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23 Nov 06 - Turning natural resources into development opportunities

 The role of transnational corporations (TNCs) in extractive industries has recently attracted renewed attention, partly due to rising commodity prices. Depending on the kind of natural resource, TNC involvement can take the form of foreign direct investment (FDI) or agreements with governments.


FDIThe role of TNCs has undergone significant change in recent decades. For example, in the extractive industries, developing-country firms are emerging as regional or global players.

A number of state-owned enterprises have recently started investing abroad, adding an important South-South dimension to the role of TNCs in extractive industries.

But for many African countries where FDI is concentrated on the extraction of natural resources, especially oil, there are still concerns about the development impacts of such FDI.

A conference organized by UNCTAD on 20-22 November 2006 examined the potential economic, social and environmental impacts of TNC involvement in extractive industries on host economies. It also discussed policy options to ensure development gains from FDI in these industries.

Experts representing all key stakeholders attended the conference: home and host countries, local communities, trade unions, the private sector and civil society.

Participants noted that many developing countries need more support from the international community if they are:

  • to improve their legislative frameworks
  • to enhance their ability to bargain with TNCs.

They also recognized the need for more international dialogue to identify good practices among governments and firms in the extractive industry – the main objective being to secure development gains from foreign investment.

The deliberations of the expert meeting will feed into the preparation of the World Investment Report 2007 , expected to be published in autumn 2007.


 

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