Global pandemic calls for new approach to foreign direct investment (FDI)
New research reveals how global Investment Promotion Agencies (IPA) and Economic Development Organizations (EDO) are reacting to the crisis
The COVID-19 pandemic and its unprecedented economic impact has forced Investment Promotion Agencies (IPA) and Economic Development Organizations (EDO) to urgently recalibrate their strategies to attract foreign direct investment (FDI) to their regions.
Within the Business Process Outsourcing (BPO) investment space, and other sectors, IPAs and EDOs face numerous challenges.
According to the 2020 Global IPA and EDO Business Continuity Special Report, published by Genesis GBS | Knowledge Executive in partnership with Ryan Strategic Advisory and FDI Business Diplomacy, uncertainty regarding the trajectory of the global economic recovery and the reprioritization of investment spend and capital expenditure are the major concerns.
Specifically, the research findings reveal that respondents feel the most significant pain point or challenge in the global FDI marketplace currently relates to uncertainty about the future in a post-COVID world.
As such, they are grappling with operational challenges around the shift to remote working, which has affected traditional investment promotion models. Half (50%) of all respondents in the survey ranked cancelled in-person investor visits, events, fairs and missions as the biggest pain point or challenge experienced in the global FDI marketplace amid the pandemic.
Insights from the report also suggest that this ‘new normal’ has rendered legacy approaches obsolete – 31% of respondents felt that tried and tested strategies from the past proved ineffectual amid the crisis.
The disruption to supply chains has also led to a lack of security and shortening global value chains, which respondents cited as additional, yet less prolific immediate concerns.
These challenges, coupled with a drop in spending, have constrained new project pipelines and created challenges in attracting new investments, effective lead generation and location marketing, which are exacerbating the FDI outlook.
In response to the crisis and its myriad challenges, the report reveals how agencies are pivoting their focus and approach to support businesses and investors.
For instance, the majority of agencies surveyed (76%) plan to, or have already deployed, various services aimed at mitigating COVID-related risks. These measures include co-creating models and processes to assist businesses with crisis management and maintaining proactive contact with clients and prospects.
This approach includes a shift to online engagement as 75% of respondents are currently or are in the process of replacing physical interactions with digital engagements and re-purposing event initiatives into digital formats via webinars and virtual roadshows.
Additional mitigation measures from IPAs and EDOs identified in the report include creating COVID relief websites or online resources, which 44% of respondents had implemented, while 38% had created models and processes to assist businesses with crisis management.
Beyond these immediate crisis management and survival measures, IPAs will deploy initiatives to accelerate the recovery. According to the survey findings, the most prominent measures that IPAs are focusing on include assisting with recovery and growth initiatives (75%), providing recovery and response insights/intelligence on specific country/location attributes (69%) and providing support for crisis resilience (69%).
As the crisis enters the recovery phase, agencies plan to shift their focus from the broader promotion of the BPO industry as a business continuity best practice, to boosting local FDI with location-focused promotion as an offshore alternative.
What is abundantly clear from the report is that promotional agencies face multiple new challenges, which tried and trusted industry approaches are ill-equipped to address. It is vital that agencies rip up the old rulebook and embrace new innovative and agile approaches in the post-COVID era. You can download a copy of the report here: http://resources.knowledge-executive.com/2020-global-ipa-and-edo-business-continuity-market-intelligence-report/