cost efficiency._ While most investors value some characteristics across the board—such as investment protection guarantees and transparency and predictability—some policy variables are more important for certain investor types. Firms involved in efficiency-seeking FDI seem more responsive to incentives. Relatively smaller investors are more sensitive to government support and policy and regulatory uncertainty. Manufacturing firms may be more responsive to business-friendly policies on importing inputs, while services firms are more sensitive to adverse government conduct. These results reinforce the need for targeted policy approaches by governments, keeping in mind the specific types of FDI they wish to attract, retain, and harness for development.

_Addressing policy reforms to attract FDI and offering aftercare services are equally important._ Policy makers tend to focus on attracting FDI through investment incentives, facilitation, and proactive investment promotion. While these are important, investors say that investment protection is even more critical to them, suggesting that government efforts should also aim to encourage investors to stay in the country and expand their operations. Policy initiatives should include strengthening investor protection guarantees, providing proactive investor aftercare, managing grievances, and promoting linkages.

_Predictable government conduct is at least as important to MNCs as countries’ laws and regulations._ Investors cited the importance of transparency and predictability in the conduct of government agencies as the most important among investment climate factors. Investors look not only at policies on paper, but also at implementation and administration of those policies. Implementation weaknesses can include bureaucratic inefficiencies, complex regulations and procedures, and unpredictable or arbitrary government conduct. Addressing these weaknesses can not only attract new investments, but also prevent divestments by existing investors.

24
**Annexes**

# **Table A.1. Location of Headquarters**

|Developed economies|No. of<br>respondents|Percentage of<br>respondents|Developing economies|No. of<br>respondents|Percentage of<br>respondents|
|---|---|---|---|---|---|
|Germany|111|14.72|South Africa|35|4.64|
|Spain|80|10.61|Argentina|23|3.05|
|United States|60|7.96|Turkey|20|2.65|
|Italy|53|7.03|India|16|2.12|
|Korea, Rep.|37|4.91|Mexico|14|1.86|
|Austria|36|4.77|Bulgaria|10|1.33|
|Japan|32|4.24|Brazil|9|1.19|
|France|30|3.98|China|8|1.06|
|United Kingdom|28|3.71|Malaysia|6|0.80|
|Netherlands|22|2.92|Russian Federation|6|0.80|
|Sweden|20|2.65|Nigeria|4|0.53|
|Switzerland|20|2.65|Colombia|4|0.53|
|Canada|6|0.80|Peru|4|0.53|
|Belgium|5|0.66|Venezuela, RB|4|0.53|
|Australia|4|0.53|Belarus|3|0.40|
|United Arab Emirates|1|0.13|Bosnia and Herzegovina|3|0.40|
|Uruguay|1|0.13|Guatemala|3|0.40|
|Chile|1|0.13|Romania|3|0.40|
|Taiwan, China|1|0.13|Serbia|3|0.40|
|Iceland|1|0.13|Ukraine|3|0.40|
|Finland|1|0.13|Kenya|2|0.27|
|Estonia|1|0.13|Costa Rica|2|0.27|
|Denmark|1|0.13|Panama|2|0.27|
||||Egypt, Arab Rep.|1|0.13|
||||<br>Bolivia|1|0.13|
||||Botswana|1|0.13|
||||Ecuador|1|0.13|
||||El Salvador|1|0.13|
||||Pakistan|1|0.13|
||||Saint Lucia|1|0.13|
||||Sri Lanka|1|0.13|
||||Swaziland|1|0.13|
||||Thailand|1|0.13|
||||Uzbekistan|1|0.13|
||||Djibouti|1|0.13|

**Table A.2. Sectoral Distribution of Respondents**

|Sector|No. of respondents|Percentage of<br>respondents|
|---|---|---|
|_Primary_|**_48_**|**_6.37_**|
|Agriculture, hunting, forestry, and fishing|22|2.92|
|Mining, quarrying, and petroleum|26|3.45|
|_Manufacturing_|**_353_**|**_46.83_**|
|Refined petroleum products, coke, and nuclear fuel|7|0.93|
|Agroprocessing, food products, and beverages|24|3.18|
|Textiles, apparel, and leather|23|3.05|
|Chemicals and chemical products|24|3.18|
|Rubber|5|0.66|
|Plastic products|14|1.86|
|Pharmaceuticals, biotechnology, and medical devices|26|3.45|
|Metals and metal products|39|5.17|

25
|Nonmetal mineral products|3|0.40|
|---|---|---|
|Wood and wood products (other than furniture)|3|0.40|
|Furniture|2|0.27|
|Paper and paper products|6|0.80|
|Printing and publishing|4|0.53|
|Automobiles, other motor vehicles, and transport<br>equipment|67|8.89|
|Information technology and telecommunications<br>equipment|6|0.80|
|Machinery, and electrical and electronic equipment and<br>components|64|8.49|
|Other manufacturing|36|4.77|
|_Services_|**_336_**|**_44.56_**|
|Electricity, gas, and water|20|2.65|
|Alternative energy|19|2.52|
|Construction|53|7.03|
|Wholesale and retail trade|43|5.70|
|Hotels and restaurants|7|0.93|
|Other travel and tourism-related services|8|1.06|
|Logistics, transport, and storage|35|4.64|
|Telecommunications|13|1.72|
|Computer and software services|10|1.33|
|Financial services including insurance|44|5.84|
|Real estate|4|0.53|
|Business services|18|2.39|
|Professional, scientific, and technical services|32|4.24|
|Health services|8|1.06|
|Media and entertainment|7|0.93|
|Other services|15|1.99|
|_Other_|**_17_**|**_2.25_**|
|Total|754|100.00|

**Table A.3. Sectoral Distribution of Respondents Compared with Sample Frame**

|NA|CE Section|Respondents|Sample Frame|
|---|---|---|---|
|A|Agriculture, Forestry and Fishing|0.7%|0.7%|
|B|Mining and Quarrying|1.4%|1.7%|
|C|Manufacturing|37.8%|38.9%|
|D|Electricity, Gas, Steam and Air Conditioning|1.8%|0.8%|
|E|Water Supply, Sewerage, Waste Management and Remediation Activities|0.0%|0.2%|
|F|Construction|4.6%|3.4%|
|G|Wholesale and Retail Trade; Repair of Motor Vehicles and Motorcycles|11.2%|8.9%|
|H|Transportation and Storage|1.1%|1.0%|
|I|Accommodation and Food Service Activities|0.7%|0.3%|
|J|Information and Communication|3.2%|3.7%|
|K|Financial and Insurance Activities|13.7%|17.1%|
|L|Real Estate Activities|0.6%|0.4%|
|M|Professional, Scientific and Technical Activities|8.8%|7.9%|
|N|Administrative and Support Service Activities|3.6%|3.8%|
|O|Public Administration and Defence; Compulsory Social Security|0.0%|0.0%|
|Q|Education|0.0%|0.0%|
|S|Human Health and Social Work Activities|0.0%|0.0%|
|(bla|nk)|9.8%|6.1%|

_Source_ : Computation based on sample frame drawn from Dunn and Bradstreet.

_Note_ : The D&B sample frame contains many missing values (28% of records) on the NACE code. This list is calculated by the authors, drawing from a field that contains “line of business” and mapping to a NACE code.

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