Leveraging digital FDI for capacity and competitiveness: How to be Smart

T20, Task Force 3 (2021)

28 Pages Posted: 25 Oct 2021

See all articles by Matthew Stephenson

Matthew Stephenson

World Economic Forum; Graduate Institute of International and Development Studies (IHEID)

Lorraine Eden

Dept of Management, Mays Business School, Texas A&M University ; School of Law, Texas A&M University

Fukunari Kimura

Keio University - Faculty of Economics

Karl P. Sauvant

Columbia University - Columbia Center on Sustainable Investment

Niraja Srinivasan

Dell Technologies

Lucia Tajoli

Politecnico di Milano - Dipartimento di Ingegneria Gestionale

James Zhan

UNCTAD

Abstract

Policy-makers and firms can leverage foreign direct investment (FDI) to grow their digital capabilities and competitiveness with a three-part strategy. First, launching Digital FDI enabling projects (DEPs) to create digital friendly investment climates by adopting enabling policies, regulations and measures. Second, using a SMART test as a heuristic before launching a full-fledged DEP, which benchmarks their economy’s digital Skills, Market functioning, Access through connectivity, Restrictions, and Trust (or ‘SMART’), and provides tools to tackle limiting factors. Third, policy-makers can review FDI trends in six sectors that are important to grow the digital economy (two of which are proposed as essential, namely communications and software & IT services), with quantitative evidence that can guide policymakers to prioritize policy reforms and investment promotion where they are relatively weak. Throughout the strategy, particular attention should be paid to growing the digital capacity of SMEs. A G20-initiated Sustainable Technology Board – modelled after the Financial Stability Board but oriented to cooperation over new technologies – could help address techno-competition and other concerns over Digital FDI.

Suggested Citation

Stephenson, Matthew and Eden, Lorraine and Kimura, Fukunari and Sauvant, Karl P. and Srinivasan, Niraja and Tajoli, Lucia and Zhan, James, Leveraging digital FDI for capacity and competitiveness: How to be Smart. T20, Task Force 3 (2021), Available at SSRN: https://ssrn.com/abstract=3942066

Matthew Stephenson

World Economic Forum ( email )

CH - 1223 Cologny/Geneva
Switzerland

HOME PAGE: http://www.weforum.org

Graduate Institute of International and Development Studies (IHEID) ( email )

PO Box 136
Geneva, CH-1211
Switzerland

Lorraine Eden

Dept of Management, Mays Business School, Texas A&M University ( email )

Dept of MGMT, TAMU 4221
College Station, TX 77843-4221
United States
979-777-3489 (Phone)

HOME PAGE: http://mays.tamu.edu/mgmt/

School of Law, Texas A&M University ( email )

1515 Commerce St.
Fort Worth, TX 76102
United States
9797773489 (Phone)

Fukunari Kimura

Keio University - Faculty of Economics ( email )

2-15-45 Mita, Ninato-ku
Tokyo 1088345
Japan

Karl P. Sauvant (Contact Author)

Columbia University - Columbia Center on Sustainable Investment ( email )

Columbia Law School
435 W 116th Street
New York, NY 10027
United States

HOME PAGE: https://works.bepress.com/karl_sauvant/388/

Niraja Srinivasan

Dell Technologies ( email )

1 Dell Way
Round Rock, TX 78682
United States

Lucia Tajoli

Politecnico di Milano - Dipartimento di Ingegneria Gestionale ( email )

via Lambruschini 4b
Milan, 20156
Italy
++390223992752 (Phone)

James Zhan

UNCTAD ( email )

Palais des Nations
Office E 8074
Geneva, 1211
Switzerland

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