7th World Investment Forum event: Investment, trade and development nexus in the post-COVID-19 era
22 October 2021
Excellencies,
Distinguished delegates,
Dear participants,
Thank you for joining us today at this meeting which takes place at a significant moment. We are almost two years into the pandemic which has had an enormous impact and is still not over. Yet, the recovery is underway and we have an opportunity to create more resilient, sustainable and inclusive economies.
Global value chains boosted trade and investment for over three decades and were an engine of the global economy. But the COVID-19 pandemic brought them close to breaking point. In 2020, international investment declined by 35 per cent to one trillion US dollars, reaching its lowest level since 2005. International trade also experienced a historic fall. In 2020, merchandise trade fell by 7.3 per cent, and services trade by 20 per cent.
Yet, GVCs did not break. After the initial shock, global value chains have proven to be responsive and vital. Trade started recovering strongly at the end of 2020, but then trade growth slowed down in the course of 2021. International investment is now also recovering. Global FDI flows in the first half of 2021 reached an estimated 850 billion US dollars. That means that it has recovered more than 70 per cent from last year’s loss.
Still, we have to remain vigilant. The investment recovery appears to be driven mostly by the push for infrastructure investment. FDI in industrial sectors and global supply chains is still stagnant. Concerns about the fragility of global value chains are thus not subsiding. We have seen the repercussions that failings in global supply chains can do, especially in health-care equipment and medicines but also in virtually all manufacturing industries.
While the crisis has further increased the challenges of international production, several other factors had already started transforming the system prior to the pandemic. In our 2020 World Investment Report, we examined various challenges and how they are expected to transform the global system of international production in this decade. We analyzed the implications of emerging trends, such as the downsides of reshoring, the drive towards regionalization, or the desire for diversification of supply chains. During the WIF this week, we also discussed the issue of the opportunities, role and influence of SMEs in global value chains. All these trajectories have important implications for policymakers in trade, investment and development.
Certainly, international production is vital for the recovery, economic growth and job creation. It is important to maintain an open trade and investment policy environment that favours a gradual – rather than a shock – adjustment of international production networks. In developing countries especially, policymakers need to prepare for the challenges arising from the expected gradual transformation of international production and be ready to capture the opportunities and attract the investment that is required.
To this end, we are pleased to see progress on Investment Facilitation in discussions at the WTO. Investment facilitation is critical for reducing uncertainty for investors. It contains many aspects and tools, such as the use of ombudspersons, dispute prevention approaches, and consultation mechanisms. These aspects must be familiar to you as they echo the success achieved in trade facilitation.
What we have learned from trade facilitation on the ground and from our experience with foreign investors, is the immense value of information provision and transparency, streamlining and automation of administrative procedures. These are gains that governments can quickly seize as often they do not require legislative changes; only changes in the way rules are implemented.
In this context I would like to mention our Global Enterprise Registration index - Ger.co – which rates countries’ information portals and single windows for businesses and investors. Information portals provide guidance on required procedures to invest, establish and operate a business, or obtain necessary trading licenses and permits. Single windows enable investors to create a company online. GER.co builds on our pioneering work on transparency and online single windows across developing countries.
We work with governments to simplify procedures, often cutting the number of steps, time and cost to businesses by half or more. We then automate these procedures through online single windows. This avoids numerous visits to multiple government offices, excessive paperwork and opportunities for excessive discretion. Thanks to this work, Benin and Bhutan are among the fastest places in the world to create a business, and both are Least Developed Countries.
We hope to build on this experience with you and help focus investment facilitation efforts on those issues that matter most to investors, and which make the biggest difference to mobilizing investment for sustainable development.
I thank you for your attention and wish you a fruitful discussion.
