Essential News

Seth O'Farrell September 4, 2023

Investment promotion will get “harder” as a result of more adoption of artificial intelligence (AI), says Pilar Madrigal, the director of investment advisory at Cinde, Costa Rica’s investment promotion agency (IPA), as competition and the demand for new skills increase.

In a context where companies will have more access to data about specific locations, Ms Madrigal argues that the future trajectory of investment promotion can be boiled down to the following maxim: “The race gets faster.”

“It's going to be harder for all of us to compete [...] All of us need to act quicker, more effectively and we’re not 100% prepared just yet,” she adds.

Predictive models
Cinde has been using AI in a trial programme for the past five years chiefly to access predictive analysis and thus determine where investors are looking to invest. It uses a model with more than 150 data points and tracks more than 800,000 companies around the world.

“We’re simply using AI to profile a company,” she says but, for the time being, will retain more traditional methods of finding leads. “The human element is still there,” she adds, referring to the negotiation process that follows lead generation.

Regarding the thorny question of how automation will affect the team dynamic, Ms Madrigal insists that it will have an impact on how an IPA is run.

However, far from demanding more IT skills, it will lead to a need for more negotiating skills.

“I do believe there will be fewer people on the team and the skills needed are going to be much more business-oriented,” she says, as the relationship between investor and IPA becomes more consultative and personalised.

Ms Madrigal recalls that some 20 years ago Cinde’s investment promotion tools were underpinned by fax and telephone. “Today we don’t need everyone to be on the phone; we need a digital automated marketing tool that can reach out to [investors] without a person needing to knock on doors.”

System overhaul
On the road to a digitised future, the first thing an IPA needs to do, she stresses, is overhaul its entire internal system. “It will only be a game-changer for economic development organisations and IPAs only if they successfully digitise their entire internal process of doing investment promotion,” she says. 

Roughly a decade ago, Cinde started digitising its processes to pave the way for new customised customer relationship management. This in turn led to more website automation, the use of search engine optimisation and digital marketing.

“Because we had implemented those processes and had that data, we had enough to run AI and start getting some predictive analytics,” Ms Madrigal says.

Now, the agency has “a full footprint” of the companies it has profiled. “We have more than 100 [sections] to fill out on each investor,” she says.

Conceding that there is some “hype” right now surrounding the discussion on AI, Ms Madrigal says that it will likely take “a few more years for it to become as effective as we think”, especially when it comes to the accuracy of the data produced.

Regarding IPAs in least developed countries (LDCs), Ms Madrigal is optimistic that they will be able to “leapfrog” the path from analogue to digital that Cinde has trodden but remains firm on the need for each IPA to understand its own selling points.

“[Each] has to understand that sector or that group of companies first and then maybe the AI [deployed by other IPAs in LDCs] is going to be used differently than how we're using it,” she remarks.

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The original editorial note by fDi Intelligence is available for your perusal at this link: https://bit.ly/fDi_AIinFDI