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Sunday, March 9, 2014
- Global investment, trends, prospects, and policy challenges were the themes discussed in the briefing on “UNCTAD’s World Investment Report 2012”, organized by the New York Office of the U.N. Conference on Trade and Development (UNCTAD).
The main part of the presentation focused on the ‘‘Investment Policy Framework for Sustainable Development’’, which was a special topic for the 2012 report and published as a separate document.
Richard Bolwijn, Chief Economist of the Division on Investment and Enterprise UNCTAD, took the opportunity to show some new thinking about the policy environments that are created, not only to make foreign direct investment (FDI) or investment more attractive from the investors’ side, but more importantly to make FDI more productive of development as we understand it, meaning increases in productive to capacities, diversification of economic outputs, improvement in skill sets and improvement of pills overs of FDI into the economies.
A few highlights from the trend section of the report shows that ‘‘the global foreign direct investment flows finally surpassed the pre-crisis average in 2011,’’ mentioned Bolwijn, ‘‘however we are still well behind the top years for 2007/2008.’’
The increase seen in 2011 was spread across the various economic groupings like transitioning economies and developing economies, which remained over more than half of global FDI flows were the numbers that they reached in 2010 for the first time. In fact it looks like this year it will get over 50% coming just from the developing economy group, which shows that is a trend that is evolving.
‘’The FDI outflows from developing countries and emerging markets fell slightly, but remained high,’’ said Bolwijn. In the last few years, developing countries have become ever more important also in outward invest not just as recipients of inwards investments.
The drivers of the growth in 2011 came from Mergers & Acquisitions (M&As), even thought the green field investment remains the biggest part of FDI flows.
In this year’s report there was a specific analysis on the largest 100 multinationals TNCs in the world. ‘‘We looked at their balance sheets, how they balance their cash and we see this trend confirm of increasing cash holding and much greater cash holding behavior, compared to their pre-crisis cash holdings’’, added Bolwijn. Global trade to a large extend is driven by and linked to the networks of multinational companies.
‘‘The networks of investment overseas by multinational enterprises account for a good 80% of global trade (exports of goods and services).’’
The reason sustainable development was chosen as the theme for the 2012 report was because the ‘‘global investment landscape is rapidly changing; emerging markets are becoming more relevant; there is more international agreements and discussion about sustainable development and investment treaties.
Additionally, it is now no longer just developed countries wishing to protect their investments abroad but also developing countries seeing that the tables can also be turned; there is ever greater need for coordination at an international level for international policies,’’ noted Bolwijn.
The “new generation” of investment policies framework strive ‘‘ to create synergies with wider economic development goals or industrial policies, and achieve seamless integration in development strategies; foster responsible investor behaviour and incorporate principles of Corporal Social Responsibility; ensure policy effectiveness in their design and implementation and in the institutional environment within which they operate,’’ he added.
The national level policies challenges were to integrate investment policy in development strategy; incorporate sustainable development objectives in investment policy; and ensure investment policy relevance and effectiveness.
On the other hand, the international investment policy challenges means to strengthen the development dimension of International investment agreement (IIAs); balance the rights and obligations of states and investors; manage the systemic complexity of the IIA regime.
Thus, the UNCTAD’s Investment Policy Framework for Sustainable Development helps policymakers address these challenges.
Bolwijn also mentioned the sustainable development features of the IPFSD’s national investment policy guidelines and the policy options to operationalize sustainable development objectives in IIAs.