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*Karl P. Sauvant, PhD* *Resident Senior Fellow* *Columbia Center on Sustainable Investment* Columbia Law School - The Earth Institute, Columbia University 435 West 116th St., Rm. JGH 825, New York, NY 10027 | p: (212) 854 0689 | cell: (646) 724 5600 e: [log in to unmask] | w: www.ccsi.columbia.edu | t: @CCSI_Columbia <https://twitter.com/CCSI_Columbia> "Can host countries have legitimate expectations?", "The Next Step in Governance: The Need for Global Micro-regulatory Frameworks", "How International Investment Agreements can Protect Free Media", "China, the G20 and the International Investment Regime", "The Evolving International Investment Law and Policy Regime: Ways Forward", "China's Outward FDI and International Investment Law", and "Policy Options for Promoting FDI in the LDCs" *are* available at http://papers.ssrn.com/sol3/results.cfm and http://www.works.bepress.com/karl_sauvant/. > View this email in your browser > <http://us6.campaign-archive2.com/?u=ab15cc1d53&id=9ff7ac5493&e=df645fa32e> > > 哥伦比亚大学国际直接投资展望中文版都可以在我们的网站查看：http://ccsi.columbia.edu/public > ations/columbia-fdi-perspectives. > *Columbia FDI Perspectives* > Perspectives on topical foreign direct investment issues > No. 186 November 7, 2016 > Editor-in-Chief: Karl P. Sauvant ([log in to unmask]) > Managing Editor: Daniel Allman ([log in to unmask]) > *From export processing to knowledge processing:* > *upgrading the FDI promotion toolkit* > <http://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=6326912353&e=df645fa32e> > by > Jose Guimon* * <#m_-6603794876910834692_m_4145196002687453112__edn1>* > > Since the 1980s, with the transition from an import-substitution to an > export-oriented industrialization strategy, many developing countries > created *export processing zones* to attract large-scale, export-oriented > manufacturing activities of multinational enterprises (MNEs), by offering > grants and exemptions from customs duties and corporate taxes. During the > past decade, however, emerging markets have been trying to take part in a > new transition—from an industrial-based to a knowledge-based economy—and > this requires a different approach to foreign direct investment (FDI) > promotion policies. Rather than relying on export processing zones, the aim > is to develop *knowledge processing zones* or science hubs. However, the > shift from low cost, export-platform FDI toward higher value, > knowledge-seeking FDI is a challenging one that cannot be achieved by > relying exclusively on the dynamics of MNE affiliates. Success in the > development of FDI-driven science hubs will be marked by the capacity of > local researchers, universities and firms to integrate with foreign > enterprises within local networks, such that the host country national > innovation system is enhanced by foreign presence rather than crowded-out. > > The cases of Singapore and Chile are useful to illustrate how the FDI > promotion toolkit needs to upgrade to contribute to this policy agenda. > Singapore is one of the world’s most obvious examples of successful > FDI-driven economic development. Since the 1980s, the focus of FDI > promotion policies gradually moved away from lower-end manufacturing to > knowledge-intensive activities. In addition to targeting innovative MNEs, > in recent years the government has launched new programs to attract foreign > universities into the country, building a competitive science hub. The > Global Schoolhouse initiative, launched in 2002 to attract campuses of > foreign universities, aims at improving the national education system and > attracting international scholars and students. Complementing these > efforts, the Campus for Research Excellence and Technological Enterprise > (CREATE) program was set up in 2008 to attract foreign universities’ > research-and-development (R&D) centers. As a result, nine universities in > total (including MIT and Cambridge University), from six countries, have > established new research centers in Singapore, and are now collaborating > closely with local universities and firms. However, Singapore’s experience > is a unique success story, with a confluence of historical, geopolitical > and institutional circumstances (not easily replicable by other countries), > enabling the development of a world-class international science hub. > > In Chile, too, a shift in FDI promotion policies has occurred since the > early 2000s, with a stronger focus on using FDI as a lever for building > national technological capabilities. In 2000, the InvestChile program was > launched as an attempt to emulate Ireland’s success in attracting > high-technology FDI, offering grants of up to US$2 million. In 2009, a new > scheme was initiated to create International Centers of Excellence in R&D, > offering foreign universities and research institutes grants of up to > US$19.5 million over a 10-year period to establish new R&D centers in > Chile. A total of 13 R&D centers from seven countries have been established > so far under this program. Following an open call for proposals, these > centers were selected based on their alignment with local industrial needs > and their capacity to build partnerships with Chilean universities. This > helps to illustrate how public policies can modulate the local embeddedness > of foreign-owned research centers to maximize domestic linkages and > spillovers. Moreover, in 2010, the government launched the Startup Chile > program to attract innovative entrepreneurs from abroad by offering them a > residence visa and a small non-reimbursable grant to develop startups in > Chile. While over 1,000 startups from over 70 countries have participated > in the program, the impact on the local economy has been modest so far, > because (among other reasons) most of these entrepreneurs left the country > after obtaining the grant and complying with the minimum six-month > residency requirement. > > Although the initiatives discussed in this *Perspective* have achieved > some promising early results, it is too early to know what their final > impact will be. These are expensive programs that divert taxpayers’ money > toward foreign institutions, and it is questionable whether the local > embeddedness of foreign investors will continue after the financial support > from governments expires. Purely policy-driven or top-down science hubs > risk becoming a short-term fix, an unsustainable solution to a country’s > technological shortcomings. Thus, a simultaneous effort to develop domestic > technological capabilities and empower local actors is the *sine qua non* > condition for success. > > The kinds of policies needed to attract R&D-related FDI are quite > different from those aimed at attracting large-scale manufacturing > operations, involving a shift from the *low-cost* approach prevalent > under export-processing-zone schemes, toward a *high-quality* approach > that focuses on enhancing research infrastructure and human capital. Under > the latter approach, FDI promotion policies should emphasize projects that > demonstrate strong potential for building knowledge-intensive linkages with > local actors. This calls for a much closer coordination between FDI > policies and science, technology and innovation policies, two areas that > operate rather separately in many emerging markets. Furthermore, > experiences in Singapore and Chile suggest that, besides targeting MNEs, > the development of science hubs in emerging markets requires a broader > scope in FDI promotion, including the attraction of foreign universities, > research institutes and startups. > > ------------------------------ > * <#m_-6603794876910834692_m_4145196002687453112__ednref1> Jose Guimon ( > [log in to unmask]) is associate professor at the Department of > Development Economics of Universidad Autonoma de Madrid, Spain. The author > is grateful to Manuel Agosin, John Cantwell and Ana Novik for their helpful > peer reviews. The author also thanks Alexandre de Crombrugghe and Rodrigo > Krell for helpful comments. *The views expressed by the author of this > Perspective do not necessarily reflect the opinions of Columbia University > or its partners and supporters. Columbia FDI Perspectives (ISSN 2158-3579) > is a peer-reviewed series.* > *The material in this Perspective may be reprinted if accompanied by the > following acknowledgment: “Jose Guimon, ‘**From export processing to > knowledge processing: upgrading the FDI promotion toolkit**,’ **Columbia > FDI Perspectives, No. 186, November 7, 2016. Reprinted with permission from > the Columbia Center on Sustainable Investment (www.ccsi.columbia.edu > <http://www.ccsi.columbia.edu>).” A copy should kindly be sent to the > Columbia Center on Sustainable Investment at [log in to unmask] * > > For further information, including information regarding submission to the > *Perspectives*, please contact: Columbia Center on Sustainable > Investment, Daniel Allman, [log in to unmask] > > - No. 185, Frank J. Garcia, “Investment treaties are about justice,” > October 24, 2016. > - No. 184, Lukas Linsi, “Less compelling than it seems: rethinking the > relationship between aggregate FDI inflows and national competitiveness,” > October 10, 2016. > - No. 183, Karl P. Sauvant and Güneş Ünüvar, “Can host countries have > legitimate expectations?,” September 26, 2016. > > *All previous FDI Perspectives are available at **http://ccsi.columbia.edu/ > <http://ccsi.columbia.edu/>publications/columbia-fdi-perspectives/**. * > > > > > Karl P. Sauvant, Ph.D. > Resident Senior Fellow > Columbia Center on Sustainable Investment > Columbia Law School - Earth Institute > Ph: (212) 854-0689 > Fax: (212) 854-7946 > *Copyright © 2016 Columbia Center on Sustainable Investment (CCSI), All > rights reserved.* > [log in to unmask] > > *Our mailing address is:* > Columbia Center on Sustainable Investment (CCSI) > Columbia Law School - Earth Institute, Columbia University > 435 West 116th Street > New York, NY 10027 > > Add us to your address book > <http://columbia.us6.list-manage.com/vcard?u=ab15cc1d53&id=a61bf1d34a> > > > unsubscribe from this list > <http://columbia.us6.list-manage1.com/unsubscribe?u=ab15cc1d53&id=a61bf1d34a&e=df645fa32e&c=9ff7ac5493> > update subscription preferences > <http://columbia.us6.list-manage.com/profile?u=ab15cc1d53&id=a61bf1d34a&e=df645fa32e> > > > [image: Email Marketing Powered by MailChimp] > <http://www.mailchimp.com/monkey-rewards/?utm_source=freemium_newsletter&utm_medium=email&utm_campaign=monkey_rewards&aid=ab15cc1d53&afl=1> > -- Best Regards, Yang Qiao ------------------------------ Spam <https://antispam.law.columbia.edu/canit/b.php?i=01S56BN7B&m=73f7589b9483&t=20161107&c=s> Not spam <https://antispam.law.columbia.edu/canit/b.php?i=01S56BN7B&m=73f7589b9483&t=20161107&c=n> Forget previous vote <https://antispam.law.columbia.edu/canit/b.php?i=01S56BN7B&m=73f7589b9483&t=20161107&c=f> ____ AIB-L is brought to you by the Academy of International Business. 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