Investment promotion agencies to play critical role in orienting foreign direct investment toward infrastructure and green growth

20 October 2014

More than 250 executives attended the annual Investment Promotion Conference, held during UNCTAD's World Investment Forum, to debate their role in meeting sustainable development goals.

This year's Investment Promotion Conference at UNCTAD's World Investment Forum 2014 focused on how FDI can contribute to infrastructure development and the greening of economies. 

The conference was organized in concert with the World Economic Forum (WEF) and the United Nations Environment Programme Finance Initiative (UNEP-FI).

The Conference followed the publication of UNCTAD's World Investment Report 2014, which identified an annual investment gap of $2.5 trillion in developing countries to meet proposed sustainable development goals (SDGs).

These investment needs will be for basic infrastructure, food security, climate change mitigation and adaptation, health, and education. There is a potential for increased private sector investment contributions to fill this gap, but it will require new policies, incentive schemes, and investment promotion strategies focused on SDGs.

Discussions centred on innovative national and international options for financing infrastructure and green growth in developing countries, as well as conditions and incentives needed to create a competitive environment for attracting infrastructure and green investment projects.

Conference panelists included executives from transnational corporations, insurance companies, pension funds, industry associations, consulting firms, and investment promotion agencies (IPAs).

In the debate on investment in infrastructure, investors emphasized the need for predictable legal and institutional frameworks over the long term.

Pedro Rodrigues de Almeida from the World Economic Forum said that investment decisions are influenced by the perceived risk related to changes in regulations, taxes, and the way that public institutions work.

Philipp Gerbert from the Boston Consulting Group agreed, adding that the biggest disincentive in developing countries is regulatory uncertainty, which is often considered worse than tough regulations.

Dominic Jermey, CEO of UK Trade & Investment, saw an important role for IPAs as problem solvers and promoters of flexibility and dialogue between the public and private sector.

In the debate on the role of FDI in green growth, private sector representatives emphasized the willingness of companies to work on business models that embrace sustainability.

Bernard Mathieu of Holcim said that in the cement industry, sustainability is now considered as a growth value, adding new business activities such as the development of more sustainable housing materials and waste treatment, which are becoming a major part of the companies' turnover.

Michael Tost from the mining company Vale aid sustainability aspects now contribute to a company's competitiveness profile.

In response to questions on the approach that should be taken to green the economy, Kimball C. Chen, Chairman of Energy Transport Group Companies, said that it should be seen as a process by all stakeholders with mid-term targets of becoming "greener" and with "green" as the end goal.

Investment promotion agencies are critical in this process, requiring a shift in emphasis in favor of sustainability. Francisco Gonzalez, Director General of ProMexico, explained that such a change is needed and that the "business as usual" approach will not suffice.

To encourage the exchange of experiences by IPAs in promoting SDGs, UNCTAD's World Investment Forum 2014 also hosted a workshop on the Geneva Cleantech Cluster organized in cooperation with the Geneva Economic Development Office and the Office for the Promotion of Industries and Technologies.