Transcript FDI - Khalil Hamdani

Foreign Direct Investment:
attract more to benefit more
C
Istanbul, 20 November 2013
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MC
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Khalil Hamdani
MCE
OIC countries can be more active in FDI
(UNCTAD data, inflows, billions of dollars)
2,500
2,000
1,500
World
Developing coountries
OIC countries
1,000
500
0
1980
1988
1996
2004
2012
OIC countries are now more open to FDI
(UNCTAD data, inflows, percent of GDP)
4
3
OIC countries
Developing countries
2
1
0
1980 1984 1988 1992 1996 2000 2004 2008 2012
OIC country experiences vary by region
(UNCTAD data, inflows per capita, dollars)
$350
$300
$250
$200
$150
$100
$50
$0
ASIA (8)
MENA (19)
SSA (22)
Economies in transition (7)
African members rely on FDI more for capital formation
(UNCTAD data, inflows, percent of gross fixed capital investment)
40
35
30
25
20
15
10
5
0
1980
1985
ASIA (8)
1990
MENA (19)
1995
SSA (22)
2000
2005
2010
Economies in transition (7)
Largest OIC recipients of FDI
Largest OIC providers of FDI
Intra-OIC FDI: acquisitions have slowed
(UNCTAD data, billions of dollars)
Intra-OIC FDI: main buyers
(cross-border acquisitions)
Intra-OIC FDI: main locations
(cross-border acquisitions)
Intra-OIC FDI: greenfield projects
(UNCTAD data, estimated capital expenditure, billions of dollars)
world
Intra-OIC FDI: main industries
(UNCTAD data, greenfield projects, 2003-2012, capital expenditure, billions of dollars)
Intra-OIC FDI played an important role
(UNCTAD data, billions of dollars)
200
180
160
140
OIC FDI inflows
120
100
OIC FDI outflows
80
Intra-OIC FDI
(estimated by author)
60
40
20
0
2000
2004
2008
2012
OIC countries can be more active on outward FDI
(UNCTAD data, outflows, percent of GDP)
2.5
2
1.5
Developing countries
OIC countries
1
0.5
0
1980 1984 1988 1992 1996 2000 2004 2008 2012
Intra-OIC FDI potential: current account surplus
(UNCTAD data, billions of dollars)
$400
$350
$300
$250
$200
$150
$100
$50
$0
2000
2002
2004
2006
2008
2010
2012
More open investment policies
• Reduction of barriers to FDI
(opening up more sectors to foreign investment, lifting of ownership
restrictions, employment of non-nationals, etc)
• Strengthening of standards of treatment
(national treatment, legal protection to foreign investors, etc)
• Enhancing the functioning of the market
(supervision of banking and financial services, protection of
intellectual property rights, environmental standards, etc)
• Investment promotion and facilitation
(image building, one-stop service, aftercare, policy advocacy, etc)
• Incentives
Investment strategy
An improved investment climate
Strategic policy coordination
Strategic FDI
attraction
Linkages
policies and
programmes
Source: Altenburg, 2005.
Strengthening
hard and soft
infrastructure
Investment strategy: an example
• Shift from a natural resource-based
to a knowledge-based economy
• Diversify industrial base
• Target biotechnology, pharmaceuticals
and petrochemical products
• Encourage SMEs and entrepreneurship
development
• Develop clusters of knowledge-based
activities
Work with existing investors
BACKWARD
FORWARD
TNC
SUPPLIERS
SUPPLY CHAIN
MANAGEMENT
Improved productivity
Higher incomes for suppliers
Reduced costs for company
A
A
CONSUMERS
A
PRODUCT
STEWARDSHIP
Better products for consumers
Enlarged market share for
company
The greater the linkages between foreign affiliates and local
enterprises and public institutions, the greater the spillovers
into the domestic economy.
Enhancing FDI benefits
Channels
Benefits
 Education and training
 Production efficiency
 Support for SMEs
 Productivity growth
 Backward linkages
 Technological and
 Linkages with
technology partners
 Forward linkages with
customers
Participation in global
supply chains
 Outward investment




managerial capabilities
Entrepreneurial activity
Market diversification
Upgrading of production
Export growth
Incentives
Carefully targeted, strategic incentive
packages may be relevant and useful to:
• enhance the benefits from investment and
trade in extractive industries.
• diversify industrial and export base.
• attract FDI into infrastructure, manufacturing
and services.
• create linkages between FDI and domestic
investment.
Recommendations
• encourage investment among the OIC countries, through
intergovernmental agreements, financing facilities and
joint investment projects to improve cross-border
transactions and infrastructure.
• Mandate your envoys in OIC countries to promote intra-OIC FDI.
• expand knowledge sharing within the OIC on FDI, using
existing institutions and involving private sector.
• Intensify cooperation among investment promotion agencies.
• generate reliable data on FDI at the country level that is
comparable across OIC countries in conformity with
international standards.
Intra-OIC FDI, trade and development
(UNCTAD data, current account net, 2012, billions of dollars, for 57 OIC countries)
$150
$100
$50
$0
-$50