Offers: Improve Both the Hard and Soft Conditions of Host Countries

Attracting foreign direct investment along with has become an essential part of development strategies among less developed countries. Many offer special incentives to foreign investors, such as tax holidays, tariff reductions or exemptions, and subsidies for infrastructure. To a large extent, such policies have indeed been instrumental in accelerating foreign direct investment flows into least developed countries.

At a broader level, Policy makers in host countries seeking to attract the flow of FDI into their cities must improve both the hard and soft conditions of their city’s investment environment-to offer solid economic infrastructures and favorable policy incentives are not enough. They should also put efforts into cultivating business-oriented institutions and cultures. At a higher level, a host country’s policy makers should be cognizant of foreign investors’ motivations, concerns, and calculations. Our observation that many foreign investment projects have avoided or even failed in the political capital suggests that there is still much room for the central government to improve and reform the country’s institutions in a systematic manner.

Focusing Investment in Strategic Industries

The usefulness of industrial policies is hotly debated. Having already invested huge sums in developing its manufacturing sector, the governments now want to strengthen their domestic capability. Any transnational corporation which allocates an affiliate of transnational corporations should meditate where to allocate investment. During allocating transnational corporations to host country, there should be perspective.

Learning to Compete in International Rules

Today world trade is increasingly forced to play by the rules of the WTO and some other international countries. Stricter enforcement of agreements on trade and intellectual property will make it more difficult to copy designs and processes, thus limiting the scope for reverse engineering. So learning to compete in international rules is a long-term task for transnational corporations.

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Appendix 1

The worlds’ largest corporations 2010

Appendix 2

International projects of “LUKOIL”

Appendix 3