Monterrey Consensus on Financing for Development UN, February 15, 2008 Molly Pollack, Executive Director, ChileGlobal

1. Monterrey Consensus on Financing for DevelopmentUN, February 15, 2008Molly Pollack, Executive Director, ChileGlobal

2. Challenges / Goals of Monterrey Consensus • Goals: Eradicate poverty /Sustained economic growth/ inclusive global economic system • How: Movilizing and increasing use of financial resources through • New partnership /developed and developing countries • Collaboration among all stakeholders • Each country responsible for its economic and social development: important role of national policies

3. And… • Regional partnerships • Financing for development should be: • Sustainable • Gender-sensitive • Development focused on people

4. What has happened since the MC • Improvement in macroeconomic and fiscal policies • Increase in flow of private resources to developing countries, although may not be sustainable . • International trade has recovered, but new forms of proteccionism emerged • Official Development Assistance changed its negative trend • Debt indicators have improved

5. Critical comments on the Monterrey Consensus • Growing power of transnational short-term capital flows instead of promoting long term investments • The opening of markets could widen gap between rich and poor countries • Underdeveloped countries have to compete on the global market with wealthy economies that can afford protectionism policies and subsidise their products • Focus on “human development” is needed • Mechanisms to promote investments in low-income countries should be implemented.

6. Mobilizing international resources for development: FDI and other private flows • Why FDI is good? • Help to accelerate transfer of knowledge and technology • Increase employment generation • Boost overall productivity • Enhance competitiveness and entrepreneurship • As a result: poverty reduction and economic growth

7. What should stakeholders do? • Countries • Improve investment climate (business friendly environment) • Focus on human capital development • Promote public/ private partnerships • International institutions • Increase support to infrastructure development • Support VC and other lending instruments, export credits, etc. • Facilitate business contacts • Support public/ private initiatives

8. What should business sector do? • Business should be more socially responsible • Social and gender sensitive gender • Consider environmental implications of their undertakings (business culture) • Be transparent, reliable • Respect rules • More willing to networking

9. Developments since Monterrey • Insufficient political will slowed down the required reforms • Current international economic conditions present the spectre of deflation, volatility in capital markets and exchange rates • Large and increasing imbalances in the United States economy, and fluctuations in oil prices • The Global Microcredit Summit’s goal of reaching 100 million poorest families.

10. Source: ECLA, on the basis of official figures as of April 2007 LAC after Monterrey

11. Developments since Monterrey (2) • Opening up to FDI and improved regulatory frameworks have not led to the magnitude of FDI inflows expected • Still information on stocks of external assets and debt is especially limited. • Some countries have not implemented parts of their macroeconomic and structural reform programmes

12. LAC after Monterrey • Source: ECLA, on the basis of official figures as of April 2007

13. LAC after Monterrey • Source: ECLA, on the basis of official figures as of April 2007

14. LAC after Monterrey LATIN AMERICA AND THE CARIBBEAN: COUNTRY DISTRIBUTION OF FDI FLOWS,BY RANGE, IN 2006: • Source: UNCTAD, FDI/TNC database

15. Total Factor Productivity Comparison by World Region

16. Chile after Monterrey • Introduction of MK1 and MK2 reforms that allowed the complete integration of the domestic stock exchange with the international market and facilitated the development of the Venture Capital Industry • CORFO and ProChile become crucial in promoting Chilean exports and investments in Chile • Chile’s attempts to join Financial Action Task Force (FATF)

17. Chile After Monterrey Country agenda coincides with the Consensus Consensus goal Eradicate poverty, achieve sustained economic growth and promote sustainable development as we advance to a fully inclusive and equitable economic system. The Four Pillars of the Bachelet Government for Development • Pension Plan Program Reform for All Workers • Education Improvement • Strengthening Innovation & Entrepreneurship – A Knowledge Economy • Better Infrastructure & Housing for All

18. Innovation as a Key Issue for Development: Public-Private Partnership as the Means • Creation of a National Council on Innovation for Competitiveness • Supra-ministerial • Coordinates: Inter-ministerial – inter-agency • Includes a select group of the highest representatives of the public, scientific, academia, and private sector. • Mandate to develop a country innovation strategy beyond government • Creative financing: Mining Royalty Fund • Key Cluster Agenda • working with Chile’s competitive advantages

19. Public-Private Partnerships for InnovationHow do we do it? Fundación Chile Non-profit, privately owned corporation, created in 1976 by an agreement between the Chilean Government and ITT Corporation (USA). In 2005 BHP Billiton became a co founder. Mission To increase the competitiveness of human resources and productive sectors and services, by promoting and developing high impact innovations, technology transfer and management for the country.

20. Working with Chile’s Key Sectors Technologies Sectors • Biotechnology • Environmental Technologies • Fine chemistry • ICTs • Financial engineering • Food technology • Marine Resources • Agribusiness • Forestry • Human Capital • Environment • ICTs

21. The Outcome

22. Measuring Impact: Developing Clusters Fundación Chile Model = Innovation + Difussion Salmon Program Industry Production Year Tons 1983 347 2005 383.000 • US$ 1.725 M in exports for 2005 • 20,2% of Chile’s total food exports • +35.000 direct and indirect jobs created Source: (Informe Económico Salmonicultura 2005, SalmonChile)

23. Exporting the Fundación Chile Model to Region Mexico • Fundación Jalisco • Fundación Sonora Peru • Fundación Perú …networks + public-private partnerships + competitive advantages

24. Networks+Public-Partnerships+Diasporas • Expatriates played a crucial role in the acceleration of technological change, business creation and investment capital in countries such as Scotland, India, Taiwan, Ireland, Israel, China and others. • Pioneer investors • Helped attract foreign investment to countries of origin at times when their nations were considered risky • Constitute bridges between residence and home countries for: • Market connections • Technological transfer • Coaching of local business • Internationalization of local firms • The acceleration of economic growth and development in Latin America requires a boost in its innovative capacity and an upgrade of the stock of qualified human resources of the region. • An important pool of talent and human capital of the region is outside its national borders and is constituted by business Diasporas.

25. Diaspora for Development:A Public-Private Partnership - ChileGlobal

26. What is ChileGlobal? An active international network of Chilean business owners and high level executives · and those with an affinity for Chile · whoare interested in contributing and sharing the success of the Chilean economy

27. Objectives • To help incorporate the country to the knowledge economy • To create and promote a mechanism of technology transfer and knowledge exchange, in order to increase network opportunities, access international advice and knowledge for the benefit of Chile while accelerating innovation

28. Sectoral Insertion of Members

29. Developing an Investment Network • A network that reaches the entire innovation chain from idea to business • Investing time, contacts, knowledge, and resources

30. Spreading the Model: A Proposition for Multilateral Agencies and countries • Creation of regional talent investment network • Private-public partnership • Innovation-based • Sector focused

31. Conclusions and recommendations • The Monterrey Consensus has played a fundamental role in the orientation of strategies and policies in the global context and part of the goals have been achieved • The rapidly changing conditions and the experiences obtained make necessary to take these facts into consideration • Multilateral organizations should promote and support new strategies and successful programs in a massive and regional manner

32. Recommendations • Next steps should be more micro than macro • Focus on quality rather than in quantity (foreign investment) • Learn from successful experiences (role of highly skilled diasporas) • Promote actively public-private partnership, using role models (Fundacion Chile) • Support strategies for entrepreneurship (VC) • Promote and support successful programs to incentive entrepreneuship • Promote and support regional networks (ChileGlobal)

33. Thank youwww.chileglobal.org