INVESTMENT FOR DEVELOPMENT (IFD)
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Introduction The “Investment For Development” (IFD) Project aims to create awareness and build capacity on investment regimes and international investment issues in developing and transition economies. This two-year project, launched in September 2001, is being conducted by the Consumer Unity & Trust Society (CUTS), in collaboration with the United Nations Conference on Trade and Development (UNCTAD). It is supported by the Department for International Development (DFID) of the UK. Background Foreign Direct Investment (FDI) is being recognised widely as a potential source of financing for development. It is being seen as a principal channel for transfer of technological know-how and a potentially significant contributor to income and export growth and employment. Several governments are trying to create ‘enabling environments’ for investment, making changes in the national economic and institutional infrastructure, though their attempts have been met with varying degrees of success. FDI to developing countries has been increasing, but disproportionate shares have been going to a handful of countries. Through the experience of selected countries, the IFD project attempts to identify the various factors that can encourage or inhibit investment flows, the problems or deficiencies that exist in the national investment regimes and plausible solutions for the same. An extremely important aspect of the project is involvement of stakeholder groups, including civil society representatives, throughout the process to create the necessary momentum for building an investment-friendly regime. Investment-related regulations
and codes of conduct have been under discussion at the multilateral
level such as the WTO, UNCTAD and in other bodies for sometime now.
In order to protect and promote their interests, it is felt by developing
countries that they need to have adequate expertise and capacity to
engage actively in negotiations and policy formulation. The IFD project
aims to raise awareness and capabilities relating to investment among
policy-makers, government officials, business, the media, civil society
and other stakeholders. Outline The project involves fact-finding and advocacy work on investment regimes in seven developing & transition economies. The project has two components, research and advocacy. The project focuses on the following countries: India, Bangladesh, Brazil, Hungary, South Africa, Tanzania and Zambia. The countries were selected to cover a range in terms of size, level of development, geographical location, macroeconomic characteristics (including least developed countries, lower- and upper-middle income countries), policy orientation and performance in terms of attracting FDI. The level of activity and capacity in civil society organisations was also taken into account. The project was formally launched at a Launch Meeting in Jaipur on 13th & 14th December 2001. Research In order to form a complete picture of the effectiveness of investment policies in selected countries, two research reports have been prepared by the country researchers. The first one, "Investment Policy Report" (Report A) covers: the broad macroeconomic environment including performance in domestic and foreign direct investment; broad parameters of the policy environment; an investment policy audit; the institutional and policy-making framework for investment in the country. The research for this report relied mainly on the existing literature and policy documents. One report was prepared for each country and has taken the form of a reader-friendly document for distribution to stakeholders and other interested parties at the national level. The second report, "Investment Performance and Perceptions Report" (Report B) covers perceptions of the investment environment the country’s performance in terms of attracting FDI and in securing benefits from FDI for the national economy. Inputs for the report will include secondary sources, official documents, economic data and three surveys. The surveys employed structured questionnaires on the views and decisions of actual and potential investors in each country, including domestic companies, subsidiaries of transnational corporations, and parent companies in third countries. Apart from investors' surveys, a civil society survey has been undertaken in each project country to get the views of the civil society on foreign direct investment, and its effect on the domestic economy. Three sectors with distinct characteristics were selected for case studies. The case studies looked in detail at economic, policy and legal features of the investment environment and assess their impact on final performance. The output is a reader-friendly document, accessible to all stakeholders and civil society in particular. Country level research was supplemented by surveys to be conducted internationally in home countries with TNCs that are considering, conducting or withdrawing from investments in the project countries. This provides a valuable insight into the kinds of factors that influence investor decisions across countries, particularly where investor experiences have been unsatisfactory.. On the basis of the country reports, international surveys and other sources of data have been compiled in two synthesis documents by the Core Researcher. These highlight similarities and differences, cull out examples of good practice and develop a set of policy recommendations based on these. The documents reflect the significant differences between large developing countries (Brazil, India and South Africa) and LDCs (Bangladesh, Tanzania and Zambia) and transition economies (Hungary) in terms of their capabilities and needs. These reports will also generate recommendations for developing countries in international negotiations on this issue at the WTO or in other bodies. A "National Advocacy Document" (Report C) containing policy recommendations for governments, civil society and intergovernmental organisations, has been prepared by each country researcher. On the basis of Report Cs, CUTS has been preparing a Project Advocacy Document containing suggestions for action points and policy changes targeting civil society, national policymakers and international negotiators. Outreach Three national-level seminars (National Reference Group Meetings) were organised in each of the project countries for a broad cross-section of stakeholders including government, business, civil society etc. National research reports were presented and discussed at these events, ensuring that the research accurately reflects the realities of the investment environment. National seminars also sought to raise awareness on investment issues and stimulate debate across the stakeholder groups. On the basis of the consultations that had taken place at the national seminars, a set of policy recommendations have been formulated for circulation and advocacy work at the national level. Building on the national-level work, three Regional Seminars were organised in collaboration with UNCTAD in three different regions in the second half of 2002. The regions were Asia, Africa and Latin America and the aim was to disseminate the research results and, raise awareness of the development dimension of investment policies and international investment agreements at national and regional levels. The main target audience for these seminars were civil society groups, while resource persons were regional and international experts and practitioners in the subject area. The advocacy element of the project (The Project Advocacy Document) were presented in the Review Meeting of the project on 9-10 May 2003 in Geneva. This major event brought together investment experts and practitioners to present the results of the project to an international audience of trade negotiators and other interested parties. The event provided a forum to share the learnings of the project with a wide audience and to raise awareness on the needs and concerns of developing countries with regard to international investment agreements. It also highlighted key issues for training and capacity-building on investment in developing countries and promote cooperation and information exchange between developing countries to develop a common strategy on these issues. Project outreach have been strengthened by regular newsletters and access to project materials on the Web. Two newsletters, one electronic and one hard-copy, are being distributed regularly throughout the project. The hard-copy newsletter is produced quarterly. It includes updates on the project, highlights of the research results and other project outputs and topical articles on issues in the area of investment. The electronic newsletter includes updates on the project, news summaries and links to stories and sites of interest to investment stakeholders and links to the project area of CUTS’ web-site. Partner Organisations National-level research and advocacy will be conducted by partner organisations in the selected countries. The following institutions have been confirmed as partners:
· India: National Council of Applied Economic Research, New Delhi · South Africa: Institute for Global Dialogue, Johannesburg · Tanzania: Economic and Social Research Foundation, Dar es Salaam · Zambia: CUTS-Africa Resource Centre, Lusaka. · Bangladesh: Bangladesh Enterprise Institute, Dhaka Project Advisory Committee A Project Advisory Committee comprised of international experts including policy-makers, representatives of international organisations, academia and other civil society groups have been guiding the design and implementation of the project. The Advisory Committee members are as follows: · Richard Eglin, Director, Trade and Finance Division, World Trade Organisation · John Gara, Commercial Justice Advisor, Commercial Justice Reform Programme, Uganda · Sanjaya Lall, Professor of Development Economics, Oxford University, UK · Arvind Mayaram, Secretary to the Government of Rajasthan, Department of Tourism, India · Roger Nellist, Team Leader,
Investment, Competition and Business Development Services Team, Policy
Division, Department for International Development (DFID), UK · Karl Sauvant, Director, Division on Investment, Technology and Enterprise Development, United Nations Conference on Trade and Development · Farooq Sobhan, President, Bangladesh Enterprise Institute · M. Sornarajah, Professor, Faculty of Law, National University of Singapore · Diana Tussie, Senior Research Fellow, Latin American Faculty of Social Sciences (FLACSO), Argentina · Myriam van der Stichele, Centre for Research on Multilateral Co-operations (SOMO), The Netherlands · Mohan Kaul, Commonwealth Business Council, UK |
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