Promoting Competitiveness: inward investment incentives and enterprise policy

Abstract

The preceding chapters have all dealt with instruments of industrial policy in Europe. Each displays evidence of ‘horizontal measures promoting industrial competitiveness by facilitating market-driven structural adjustment’, as we defined industrial policy in Chapter 1. Other elements of government policy exist, which contain little in the way of structural adjustment objectives. These are nonetheless intended to promote corporate competitiveness across Europe. They aim to achieve this objective through developing fresh ideas and resources and facilitating the emergence and growth of new market competitors. This is done by first, encouraging inward investment and second, promoting business start-ups and enterprise culture. The two policy sets are intertwined and thus merit being treated together rather than separately. Foreign direct investment (FDI) can be seen as an attempt by some states to generate the internal competition needed to spur home firms to innovate and improve. Certainly this was one aim of the UK’s inward investment policy developed since the early 1980s. Thus, FDI (outside) and enterprise (inside) are really part of the same package. Creating an ‘attractive’ economy means creating a fluid, open and dynamic local economy where foreigners and locals compete:

This chapter is developed in part from an initial outline and ideas advanced by the late Mike Hodges.