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Investment advisory council discusses how to boost investment for expanding productive capacity in globe’s poorest countries

UNCTAD/PRESS/PR/Doha/2012/018
Doha, Qatar, (21 April 2012)

UNCTAD Secretary-General Supachai Panitchpakdi and International Chamber of Commerce Secretary-General Jean-Guy Carrier called Saturday for efforts by the international community to boost investment that can spur improvements in productive capacity in least developed countries (LDCs).

Their remarks came during the 10th session of the Investment Advisory Council, a joint meeting of UNCTAD and the International Chamber of Commerce.

“Productive capacity” refers to the ability of an economy to produce a broader variety of goods and goods of greater complexity.

Mr. Supachai said productive capacity building requires improving the education and skills of workers and potential workers; expanding and raising the quality of infrastructure, such as roads and ports; developing and adapting technology; and spurring the creation and expansion of new businesses. All of these components require investment. He then introduced the concept of “aid for investment in productive capacity,” and said it could be encouraged through financial support and insurance guarantees for investors, technical assistance to LDC governments to help them attract foreign direct investment (FDI), and an international policy environment conducive to fostering investment in LDCs.

ICC Secretary-General Carrier – representing the views of the business community – emphasized the need to maintain and even strengthen international dialogue and cooperation on global economic policy issues, including trade and investment. He expressed concern that governments seem to be moving away from multilateral approaches to key economic governance issues. Mr. Carrier also warned about a return of protectionist tendencies in the areas of trade and investment. The need to reverse that trend, he said, makes an international collaborative approach even more important.

Anil Kumar Jha, Minister of Industry of Nepal -- who as LDC coordinator for the UNCTAD conference represented the views of 49 least developed countries -- called for international organizations to “mainstream” productive capacity building in their work, and for developed countries to promote investment in sustainable development in LDCs through risk-insurance schemes, the promotion of venture capital for investment in developing countries, and through setting up “enabling policy environments” providing access for trade.

Other speakers, including Riadh Bettaieb, Minister of Development and International Cooperation of Tunisia, pointed out that “the FDI agenda” is not always the same as “the poor agenda,” and that policies are needed to attract investment to key sectors for development, such as infrastructure, agriculture, health, education, tourism, and small industries, and policies also are needed to realize the development benefits of such investment. In addition, these speakers pushed for greater investment in rural development. To strengthen local enterprise development in conjunction with foreign investment, they suggested vocational training and coaching support for entrepreneurs.

Participants from the private sector, including Peter Brabeck, Chairman of Nestlé, and Dominic Barton, Chief Executive Officer of McKinsey & Company, said that failures of international cooperation, including in the Doha round of trade talks, are a serious loss, especially for the least developed countries. The bilateral treaties that proliferate in the absence of multilateral agreements tend to favour larger and more developed economies, they said. They acknowledged that policy environments for investment have improved at the national level, but stressed the importance of stability and insurance policies in case of changes in government direction, saying such components are an integral part of building an enabling environment for investment.


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