A new UNCTAD report on the status of foreign direct investment (FDI) in the world’s 48 poorest countries urges a changed approach that would focus such investment on creating jobs, as well as on enhancing those countries’ productive capacities – that is, their abilities to produce wider varieties of goods and more sophisticated goods.
The report, titled 'Foreign Direct Investment in Least Developed Countries: Lessons Learned from the Decade 2001–2010 and the Way Forward', is intended to contribute to debate at the Fourth UN Conference on the Least Developed Countries tomorrow in Istanbul.
As Nepal is the chair of LDCs, Prime Minister Jhala Nath Khanal will address the conference that has been urged -- by the report -- to develop strategies and provide incentives to target opportunities where investors can use technology to 'leapfrog', as is already happening in telecommunications with the rapid development of mobile telecommunication networks and with ancillary services such as mobile phone banking or payment services in rural areas.
The report notes that while FDI to these nations grew rapidly over the decade to reach an estimated $24 billion in 2010 and their share of global foreign investment flows has effectively doubled to two per cent, most in terms of value was dedicated to natural-resource extraction. That sector has tended to create relatively few jobs, the study says. Such investment also has not tended to 'fertilise' Least Developed Countries economies by leading to greater links between foreign businesses and local firms that can spread know-how and technology and help spur broad-based, long-term economic growth.
Although FDI has recently enabled some Least Developed Countries to connect with the global value chain in which products are upgraded and reap higher profits, the majority of Least Developed Countries remain marginalised from the world economy, the report said, recommending to establish an 'LDC infrastructure development fund' that would improve these countries’ abilities to attract investment by upgrading such factors as electricity supply, roads, railroads and computer or Internet connections. "Such a fund would seek to provide 'innovative' solutions to infrastructure weaknesses by establishing public-private partnerships between Least Developed Countries and foreign investors," it added.
It also called for an aid-for-productive-capacities programme that would support technical and vocational training, education and entrepreneurship in Least Developed Countries. The intent is to provide Least Developed Country's populations with skills that can attract foreign investment and spur sustainable economic progress. The report recommends that Least Developed Country governments and overseas development partners boost efforts to attract small- and medium-scale international investors – a group that often finds and exploits hidden business opportunities.
There is a potential for business people to get involved further in investment by undertaking projects that aim to solve social and environmental challenges, the study said, calling for governments to implement regulatory reforms that can help channel FDI in directions that should act to improve living standards, create jobs and broaden the economic bases of Least Developed Countries.
FNCCI to present paper
KATHMANDU: Federation of Nepalese Chambes of Commerce and Industry president Suraj Vaidya will present a paper on 'Millennium Development Goals in Current National Three Year Interim Plan," during the Fourth UN Conference on the Least Developed Countries that starts from Monday in Turkey. The president of umbrella organisation of Nepali private sector will also hold discussions on Contributing to Millennium Development Goal: The Role of Chambers in Achieving the MDGs' that will be oganised by Union of Chambers and Commodity Exchanges of Turkey under the Global Business Partnership Forum. Vaidya left for Turkey on Sunday.
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