Transcript Trends in Financial Flows and Technology Transfer

Trends in Financial Flows and
Technology Transfer
Daniele Violetti
Programme Officer, Technology
Climate Change Secretariat (UNFCCC)
UNFCCC Workshop on Innovative Options for Financing the
Development and Transfer of Technologies
Montreal, 27-29 September 2004
Outline of the presentation
I.
Previous work of the UNFCCC
II.
Financial flows in the UNFCCC process
III. Financial flows outside the UNFCCC
IV. Outlook on financial flows
V.
Conclusions
Technology Transfer and Financial
Flows
Greenhouse gas
emissions in
developing countries
Need for
environmentally
sound technologies &
technology transfer
Problem:
Financing
Previous work of the UNFCCC
• First technical paper on terms of transfer of technology and
know-how in 1997 (FCCC/TP/1997/1), with a focus on
multilateral lending institutions
– Problem of quantification and measurement of technology transfer
(especially know-how transfer)
• Because of their strong linkage to technology, financial
flows are often used as a proxy for technology transfer
• Problem: data on climate-relevant financial flows are
normally not collected separately (esp. in private sector)
Financial Flows in the UNFCCC process
• Information provided by Annex II Parties in
their third National Communications
Financial flows from OECD countries
Climate change-related ODA by sector
from 1998 to 2000 (US$ million)
Other
13%
Transport
30%
General environment
protection
17%
Forestry
4%
Agriculture
2%
Source: OECD DAC
Energy
34%
• A DAC study shows that $2.7 billion annually are spent for climate change-related
aid – representing 7.2 percent of ODA commitments
Financial Flows in the UNFCCC process
• The Global Environment Facility in the period
1995-2003 provided around USD 1.35 billion in
grants to climate change activities and another 6.2
billion has been leveraged
• The Special Climate Change Fund will finance
projects relating to technology transfer
• Financial flows generated by JI/CDM projects
(How much? When?)
Definition of financial flows
Financial flows to low and
middle income countries
Official flows
Loans
Grants
bilateral/
multilateral
bilateral/
multilateral
Private flows
Debt flows
FDI/
Portfolio equity
flows
Trends in financial flows
Table 1: Aggregate resource flows to developing countries
Type of flow (US$ billion)
1995 1996 1997 1998 1999 2000 2001 2002 2003e
Aggregate net resource flow
237.2 284.6 324.2
Official development finance
53.0 40.8 38.4
Grants
32.6 31.3 25.3
Loans
20.4
9.5 13.2
Bilateral
9.4 -5.6 -6.6
Multilateral
11.1 15.0 19.8
Total private flows
184.2 243.8 285.8
Debt flows
56.6 88.6 92.2
Commercial banks (M-L term) 26.5 34.2 43.9
Bonds (M-L term)
28.5 46.1 38.2
Others
1.7
8.3 10.0
Foreign direct investment
95.5 109.5 171.1
Portfolio equity flows
32.1 45.7 22.6
Source: Global Development Finance, 2004. World Bank.
266.4 236.7 193.7 206.1 190.6 228.2
60.9 42.2 22.8 54.8 35.3 28.0
26.7 28.5 28.7 27.9 31.2 34.3
34.2 13.7 -5.9 26.9
4.1
-6.3
-3.2 -2.2 -6.8 -7.7 -10.6 -12.8
37.4 15.9
0.9 34.6 14.7
6.5
205.5 194.5 170.9 151.3 155.3 200.2
23.4
0.1 -3.9 -28.1
3.2 50.6
52.4
-5.1
-5.8 -10.2
-3.9
-6.6
39.7 29.8 16.5 12.2 12.7 33.1
-68.7 -24.6 -14.6 -30.2 -5.6 24.1
175.6 181.7 162.2 175.0 147.1 135.2
6.6 12.6 12.6
4.4
4.9 14.3
Trends in financial flows
• Financial flows have decreased for five consecutive year after a historical
peak in 1997 ($324 billion) due to global economic downturn and low FDI
• Flows increased for the first time again between 2002 and 2003 from $197 to
228 billion – but they remain 30 percent below their peak level of 1997
• Official flows have decreased by 25 percent since 1990
• FDI has become the main source of financial transfers, representing between
60 to 80 percent of total flows in recent years (up from 25 percent in 1990)
• Countries replace official flows with FDI as they become more developed –
but aid remains important as a buffer during economic downturns and crisis
• Still 87 percent of FDI goes to Japan, USA and Western Europe (2002)
Trends in financial flows
Aggregate financial flows from 1990 to 2003
US$ billion
350
300
250
200
150
100
50
0
1990
1991
1992
1993
1994
1995
1996
Official development finance
Source: Global Development Finance 2004. World Bank.
1997
1998
1999
2000
Total private flows
2001
2002
2003e
Trends in financial flows
Net foreign direct investment (FDI) by region (2003)
Latin America and
Caribbean
27%
Europe and Central
Asia
19%
Middle East and
North Africa
1%
Sub-Saharan Africa
6%
South Asia
4%
Source: Global Development Finance 2004. World Bank.
East Asia and the
Pacific
43%
Outlook on Financial Flows
• Total FDI is expected to pick up again in 2005 due to
recovery from global downturn
• The share of FDI to developing countries is expected
to rise
• Further stagnation of FDI expected in Latin America
and Caribbean as privatizations approach their end
• Strong growth of FDI expected in East Asia and the
Pacific – especially due to growth in China
Conclusions
• Private sector involvement is still low in developing countries - only 13
percent of FDI goes to developing countries
• The involvement of the private sector in the technology transfer process
is crucial for achieving the objectives of the UNFCCC
• The challenge for addressing transfer of ESTs rests primarily with the
public sector by:
– Provide funding
– Creating favorable market conditions
– Raising awareness
• This workshop, within the CC process, has the opportunity of starting to
bridge the gap between governments and the private sector in order to
benefit from the innovative options for financing the development and
transfer of technologies already available
THANK YOU!