The purpose of this section is to link the scientific findings on home-country effects and their influencing factors with the available policy tools in the form of HCMs and their targeting strategies. The aim is to identify which HCMs should be targeted at which companies or OFDI characteristics (i.e., influencing factors) to effectively generate, nurture and maximise each of the 11 home-country effects from section A of this Toolkit and thereby promote home-country sustainable development outcomes. The logic is shown in Figure 9.
Figure 9 HCMs are targeted (at influencing factors)
to generate home-country effects
The following approach was taken:
- Identifying key scientific insights: For each category of home-country effect (section A), the scientific evidence and theoretical understandings on how specific influencing factors support the generation of the home-country effect was gathered from section B.
- Matching categories: In this Toolkit, the categories for influencing factors and targeting strategies (sections B and D) match, thus making it possible to link influencing factors one-to-one with corresponding targeting strategies. In other words, governments can use HCMs to target the influencing factors that support the generation of home-country effects. Specifically, HCMs can be targeted at either specific companies (e.g. by size, ownership, industrial sector) or at particular OFDI characteristics (e.g. by motivation, entry mode, investment destination).
- dentifying corresponding HCMs: The next step identified the HCMs (section C) that are found in this Toolkit to be used for targeting the relevant companies or OFDI characteristics (section D).
- Analysing combinations: Through this analysis, it becomes possible to understand how the targeting of HCMs at specific companies and OFDI characteristics can generate, nurture and maximise specific home-country effects. For each home-country effect, a table is provided that presents the combined findings from the Toolkit sections A to D. It lists in bold what companies and OFDI characteristics HCMs should be targeted at to generate, nurture or maximise the home-country effect. Under each targeting option, the table then lists feasible and common HCMs that could be used for such targeting.
These tables enable policymakers and governments aiming to promote, nurture or maximise a specific home-country effect, such as one that is particularly important for a country, to identify the right targeting strategies and associated HCMs. If policymakers wish to promote several home-country effects at the same time, they need to look at all the respective sub-sections and combine insights from them to develop a fuller strategy of targeting the chosen effects through appropriate HCMs.
The tables are comprehensive, presenting all the findings and interactions from the Toolkit sections A to D. Thus, they include both interactions that happen in theory, but also those for which there is either strong, or at least weak, evidence. This differentiation is maintained in the tables through the colour coding that has been used throughout the Toolkit and is reproduced in Table 4. In the table, the colouring of a home-country effect (written in capital letters) indicates the extent to which its occurrence is empirically known. The colouring of a company type or OFDI characteristic for targeting (written in bold) indicates how much is empirically known about its ability to influence the generation of the home-country effect. And finally, the colouring of the HCMs (normal print) indicates the extent to which these have been found in practice to be used for targeting the relevant company or OFDI characteristic.
Table 4 Colour coding
| Dark green | Empirical evidence is strong based on multiple studies, or the practice has been observed repeatedly. |
| Light green | There is some empirical evidence (at least one study), or the practice has been observed at least once. |
| Yellow | In the absence of empirical evidence or observations of existing practices, the insight or interaction is theoretically plausible. |
| Red "!" | The effect is associated with potential risk factors and negative outcomes. |
Policymakers will need to judge for themselves to what extent they are comfortable to follow theoretical advice – some of which is entirely plausible even if empirical evidence is scarce or non-existent – or whether they prefer to take an arguably more certain approach by primarily following available and proven empirical evidence. There is likely some value in doing both in combination.
Of course, targeting certain types of companies and OFDI characteristics could sometimes be valuable on its own right, without consideration of any associated home-country effects. For example, supporting SMEs to help them overcome the specific challenges they face might be generally desirable, regardless of whether this results in a specific home-country effect. Section D10 has also shown that, on some occasions, is possible to directly target home-country effects, without targeting influencing factors. These kinds of considerations are not covered by this analytical tool but should remain a factor in the choices of policies and measures made by governments.