Promoting Foreign Direct Investment to LLDCs

​Background

The 32 landlocked developing countries (LLDCs), with a population of over 500 million share some common problems due to their geographical location, which affect their economic engagement with the rest of the world. Many LLDCs find themselves marginalized from the world economy, cut-off from the global flows of knowledge, technology, capital and innovations, and unable to benefit substantially from external trade. This situation results in narrow production and export bases, leading to limited economic growth and persistent poverty in the LLDCs. As a result the LLDCs have numerous special needs financing requirements including: investment in the development and maintenance of hard infrastructure; investment into soft infrastructure/trade facilitation; enhanced trade - productive capacities, value addition, diversification, and global value chains; enhanced trade in services; enhanced human and institutional capacity building; enhanced regional integration; and mitigation and resilience building to economic shocks, climate change, desertification, and others.

In countries with low domestic capital formation like LLDCs, foreign direct investment (FDI) is an important means of financing development. After five consecutive years of decline (2011–2016), FDI flows to the LLDCs rose by 3 per cent in 2017, to $23 billion. This modest increase still left total flows to LLDCs almost 40 per cent below the peak of 2011. LLDCs have traditionally been marginal destinations because of the small size of their economies and the inherent geographical disadvantages compounded by poor infrastructure, high transportation costs, inefficient logistics systems and weak institutional capacities. Most FDI to LLDCs goes into extractive sectors, such as mining, quarrying and petroleum. A key objective for LLDCs is therefore to attract and effectively target FDI in non-extractive sectors, so as to encourage job-creation, export diversification and structural transformation.

Objective

The meeting aims to provide an opportunity for different stakeholders, the LLDCs, their development partners, the private sector and the UN system to take stock of progress and share successful experiences. The meeting is expected to come up with concrete deliverables on how to enhance investment in LLDCs, which will feed into the preparation of the Midterm Review of the Vienna Programme of Action for Landlocked Developing Countries for the Decade 2014–2024. The event will also seek to identify potential collaboration opportunities between partners on increasing investments for sustainable development.