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H2020

PI-PEC Report Summary

Project ID: 661629
Funded under: H2020-EU.1.3.2.

Periodic Reporting for period 1 - PI-PEC (Pro-Internationalization Policy in the European Union The Challenge of Policy Efficiency and Coherence Post Lisbon)

Reporting period: 2015-09-01 to 2017-08-31

Summary of the context and overall objectives of the project

The outward internationalisation of enterprises has a special significance and importance for the European Union. Research in the field of international business has long demonstrated that internationalised enterprises are more competitive, and also yield productivity benefits for the economies in which they operate, including the home economy. For the EU, the rationale for internationalization is even stronger. Exporting to other member states directly integrates the EU economy through trade, and investing in other EU member states promotes the movement of capital, people, and services, and thereby raises competitiveness at the EU level. The problem for the EU is that there is no consistent pan-European internationalisation policy between member states. This project has three objectives: (1) to discover the nature and prevalence of pro-internationalization policy inefficiency in a sample of EU member states (2) to establish the scope for improvement in policy efficiency and efficacy (3) using the findings from original theoretical analysis and empirical work to produce new academic understanding and a prototype policy of potential value to practitioners at the member state and EU levels.

Work performed from the beginning of the project to the end of the period covered by the report and main results achieved so far

The work performed within the project to achieve the objectives is: Objective (1) review of policy action, mechanisms and effectiveness in the extant literature; (2) a survey of a selection of eight EU member states (Denmark, Germany, The Netherlands, Portugal, Spain, Sweden, Republic of Ireland, and United Kingdom) covering a representative sample of manufacturing sector exporters and foreign investors (768 firms), using an instrument comprising 54 questions for firms with FDI and 36 for firms without FDI, and covering the majority of the world’s national markets (both within the EU and in third countries). At the time of writing, the UK survey is complete, and data is under analysis. Data gathering is underway in Ireland, and the surveys for Portugal and Spain commenced data gathering in the week beginning first of January 1, 2018; (3) an extensive review of the literature across economics, business and management, and international business, into the behaviour of firms – in particular internationalisation behaviour – combined with the design and implementation of original empirical work. Interview-based material to support the empirical analysis, with respondents from policy making, business representative organisations, and firms, to generate eight firm cases is under preparation, and will complete on the inspection of descriptive statistics from the survey. Finally, the creation of a prototype policy of potential value to practitioners at the member state and EU levels, will follow from the analysis of data.

Progress beyond the state of the art and expected potential impact (including the socio-economic impact and the wider societal implications of the project so far)

This project is believed to be the first scientific research into the effects upon firms of pro-internationalisation policies applied across EU member states. Firm level respondents are asked question that, on analysis, yield understanding of the mechanisms within the firm, through which policy exerts its effect. The main final results are anticipated to show that policy instruments are entirely national, are frequently legacies and the result, not of scientific research into policy optimization, but of imitation by one government of another, or others’, policies. In investigating a selection of eight EU economies, the project is changing the agenda for policy research on the international sector of EU member states, and beyond. The state of the art is typified by evaluative studies of policy interventions for the purpose of validating existing policies. This is common across the EU, and in many economies of the world. The innovation of the findings of this project will have a ready application in the investigation of actual policy efficiency across other EU member states, but also in other economies.

This project finds that the same policy instruments are employed to promote trade and investment within the EU, as are employed for third countries. That is, the importance of benefits from European integration are not explicitly reflected in policy intervention. Moreover, policy instruments are largely copied by governments from each other. An outcome of this project is the reassessment of the effectiveness of pro-internationalisation policy instruments to achieve internationalisation and, crucially to look at the differences in impact of these instruments upon foreign direct investment and exports within the European Union – which directly achieve the objectives of completing the Single Market, adding to competition, raising competitiveness, and increasing economic integration.

The expected final results and their potential impact and use flow from the fact that this project is thought to be the first systematic investigation into pro-internationalization policy in the EU. It therefore sets a new benchmark for research, placing pro-internationalization policy within the scope of European integration more broadly, and alongside market integration in the Single Market, Competition Policy and the Growth Agenda. In terms of the eventual scientific findings, these will provide a basis for re-calibrating the extent and terms of interventions between member states in the EU, to achieve greater policy effectiveness nationally and, by building in the special goals of the EU, provide a rational basis for the optimization of support measures on a pan-EU basis. Put simply, as the EU benefits more because it is pursuing regional economic integration (i.e., above the promotion of exports and FDI per se) a greater social value should be placed on internationalization within the EU. At the same time, internationalization into third countries yields benefits to the EU, and a coherent policy towards promotion with respect to these economies (as with free trade and investment agreements, which benefit the whole EU) may yield greater benefits that are currently being realized. This may be through making feasible the designing in policy coherence between member states.

On completion of analysis of all data, the findings will be communicated to policy officials and legislators directly within the EU institutions, international organisations, and business representative organisations and business and management forums. The goal of this research is to deepen scientific understanding of the mechanisms through which pro-internationalization policy intervention operates, and to contribute to the designing in of more coherent (between member states) and more effective and efficacious policy interventions, so yielding performance benefits for firms and for economic growth.

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