This report presents a comparative analysis of trends and practices of investment incentives across OECD member countries, focusing on their role within broader investment promotion strategies. Governments use tax and non-tax incentives to attract investment, particularly foreign direct investment (FDI), targeting specific sectors and locations to support national development goals. While investment incentives are often a key component of countries’ investment promotion strategies, the role and responsibilities of investment promotion agencies (IPAs) varies significantly across jurisdictions.

The report aims to explore how different incentives function within the wider context of investment promotion and facilitation. The first part examines the policy objectives behind investment incentives in OECD countries, the types of incentives offered, their design processes and key features. The second part discusses the importance of incentives within investment promotion strategies, and the involvement of IPAs in their design, governance and management.

The report draws extensively on data collected from the 2024 OECD Survey on Investment Promotion and Investment Incentives, conducted with all 35 national IPAs in the OECD. It also draws on existing literature and reflects the classifications and priorities elaborated through the joint work of the OECD Investment Division and the OECD Centre for Tax Policy and Administration on investment incentives. While OECD IPAs may not be directly responsible for designing or granting incentives, they often have detailed knowledge of available incentives as part of their investment promotion strategies. Some are also involved in shaping incentive policies through advocacy efforts. However, this does not necessarily mean they have a comprehensive understanding of all incentives offered nationwide. Responses from OECD IPAs provide insights on trends and practices regarding investment incentives in investment promotion, but not necessarily a comprehensive inventory of all incentives in each jurisdiction.

The report was prepared by Alexandre de Crombrugghe and Juan Felipe Rodrigo from the Investment Division in the OECD Directorate for Financial and Enterprise Affairs, under the overall guidance of Ana Novik, Head of the Investment Division. It benefitted from inputs and comments from Katharina Böhm, Taufeeq Nihal Khan, Fernando Mistura and Martin Wermelinger from the Investment Division as well as Sarah Dayan, Luisa Dressler and Clara Gascon from the Tax Policy and Statistics Division in the OECD Centre for Tax Policy and Administration. Meral Gedik and Lucinda Pearson prepared it for publication and Angèle N’zinga provided administrative assistance. The report has been conducted under the Work Programme of the OECD IPA Network and was used as background paper for the ninth OECD IPA Network Meeting on 5 November 2024. The report also aims to bring the investment promotion perspective to broader horizontal OECD work exploring how to improve the design, governance, evaluation and monitoring of investment incentives for advancing sustainable objectives and maximising net benefits.

The report was submitted to the OECD Investment Committee for comments on 22 October 2024 and then declassified by the Investment Committee on 6 December 2024.

The report has been financially supported by the full members of the OECD IPA Network.