UNITED NATIONS INDUSTRIAL DEVELOPMENT ORGANIZATION Reducing poverty through sustainable industrial...

UNITED NATIONSINDUSTRIAL DEVELOPMENT ORGANIZATION

Reducing poverty through sustainable industrial growth

Investment Policy for Attracting and Retaining Sustainable Investments

Workshop Panel 1F. Mithat Kulur

Investment and Technology Unit, UNIDO



Objectives of policy▶ Role of policy

Improve investment environment and governance Overcome market and government failures Absorb potential benefits of FDI

▶ Promoting FDI for development (keep focused) Culture of investment promotion (priorities)

▶ Quality of FDI FDI impact on competitiveness of domestic industry Policies to stimulate and foster this impact



Importance of dialogue and advocacy

▶ Empowerment of private sector to drive policy

▶ Overcome fragmentation of institutions

▶ Feedback loop (study impact of policy on decision makers to fine tune)

▶ Importance of a listening government3



Analysis for targeted policy

▶ Identify FDI characteristics that yield desired impact Characteristics: motivation, sector, origin, size, level of

globalization, autonomy of local subsidiary, technology, etc.

Impact: increased productivity of local firms, stimulation of domestic investment, enhanced incomes and distribution; increased trade and international linkages

▶ Target investors with identified characteristics▶ Streamline service and incentive offerings

accordingly



Investment as part of development policy

▶ Influence ability of local firms to absorb potential impact of FDI Facilitate interactions between foreign and domestic

firms Develop local skills for absorbing new technologies

and methods and exploiting increased opportunities for market access

Facilitate access to capital

▶ Investment Promotion mainstreamed into development policy and SME support



Policy tools - Example

▶ Survey in 19 countries▶ On-line Monitoring Platform▶ Domestic investment promotion▶ Some preliminary findings

Significant negative externalities (e.g. vertical spillovers in wages, output and employment are negative)

Horizontal externalities in medium tech sectors positive

Big differences between North and South FDI in terms of externalities

Positive vertical spillovers in TFP for some sectors



Thank you

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