The Ripple Effect of Nation Branding

By Daniel Florian

Daniel Florian

Every other year, Simon Anholt publishes a Nation Brand Index which measures the image of nation states all over the world. The index is more than just a beauty contest as nation brands clearly influence our choices as consumers or investors. Italian wine, German cars and British comedy have a great fan community all over the world. Furthermore, bureaucracy, corruption as well as culture and quality of life affect a country’s attractiveness for foreign investors.

A study by the renowned Social Science Research Center Berlin (WZB) found that a positive image indeed helps to attract multinational companies (PDF). “Even after taking into account the economic and fundamental standard factors that are being considered in an investment decision, immaterial factors like stereotypes and consumer perception clearly have an impact”, says Margarita Kalamova, one of the authors of the study.

The study, which is based on surveys in about 34 different countries, shows that one index point in the Nation Brand Index equals an increase of foreign direct investment (FDI) by 27%. Positive changes in a country brand can have different reasons: One important factor is a country’s attractiveness for immigration. Because foreign managers will have to spend a considerable amount of time in a country, many investors take care that their employees actually want to work in that particular country. Past successes in culture and history also hint at a certain level of creativity, which is important for companies with a high level of R&D and need for innovation.

The study shows that nation branding and public diplomacy can actually help to attract more FDI. Critics who often dismiss nation branding campaigns like “Cool Britannia” or “Germany—Land of Ideas” miss the point. However, it needs much more than an advertising campaign or a PR campaign in order to attract foreign investors. While communication can help to provide information and tell a story of an attractive investment location, the facts must also be right. Even Simon Anholt, who allegedly invented the term “nation brand,” admits that “image comes from policy, not from communications.”

Elsewhere, I have suggested an alternative approach to public diplomacy, which combines the unique strengths of the state, business and civil society by founding a private-public-partnership that coordinates a country’s nation branding efforts. Such a public diplomacy foundation could distribute funds to support a broad range of public diplomacy projects and could also invest in research, training and strategy development.

Still, not all problems can be solved by developing good policies and finding clever ways to communicate them: A survey among 13,000 people from 18 European countries recently found that among the things that people dislike most about Germany was the bad weather that we often have. It’s hard to put a positive spin on that, I guess.

Daniel Florian is associate director at the Berlin-based public affairs consultancy Dimap Communications. He can be reached at d.florian@dimap-communications.de.

June 1, 2011