UNCTAD moots new generation of investment policies for sustainable development

The United Nations Conference on Trade and Development (UNCTAD) has mooted a “new generation” of investment policies that seek to address specific concerns related to sustainable development at the national and international levels.

In presenting its 2012 World Investment Report in London, UNCTAD said at the national level, these challenges include integrating investment policies into broader development strategies, incorporating sustainable development objectives into national legislation, and improving the effectiveness of investment-related policies.

At the international level, there is a need to strengthen the sustainable development dimension of international investment agreements (IIAs), to better balance the rights and obligations of States and investors, and to better manage the existing complexity of the IIAs, which continue to grow in number around the world.

The new investment policy framework provides guidance for governments on how to address these challenges at the level of policy design and implementation. The framework consists of:

•A set of eleven Core Principles for investment policymaking with the starting point that the overarching objective of investment policymaking is to promote investment for inclusive growth and sustainable development;

•Detailed guidelines for national investment policies at the strategic, normative and administrative levels;

•Specific guidance for policymakers in the form of options for the design and use of IIAs with a particular focus on strengthening the sustainable development dimension of these agreements.

These key components reflect the recognition that investment promotion, if it is to generate sustainable development outcomes and more quality investment, has to be accompanied – if not preceded – by the establishment of proper and effective regulatory and institutional frameworks, the World Investment Report contends.

The Report indicates that global foreign direct investment (FDI) flows in 2011 surpassed the pre-crisis average – reaching US$1.5 trillion, despite persistent uncertainty in the global economy. However, flows still remained more than 20 per cent below their 2007 peak.

Slower FDI growth in 2012 was predicted, with flows leveling off at about US$1.6 trillion. Longer-term projections show a moderate but steady rise, with global FDI reaching US$1.8 trillion in 2013 and US$1.9 trillion in 2014, barring any macro-economic shocks. FDI inflows in 2011 increased across all major economic regions. Flows to developing countries reached a record US$684 billion, up 11 per cent. Transition economies saw flows increase by 25 per cent to US$92 billion. Flows to developed countries grew by 21 per cent, but were still a quarter below the level of the pre-crisis average. However, FDI recession continued in Africa and LDCs.

The Report contains detailed analysis of global and regional investment trends, national policy developments and the special topic on the new generation of investment policies. The Report contains a comprehensive investment policy framework for sustainable development, which provides detailed guidelines for national and international investment policymaking.

The Report also suggests that investment policy-making is at a cross-road, reflected by intensified review and revision of existing national and international investment regimes. Many countries continue to liberalise and promote foreign investment. At the same time, new regulatory and control measures are introduced, although often in pursuit of other policy objectives, such as industrial policy.

UNCTAD’s new Investment Policy Framework for Sustainable Development unveiled in its 2012 World Investment Report was presented today by Secretary-General Supachai Panitchpakdi at a roundtable discussion organised by the Overseas Development Institute (ODI) in London on 5 July.

Established in 1960, ODI is Britain’s leading independent think tank on international development and humanitarian issues.

After introductions by Dr. Alison Evans, Director of ODI, and Secretary-General Supachai, Mr. Richard Bolwijn, acting head of UNCTAD’s Business Facilitation Section, provided further insights into the World Investment Report 2012: Towards a New Generation of Investment Policies. The roundtable discussion on the report was chaired by Dr. Dirk Willem te Velde, Head of ODI’s International Economic Development Group.

The roundtable session also discussed the latest trends in FDI and TNC activity, including UNCTAD’s new FDI attraction and contribution indices.