The Dominican Republic, Guatemala and Rwanda have undertaken IPRs with UNCTAD. This article explains what an Investment Policy Review (IPR) is and the incredible impact it had in these three countries.
UNCTAD Investment Policy Review (IPR), a country-specific technical assistance programme, seeks to improve the investment framework to make sure that the beneficiary country gets the largest development gains from foreign direct investment (FDI).
Each IPR evaluates a country's policy, regulatory and institutional environment for FDI in line with UNCTAD Investment Policy Framework for Sustainable Development (IPFSD). The policy recommendations, which are concrete and action-driven, aim at attracting higher levels of beneficial FDI to meet the national development objectives of the beneficiary countries. With over 40 IPRs to date, UNCTAD has contributed to shaping investment policies in countries around the world. The cases of The Dominican Republic, Guatemala and Rwanda show the tangible impact of UNCTAD’s technical assistance in those countries.
THE DOMINICAN REPUBLIC
In 2007, UNCTAD undertook an IPR in the Dominican Republic that resulted in concrete outcomes for the Caribbean island.
Implementation of recommendations
The IPR process helped to strengthen the institutional setting for investment, improved the policy environment with the establishment of a competition law and policy, built capacity in the areas of SME development, through the establishment of an EMPRETEC Centre and FDI data collection.
Impact that matters
Following the IPR, the country experienced a fourfold increase in FDI inflows and a raise of employment in ITC sector of 350 per cent from 2009 to 2013. International doing business indicators confirm the impact of IPR reforms: the Dominican Republic went from position 117 in 2007 to position 84 in the 2015 world ranking.
GUATEMALA
Guatemala’s IPR was published in 2011 and focused on the area of mining, energy and roads.
Implementation of recommendations
Among other, UNCTAD assisted in the revision of the mining code and the FDI data collection methodology. The IPR also led to the reform of business registration procedures through the implementation of the eRegulations programme.
Impact that matters
As a result, the number of procedures to start a business have halved (from 12 to 6), and so has the cost for entrepreneurs, while the time required to start a business was reduced from 37 to 18 days.
RWANDA
Rwanda has made startling progress in the years since the 1994 genocide. Stable, responsible government has led to impressive economic growth and rising living standards. In 2004, feeling that inflows of foreign direct investment (FDI) were lagging far behind potential, the Government asked UNCTAD for an Investment Policy Review (IPR). This study was issued in 2006, and Rwanda quickly began to implement its recommendations. Numerous reforms intended to increase benefits from FDI – several related to the IPR – were carried out.
Implementation of recommendations
IPR recommendations implemented streamlined the investment process and made it more and transparent. UNCTAD also assisted to set up a skills attraction and diffusion programme to help Rwanda get the skilled workers and entrepreneurs it needs. Government departments also took action to be more focused on serving the public, including investors and potential investors.
Impact that matters
The reforms paid off and foreign direct investment soared increased by more than tenfold over the pre-IPR period to an annual average of $94 million between 2006 and 2013. Moreover, Rwanda’s ranking in the World Bank’s Doing Business Indicators rose from 143 (among 183 countries) in 2009 to 46 in 2015.
IPRs both drive policy reform and respond to global trends and development philosophies. Of particular importance is the increased emphasis on policy reform designed to stimulate not only FDI attraction, but the growth of the local private sector, and the effective enhancement of linkages for sustainable development. The impact of IPRs can be measured against different dimensions as these three case stories have showed.
Since its inception, the IPRs programme has been successful and UNCTAD is looking forward to answer the more than 20 requests received from developing and transition countries.