Annual Investment Meeting - Plenary Session on Investment Partnership and New Forms of FDI
08 April 2014
Excellencies,
Distinguished delegates,
Ladies and Gentlemen,
I am pleased to deliver the keynote address to this plenary session on Investment Partnerships and New Forms of FDI. Today, I would like to speak to you about the issue of sustainability and why we at UNCTAD consider it to be one of the defining investment opportunities of our time. Investment for sustainable development is opening the door both to new partnerships and to new forms of investment, and this paradigm shift is occurring faster than anyone might have expected a few years ago. Allow me to briefly describe why I believe that the time to invest in our sustainable future is now, and then I will address what this means for investment trends and for investment policy going forward.
As you know, we have experienced tectonic shifts in the economic landscape since the global financial crisis of 2009. To be sure, some of these changes, such as growing South-South ties and the rise of emerging countries, were already underway before the crisis. But the crisis amplified these dynamics. Now, almost half a decade later, countries that were the traditional mainstays of the global economy are vulnerable and trapped in a low growth rut. On the other hand, previously marginal countries have become major players on the global stage, even if their economic growth has slowed somewhat recently.
These dynamics have been accompanied by fundamental changes in the global marketplace. The past decade has seen the rapid expansion of global production networks, creating corporate giants with wealth that can dwarf that of entire countries. If governments devise policies strategically, it is possible for developing countries to benefit from these global value chains – to create jobs, bolster skills and technology, foster sustainable small enterprises and spur wealth creation. Transnational corporations also possess the requisite funds and expertise to contribute to solving multiple world problems. But these outcomes will not happen automatically. They require careful and targeted planning and policymaking, based on dialogue and strong partnerships between the public and private sector.
At the same time, there is growing international recognition that we must pursue a development trajectory that is economically, socially and environmentally sustainable. This is reflected in the Sustainable Development Goals that UN Member States are in the process of formulating. This new set of development targets will succeed the Millennium Development Goals, which expire next year. We can expect a redoubling of global ambitions to fight poverty, inequality and environmental degradation. This will put greater demand on already straining state coffers. It seems prudent that we cast our web for funding wider and explore previously neglected sources. The private sector will be our key ally in strengthening delivery of our global development commitments.
Investment – both domestic and foreign – will be crucial if we are to meet our developmental challenges. It is therefore vital that we create an investment environment that is secure, predictable and conducive, to encourage investors to play a more central role in the development agenda.
Mr. Chairman,
As you are aware, the recovery of foreign investment flows has lagged that of most other global economic indicators. Even as GDP growth moved back into positive territory and international trade and job creation accelerated, the pessimistic mood which gripped the world in 2009 persisted among investors. This was reflected in foreign direct investment numbers.
However, UNCTAD's latest data on FDI flows give us reason for optimism. The mood last year turned positive only for the second time since the onset of the crisis. While our FDI numbers will only be confirmed in the World Investment Report 2014 in June, our preliminary estimates show that global FDI flows in 2013 rose by 11% to an estimated $1.46 trillion. This level was last seen in the pre-crisis era. This is good news, and all indications are that the investment recovery is finally on track, with the outlook for 2014 and 2015 optimistic. Moreover, last year saw a continuation of one of the most positive trends in the investment sphere since the crisis – the rise of developing countries' share of global FDI. In 2013, developing country receipts reached a new high of $759 billion, or 52% of total global FDI inflows. On the other hand, for the second consecutive year, the percentage of FDI that went to developed countries remained at a historically low level of 39%. And while FDI flows to the European Union recovered, those to the United States continued their decline. As investor appetite for assets in traditional markets remained lacklustre, investment levels in emerging markets continued to grow, driven mainly by Latin America, the Caribbean and Africa.
Mr. Chairman,
Let me now turn to developments on the investment policy front. As you may be aware, UNCTAD tracks all national regulatory and policy measures that may have an impact on investment. We publish this information on a quarterly basis. I am pleased to tell you that the investment policy changes in the four months to the end of February were mostly positive. In contrast to a rash of protectionist measures taken by G20 countries both on the trade and investment front in the aftermath of the 2009 crisis, these latest measures showed a continued move towards improving entry conditions for foreign investors.
In reformulating investment policies, governments are frequently motivated by their desire to leverage foreign investment to amplify developmental gains. Policymakers have for long understood that investment is a key driver of economic growth. It is a prerequisite for building productive capacity and it enables industrial development and upgrading. Given the finance gaps in many developing countries, foreign investment often acts as a crucial complement to domestic investment. Investment policy is therefore an integral component of most countries' development strategies. But the opportunities and requirements from different types of investments may vary by country and by sector. Especially for developing countries, it remains a challenge to determine how best to mobilize investment for sustainable and pro-development outcomes.
To assist on this front, UNCTAD proposed to map a guideline for countries, particularly developing ones, on optimal investment policy options. This aims to help countries pick national and international policies that best suit their unique circumstances. The Investment Policy Framework for Sustainable Development (or the IPFSD for short) strives to be a comprehensive guide book. The framework consists of a set of core principles for investment rulemaking and gives design guidance on how to mainstream sustainable development objectives in investment policies. It is helping a new generation of investment policies to emerge, in pursuit of a wider, more nuanced development policy agenda.
Mr. Chairman,
It was in 1964, at UNCTAD I, that member States gathered in Geneva with the aim to create "a better and more effective system of international economic co-operation, whereby the division of the world into areas of poverty and plenty may be banished and prosperity achieved by all." This year of UNCTAD’s 50th anniversary coincides with the global community’s work on delivering the MDGs and formulating the development agenda beyond 2015.
As part of the UNCTAD@50 celebrations, and as part of our efforts to unite public and private sector investment stakeholders to promote global development, UNCTAD's flagship World Investment Forum this year is dedicated to the topic of Investing in Sustainable Development. The Forum takes place in Geneva from 13 to 16 October. It will provide the platform for dialogue among government leaders and corporate executives about the post-2015 development agenda, and the contribution the private sector can make in delivering the sustainable development goals.
I want to invite you to come celebrate UNCTAD@50, and attend the World Investment Forum. We can together continue the journey towards achieving the vision of the founders of UNCTAD: "to find ways by which the human and material resources of the world may be harnessed for the abolition of poverty everywhere", and to bring opportunity and prosperity to all.
I thank you, Mr. Chair and wish you successful deliberations.
