It is important for developing countries to match their strategies for attracting foreign investment with their plans for sustainable economic growth, the UNCTAD Trade and Development Board (TDB) was told this morning.
The TDB, opening the second week of its annual session, discussed “Investment for sustainable development: Towards a new generation of investment policies for inclusive growth and sustainable development” -- the topic of UNCTAD’s World Investment Report 2012, which served as background for the debate.
It is not just foreign direct investment (FDI) itself that matters as a spur for economic growth in poor countries, panellists told the meeting – it’s where and how that money is invested. “The distinct benefits and challenges associated with FDI, and the balance among them, are related to the specific type of investment that a country aims at attracting – and each country, of course, has its own circumstances,” said Ms. Anabel Gonzalez, Minister of Foreign Trade of Costa Rica.
She said it is vital for countries to “embed” investment policy in their national development plans, aligning it as much as possible with policies in other areas. It is also important to make policy consistent over time. Costa Rica aimed at expanding its industrial sector as early as the 1960s, but gradually came to realize that it must upgrade the sophistication of its industrial production, she said. The government thus set up policies resulting in better education of its workers and the creation of an appealing business climate, and succeeded in 1997 in attracting a microchip test and assembly plant to the country. That opened the door for other incoming firms and gave the country a good regional reputation as a place to set up businesses, she said.
Several speakers, including UNCTAD Secretary-General Supachai Panitchpadki, said developing countries should focus their investment strategies on the broader goal of increasing productive capacities – that is, the abilities of their economies to produce broader varieties of goods, and goods of greater sophistication. Such breadth and variety in production is understood to create more and better jobs, and to protect countries from abrupt shifts in markets for particular goods and services – especially commodities, which frequently see steep rises and falls in prices and often go through boom-and-bust phases.
Mr. James Zhan, Director of UNCTAD’s Division on Investment and Enterprise, described the Investment Policy Framework for Sustainable Development (IPFSD) introduced in the World Investment Report 2012. The framework is intended to inform government decision-making on FDI and includes a set of core principles for investment policymaking; guidelines for national investment policies; and advice for policymakers on how to engage in international investment agreements (IIAs) in ways that advance development goals.
Professor Jeffrey Sachs, Director of the Earth Institute of Columbia University in New York and Special Adviser to the United Nations Secretary-General on the Millennium Development Goals, addressing the TDB by video link, said attention must be paid to “the absolutely crucial interaction between economic growth and the health of the planet. The current relationship is completely out of line.”
Investment and other efforts to achieve sustainable development should be considered as meaning that every society should strive to achieve economic growth, eliminate extreme poverty, advance social inclusion, and care for the environment, Professor Sachs said. In terms of the environment, he said, “the challenges are much greater than have been recognized. The planet is under dramatic stress.”
Also speaking at the morning session were Mr. Rob Davies, Minister of Trade and Industry of South Africa; Mr. Mark Halle, Vice President of the International Institute for Sustainable Development; and Mr. Predeep Mehta, Secretary General of the Consumer Unity and Trust Society (CUTS) International. Statements and interventions were made by a number of regional groups and member-State delegations.
