How Nation Branding can Accelerate National Competitiveness and FDI

How nation branding can accelerate national competitiveness and attract foreign direct investment is one of the questions we asked Aparna Sharma as part of our place brand expert interview series last year. Due to the length of the interview, we decided to leave this question and answer for a stand-alone post – here we go. Comments welcome!

How can nation branding accelerate a country’s national competitiveness and FDI?

Aparna Sharma: A studied approach to nation branding can actually help a country create a blueprint and strategy to highlight its areas/sectors/industry of strength and those wherein interventions may be called for to make these globally competitive.

These could be leveraged through general nation branding and focused sectoral branding strategies to harness their full potential, develop global partnerships, collaborations and eventually become more global competitive.

Studies explicitly establish the role that nation branding plays in contributing to a country’s competitiveness and FDI.

In this context, would like to borrow from a paper on FDI in India by Jeffrey D Sachs, Nirupam Bajpai and Arun Maira, which lucidly brings out the impact and relevance of nation branding for India.

Generally speaking, the life-cycle of decisions and actions related to foreign investments are categorized into the following stages:

  • Screening when a business chooses a country to focus on;
  • Planning when specific opportunities are considered;
  • Implementing when the investor decides to proceed and expend money and
  • Operating and Expanding when it actually begins to make and/or sell within the country.

According to this study, the image of India, marketing of India and attitude to FDI impacted to the extent of 91% decisions in the Screening and Planning stages.

Factors such as bureaucracy, tariff & taxation, infrastructure etc. were also found to be crucial, but come into play in the later stages.

The study signals the most urgent areas of action in the context of India to increase FDI: legislative and policy reforms, government processes and machinery, centre-state dynamics, infrastructure and so forth.

Certainly, nation branding needs to be more deeply understood to appreciate and realize its full value as a strategy for investment promotion, among other things. Aesthetically prepared brochures and investment promotion events fall somewhere in the middle of a country branding plan and should not be placed at the start of powering a nation branding strategy.

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