Partnering to Make Investment Climate Reforms Happen for Development
June 8, 2015 Editor 0In the spirit of working together to help developing countries reap the benefits of investment, the World Bank Group’s Trade & Competitiveness (T&C) Global Practice and the Organization for Economic Co-operation and Development (OECD) joined forces to make investment climate reforms happen on the ground. In a high-level roundtable event, which took place in the context of the recent WBG Spring Meetings, the two organizations announced their partnership by acknowledging the clear synergies that exist between their respective work programs – namely the OECD’s updated Policy Framework for Investment (PFI), and the diagnostic tools, technical assistance, implementation support and financing instruments provided by the WBG’s Investment Policy and Promotion (IPP) team
The Growing Importance of Investment for Developing Countries
For the past three decades, the private sector has served as the main driver of sustainable economic growth, employment and poverty reduction around the world (World Bank Group 2015). In particular, private sector investments have been powering international trade and the world economy as a whole. According to UNCTAD’s World Investment Report 2014:
- Between 1990 and 2013, foreign direct investment (FDI) flows increased at an exponential rate – growing eight-fold from $208 to $1,452 billion.
- Today, more goods and services reach consumers through the sales of foreign affiliates than through exports. While in 2013 the dollar value of global merchandise exports was $18.8 trillion and commercial services $4.7 trillion, sales of foreign affiliates reached $34.5 trillion.
- Meanwhile, international production is continuing to expand; between 2012 and 2013, it rose by 9 percent in sales, 8 percent in assets, 6 percent in value added and 5 percent in employment.
These figures shed light on the vital role that foreign direct investment can play in linking a country’s domestic economy to global value chains. Not only does FDI bring investment and jobs to a country, but also increased exports, supply chain spillovers, new technologies and enhanced business practices. In sum, investment is a key vehicle for developing countries to leverage the world economy for domestic growth.
Building the Foundation for Future Collaboration
Realizing all the potential benefits of FDI requires the clear and effective implementation of investment strategies and policies that respond to the realities and aspirations of a country. To attract, retain and maximize the benefits of different types of FDI, developing countries need to establish a favorable investment climate, and for that they need our assistance. International organizations must strive to cooperate with one another and provide more effective, coherent and relevant support in leveraging investments to help countries better connect to the world economy, which is so critical for development, especially given the complex changes in global trade and investment patterns.
- Knowledge-Sharing Boosts Development Know-How, as Practitioners and Policymakers Meet in Mombasa
- What’s next for the Competitive Cities initiative: ‘To travel far, let’s travel together’
- Improving SME competitiveness: To target or not to target? What businesses, and how?
- At the FCV Forum, a focus on jump-starting job creation: Boosting SMEs amid woes of Fragility, Conflict and Violence
- From Tirole to the WBG Twin Goals: Scaling up competition policies to reduce poverty and boost shared prosperity
- Developing a financial inclusion strategy: 5 lessons from Paraguay
Categories: World Bank PSD
Tags: Climate Reforms
The contribution of the internet to the strategic positioning of small businesses in the tourism industry Want to support enterprise development in developing countries? Think about the other salient factors. An investigation of Zimbabwe and Pacific Island countries
Subscribe to our stories
- Kenyan scientists release five new canning bean varieties after sixty-year wait May 15, 2017
- Conceptual overview of social entrepreneurship and its relevance to Nigeria’s third sector May 15, 2017
- Industry environment features influencing construction innovation in a developing country: a case study of four projects in Ghana May 15, 2017
- Dairy production systems and the adoption of genetic and breeding technologies in Tanzania, Kenya, India and Nicaragua May 15, 2017
- Start-up from scratch? How entrepreneurship can generate sustainable development and inclusion in the Sahel May 15, 2017