Governments can make efforts to strengthen the transmission channels through which the gains from OFDI are reverted back to the home country (Stephenson 2018b). Such HCMs often focus on promoting a particular type of transmission channel. Examples include:
- Enabling cross-border financial transactions and the transfer of funds.
- Encouraging foreign subsidiaries of MNEs to procure parts, components and intermediary products from firms in the home country, by facilitating the establishment of business links between these companies.
- Helping to improve conditions for the transfer home of know-how and technologies.
- Enhancing transportation links between home and host country, such as by supporting the provision of shipping and storage facilities.
Key insights
- Governments can make efforts to strengthen the transmission channels through which the gains from OFDI are reverted back to the home country. A measure in this area will likely focus on strengthening one particular transmission channel.
Interactions
B8) Transmission channels: Home-country measures can be targeted at specific transmission channels to facilitate the generation of home-country effects.
C9) Maximizing benefits: Efforts to improve transmission channels aim at making transmission of OFDI-related benefits from host to home country more effective, thereby supporting the generation of home-country effects.
Existing Country Practices
Targeting transmission channels by the United States: The United States tax reform of 2017-18 included measures to encourage its MNEs to return funds to the United States. The Homeland Investment Act (HIA) of 2005 offered tax breaks on the repatriation of investment funds.