Brussels, 18 May - High-level government representatives, corporate executives and entrepreneurs from the world’s poorest nations met here today with their counterparts from other countries to discuss how to realize the potential for enterprise development in, and higher foreign direct investment (FDI) flows to, the 49 nations classified by the United Nations as the least developed countries (LDCs).
Globalization, and the need to strengthen the productive capacity of LDCs and bring the dynamism of the private sector to bear on the development challenges facing them, was the broad context of the debate, held during the Third United Nations Conference on the LDCs (14-20 May). The session was co-chaired by Cham Prasidh, Minister of Commerce of Cambodia, and Heidemarie Wieczorek-Zeul, Federal Minister for Economic Cooperation and Development of Germany.
Participants concurred on the urgent need for the international community to explore all ways to better integrate the poorest countries into the international production system and the world economy as a whole. The private sector has a key role to play here: without a vibrant enterprise sector, no long-term development is possible. This is particularly so because official development assistance to LDCs declined throughout the 1990s. At the same time, other sources of capital have assumed more importance. With its potential advantages for recipient countries, FDI takes pride of place among them.
UNCTAD’s latest figures on FDI to LDCs, published last week (see UNCTAD website, developmentgateway.org and UNCTAD press release LDC III/PRESS/01), show that FDI flows to LDCs increased from $0.5 billion in 1990 to $5 billion in 1999, but that they still account for a mere 0.5% of global FDI inflows. The potential for higher flows is nonetheless great because many countries are rich in raw materials and have markets for manufacturing and service products.
Today’s debate confirmed that there is considerable potential for more FDI in LDCs, but that help is needed to realize that potential. UNCTAD Secretary-General Rubens Ricupero, who is also Secretary-General of the Brussels conference, says that “enterprise development and FDI are key to building capacities in LDCs – the bedrock of sustainable development”. UNCTAD today is thus launching two programmes to assist LDCs in facilitating enterprise development and FDI flows:
- PROMOTING ENTERPRISE DEVELOPMENT: Key actions here are support for the emergence of small and medium-sized enterprises in LDCs (see also press release LDCIII/PRESS/06), the promotion of linkages between foreign corporations and domestic firms in LDCs, and support for women entrepreneurs.
- ATTRACTING AND BENEFITING FROM FOREIGN DIRECT INVESTMENT: Key actions here are improving the regulatory and institutional framework for FDI and helping to disseminate information on investment in the LDCs (see also press release LDCIII/PRESS/06). At the heart of this initiative is a multi-agency technical assistance programme by UNCTAD, MIGA and FIAS of the World Bank Group, and UNIDO. The programme also includes investment policy reviews; capacity-building in investment promotion (see press release LDCIII/PRESS/07); investment guides (published jointly with the International Chamber of Commerce (ICC)); an Investment Contract Aid Facility; an Internet platform for FDI information on the Development Gateway portal maintained by UNCTAD, MIGA and FIAS; and, together with the ICC, an Investment Advisory Council for LDCs, comprising senior business executives of multinational corporations and political leaders of LDCs. (Tanzania has offered to host the first meeting of the Council later this year in the regional context of south-east Africa, to focus on the particular opportunities of that region.) In addition, more than 20 bilateral investment treaties -- mainly between developing countries and in all cases involving an LDC -- were signed today to strengthen the international investment environment for FDI (see press release LDCIII/PRESS/08).
These programmes were developed in consultation with LDC and have benefited from the experience of providing technical assistance in investment and enterprise development, as well as from symposia held with LDCs in Oslo and Bonn and March 2001, respectively).
The various “deliverables” launched today, combined with the investment- and enterprise-related parts of the Programme of Action for the Least Developed Countries for the Decade 2001-2010 currently under negotiation, amount to an International Investment Initiative for LDCs. The Initiative reflects the leading responsibility of the development partner but also underlines the need to involve the private sector. It thus emphasizes a private-public sector partnership at the international level.
Thanks to the commitment of a number of governments and agencies, and of the international business community as represented by the ICC, the Initiative’s distinguishing feature is that its activities can be launched immediately after the conclusion of the Conference.
