Transcript World Investment Report 2000

EMBARGO 4 SEPTEMBER 2003
17:00 hrs GMT
UNCTAD
World Investment Report 2003
FDI Policies for Development:
National and International Perspectives
Zbigniew Zimny, Head
Investment Issues Analysis Branch
UNCTAD, Division on Investment, Technology and Enterprise Development
Phone: 4122 907 4643; Fax: 4122 907 0197
E-mail: [email protected]
Presentation in Warsaw, 4 September 2003
Largest FDI Downturn in 30 Years
Developed countries most affected
Global inflows of FDI, 1993-2002, by groups of countries
$ billions
1 600
1 400
World
1 200
1 000
800
600
Developed
countries
400
Developing countries
200
Central and Eastern Europe
1993
Source:
1994
1995
1996
1997
1998
1999
2000
2001
UNCTAD, World Investment Report 2003. FDI Policies for Development:
National and International Perspectives
2002
2
Uneven Downturn in Developing Countries
Largest declines in Latin America and Africa
Inflows of FDI to developing countries, 1995-2002, by region
$ billions
250
Developing countries
200
Asia and the Pacific
150
100
Latin America/Caribbean
50
China
LDCs
Africa
0
1995
Source:
1996
1997
1998
1999
2000
2001
UNCTAD, World Investment Report 2003. FDI Policies for Development:
National and International Perspectives
2002
3
The 10 Destinations Most Affected
Inflows to the US down by more than $100 billion
Declines in FDI inflows, 2002
$ billions
United States
114
United Kingdom
37
Netherlands
22
Mexico
12
Hong Kong, China
10
Canada
8
Spain
7
South Africa
6
Brazil
6
Denmark
6
0
Source:
20
40
60
80
100
UNCTAD, World Investment Report 2003. FDI Policies for Development:
National and International Perspectives
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4
Top 10 Economies Defying the Downturn
Increases in FDI inflows, 2002
$ billions
Belgium and Luxembourg
Australia
China
Finland
Germany
Czech Republic
Ireland
Japan
Malaysia
Slovakia
0
Source:
10
20
30
40
50
60
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National and International Perspectives
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5
Top 10 Destinations for FDI in 2002
China in first place leaving aside special case of Luxembourg
Luxembourg
126
China
53
France
52
Germany
38
United States
30
Netherlands
29
United Kingdom
25
Spain
21
Canada
21
Ireland
19
0
20
40
60
80
100
120
140
$ billions
Source:
UNCTAD, World Investment Report 2003. FDI Policies for Development:
National and International Perspectives
6
Top 10 Developing Economy Recipients in
2002
53
China
Brazil
17
Hong Kong, China
14
Mexico
14
9
Bermuda
8
Singapore
India
3
Malaysia
3
Cayman Islands
3
3
Kazakhstan
0
10
20
30
40
50
60
$ billions
Source:
UNCTAD, World Investment Report 2003. FDI Policies for Development:
National and International Perspectives
7
10 Largest Sources of FDI 2002
154
Luxembourg
United States
120
France
63
40
United Kingdom
31
Japan
Canada
29
Netherlands
26
25
Germany
Spain
18
Hong Kong, China
18
0
20
40
60
80
100
120
$ billions
Source:
UNCTAD, World Investment Report 2003. FDI Policies for Development:
National and International Perspectives
8
Why the Downturn
• Macroeconomic factors. Slow growth, decline in stock
market valuations (which led to the dramatic decline
in cross-border M&As)
• Microeconomic factors. Low corporate profits,
divestment, repayment of intra-company loans
• Institutional factors. Winding down of privatization
Source:
UNCTAD, World Investment Report 2003. FDI Policies for Development:
National and International Perspectives
9
Plummeting Cross-Border M&As Key Factor
Between 2000 and 2002:
 Value of cross-border M&As fell from $1.1 trillion to
$370 billions
 Number of deals dropped from 7,900 to 4,500
 The average value of deals shrunk from $145 millions
to $82 millions
 Number of mega-deals (value >$1 billion) more than
halved from 175 to 81
Source:
UNCTAD, World Investment Report 2003. FDI Policies for Development:
National and International Perspectives
10
FDI Largest Source of External Finance
to Developing Countries
Total resource flows to developing countries,
by type of flow, 1990-2002, $ billions
350
Total resource flows
300
Official flows
250
200
FDI inflows
150
100
Portfolio flows
50
0
UNCTAD, World Investment Report 2003. FDI Policies for Development:
National and International Perspectives
2002
2001
2000
1999
1998
1997
1996
1995
1993
1992
1991
1990
Source:
1994
Commercial bank loans
-50
11
International Production Growing, at Slower Pace
Indicators of FDI and international production
1982-2002, $ billions, current prices
Item
1982
1990
2000
2001
2002
FDI inflow s
59
203
1 393
824
651
FDI outflow s
28
233
1 201
711
647
FDI inw ard stock
734
1 874
6 147
6 607
7 123
FDI outw ard stock
552
1 721
5 992
6 319
6 866
..
151
1 144
594
370
5 479 15 087 16 472
17 685
Cross border M&As
Sales of foreign affiliates
Gross product of foreign affiliates
Total assets of foreign affiliates
Ex ports of foreign affiliates
2 541
594
1 959
670
1 423
2 807
3 220
3 437
8 759 23 460 24 517
26 543
1 169
2 594
2 509
2 613
Employ ment by foreign aff's (thousands) 17 987 23 858 51 013 50 254
53 094
Source:
UNCTAD, World Investment Report 2003. FDI Policies for Development:
National and International Perspectives
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Inward FDI stock, by group of economies,
1980, 1990, 1995, 2000, 2001 and 2002
(Billions of dollars)
Group of economies
1980
World
1990
1995
2000
2001
2002
699
1 954
3 002
6 147
6 607
7 123
Developed countries
392
1 400
2 041
3 988
4 277
4 595
Developing countries
307
551
921
2 030
2 174
2 340
32
50
225
51
117
381
78
202
638
145
609
1276
158
706
1310
171
762
1407
..
3
40
129
156
188
3
8
16
36
41
46
Africa
Latin America and Caribbean
Developing Asia
Central and Eastern Europe
Memorandum:.
Least developed countries
Source : UNCTAD, FDI/TNC database.
Source:
UNCTAD, World Investment Report 2003. FDI Policies for Development:
National and International Perspectives
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Outward FDI stock, by group of economies,
1980, 1990, 1995, 2000, 2001 and 2002
(Billions of dollars)
Group of economies
1980
World
1990
1995
2000
2001
2002
564
1763
2901
5992
6319
6866
Developed countries
499
1629
2584
5155
5488
5988
Developing countries
65
133
311
817
807
849
7
52
6
21
63
49
33
91
187
49
160
609
43
168
596
44
173
633
..
1
6
19
25
29
..
1
2
3
3
3
Africa
Latin America and Caribbean
Developing Asia
Central and Eastern Europe
Memorandum:.
Least developed countries
Source : UNCTAD, FDI/TNC database.
Source:
UNCTAD, World Investment Report 2003. FDI Policies for Development:
National and International Perspectives
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Inward FDI stock, 2002
Note: The size of the region/country's box reflects the size of the FDI stock.
Source:
UNCTAD, World Investment Report 2003. FDI Policies for Development:
National and International Perspectives
15
Top 15 Ranks in the FDI Performance Index
1999-2001, index value
Belgium/Luxembourg
Angola
Hong Kong, China
Ireland
Malta
Singapore
Sweden
Netherlands
Denmark
Brunei Darussalam
Czech Republic
Gambia
Nicaragua
Bolivia
Kazakhstan
0
Source:
2
4
6
8
10
UNCTAD, World Investment Report 2003. FDI Policies for Development:
National and International Perspectives
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Top 15 Ranks in the FDI Potential Index
1999-2001, index value
United States
Singapore
Norway
United Kingdom
Canada
Germany
Sweden
Belgium/Luxembourg
Netherlands
Finland
Ireland
Japan
Hong Kong, China
France
Switzerland
0.40
Source:
0.45
0.50
0.55
0.60
0.65
UNCTAD, World Investment Report 2003. FDI Policies for Development:
National and International Perspectives
0.70
17
Countries Increasingly Welcome FDI
National regulatory changes, 1992-2002
Item
No. of countries
that introduced changes in
investment regimes
No. of changes
of which:
1992
1993
1994
1995
1996
1997
1998
1999 2000 2001 2002
43
79
57
102
49
110
64
112
65
114
76
151
60
145
63
140
69
150
71
208
70
248
More favourable to FDI a)
79
101
108
106
98
135
136
131
147
194
236
Less favourable to FDI b)
-
1
2
6
16
16
9
9
3
14
12
Source : UNCTAD, based on national sources.
a
Including liberalizing changes or changes aimed at strengthening market functioning, as well as increased incentives.
b
Including changes aimed at increasing control as well as reducing incentives.
Source:
UNCTAD, World Investment Report 2003. FDI Policies for Development:
National and International Perspectives
18
Future Prospects for FDI Vary by Regiona
2003/04 and 2004/05
Per cent of responses
2003-2004
2004-2005
100
90
80
70
60
50
40
30
20
10
0
Worsen
Improved
Remain the
same
Africa
Latin America and the Caribbean
Developed economies
a
Worsen
Improved
Remain the
same
Asia
Central and Eastern Europe
The survey question was: How do you perceive the prospects for FDI inflows to your country in the short- and medium-term, as compared to the last two years (2001-2002)?
Source:
UNCTAD, World Investment Report 2003. FDI Policies for Development:
National and International Perspectives
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Part Two
Enhancing The Development Dimension
of International Investment Agreements
Source:
UNCTAD, World Investment Report 2003. FDI Policies for Development:
National and International Perspectives
20
Objectives of National FDI Policies
Attracting FDI
Development
concerns
Maximizing
benefits
of FDI
Source:
Minimizing
negative
effects of FDI
UNCTAD, World Investment Report 2003. FDI Policies for Development:
National and International Perspectives
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Proliferation of IIAs – at All Levels
 Bilateral level
o BITs: from 385 (1989) to some 2,200 (2002)
o FTAs now often contain investment provisions
 Regional level
o FTAs covering investment (NAFTA, MERCOSUR)
o Investment agreements (ASEAN Investment Area,
Andean Community’s Decision 291)
 Multilateral level: instruments affecting FDI
o GATS, TRIMs Agreement, MIGA, etc.
And many IIAs are in the making…
Source:
UNCTAD, World Investment Report 2003. FDI Policies for Development:
National and International Perspectives
22
Number of BITs and DTTs Continues to Rise
BITs and DTTs concluded, 1990-2002
250
2500
200
2000
150
1500
100
1000
50
500
0
0
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
BIT s (total per year: left scale)
DT T s (total per year: left scale)
T otal BIT s (cumulative: right scale)
T otal DT T s (cumulative: right scale)
Source:
UNCTAD, World Investment Report 2003. FDI Policies for Development:
National and International Perspectives
23
Density Mapping of BITs Worldwide
Number of BITs per country, January 2003
0
Source:
1 to 30
31 to 60
61 to 90
UNCTAD, World Investment Report 2003. FDI Policies for Development:
National and International Perspectives
> 91
24
BITs – Increasing Coverage
 176 countries have signed BITs
 45% of BITs do not involve developed countries
 Share of outward FDI stock covered by BITs
o 7% of global FDI
o 22% of FDI in developing countries
o 57% of FDI in CEE
 Main aim: investor protection…
 …but some now include provisions for the right of
establishment, performance requirements and
employment of key foreign personnel.
Source:
UNCTAD, World Investment Report 2003. FDI Policies for Development:
National and International Perspectives
25
Implications?
 Shows: national FDI policies increasingly take place
in the context of IIAs
 Various approaches to international rule-making all
have their benefits and costs
 What is desirable for a country depends on what it
seeks from an agreement—investor protection,
liberalization, international cooperation
 The desirability, from a development perspective, of
any future IIAs — at whatever level — depends on
the objectives, structure, substantive provisions and
implementation of IIAs
Source:
UNCTAD, World Investment Report 2003. FDI Policies for Development:
National and International Perspectives
26
Key IIA Issues Examined in WIR03
 The definition of investment: determines the scope and reach of
the substantive provisions of an agreement
 National treatment (especially with regard to the right of
establishment): determines how much and in what ways
preferences can be given to domestic enterprises
 Circumstances under which government policies should be
regarded as regulatory takings: testing the line between the right
of governments to regulate and the rights of private property
owners
Source:
UNCTAD, World Investment Report 2003. FDI Policies for Development:
National and International Perspectives
27
Key IIA Issues Examined in WIR03 (cont.)
 Dispute settlement: question of the involvement of non-State
actors and the extent to which the settlement of investment
disputes is self-contained
 The interaction of IIAs with national policies in the area of
o
Performance requirements
o
Incentives
o
Transfer-of-technology policies and
o
Competition policy
Source:
UNCTAD, World Investment Report 2003. FDI Policies for Development:
National and International Perspectives
28
Balancing Host and Home Country Interests
to enhance the development dimension of IIAs
 Traditional IIAs: focus on host countries
 Developed countries already use various home country
measures (HCMs) to encourage FDI to developing countries
 Some bilateral and regional agreements contain HCM
commitments
 Future IIAs: greater emphasis on HCMs
 Developing countries would benefit from making HCMs more
transparent, stable and predictable in future IIAs
Source:
UNCTAD, World Investment Report 2003. FDI Policies for Development:
National and International Perspectives
29
The Role of TNCs also Deserves Attention
 TNCs can do more to advance the development dimension of
their investments, as part of good corporate citizenship
 So far voluntary actions and corporate codes prevailed
 Focus so far is on social and environmental issues, less on
economic ones
 Key areas from development perspective:
o contributing fully to public revenues of host countries
o creating and upgrading linkages with local enterprises
o creating employment opportunities
o raising local skill levels
o transferring technology
 Further attention in IIAs is desirable
Source:
UNCTAD, World Investment Report 2003. FDI Policies for Development:
National and International Perspectives
30
Conclusions
 FDI flows are primarily determined by economic
fundamentals
 IIAs can only complement what is done at the
national level in terms of creating a more conducive
environment.
 Challenge: to make the development dimension an
integral part of IIAs at all levels…
 …in support of national policies to attract FDI and
benefit more from it.
Source:
UNCTAD, World Investment Report 2003. FDI Policies for Development:
National and International Perspectives
31
World Investment Report 2003
FDI Policies for Development:
National and International Perspectives
Thank You!
Visit the website of the World Investment Report at:
www.unctad.org/wir.