UNCTAD/CD-TFT

1. FDI Trends & Developments European Regional Economic Forum 2010 The Role of FDI in Developing Knowledge-Based Competitiveness in European Regions Elisabeth Tuerk Legal Expert, UNCTAD, Division on Investment and Enterprise (DIAE), Geneva UNCTAD/CD-TFT 1

2. Outline • UNCTAD – some background • Latest trends & developments • FDI & investment policies • FDI & (regional) competitiveness UNCTAD/CD-TFT 2

3. UNCTAD – Some Background WIR WIF Facilitation Investment Compact Consensu s Building Research & Analysis Technical Assistance Investment Information Systems Entrepreneurship Mission: Investment and Enterprise for Development

4. The Crisis ended 4-year FDI boom ($ billions) • Global FDI declined from $2 trillion (2007) to $1.7 trillion (2008) • FDI flows to developed economies fell by 29%, to $962 billion • FDI flows to developing economies rose 17%, to $621 billion • Transition economies posted a new record high, with inflows reaching $114 billion, a 26% increase UNCTAD/CD-TFT 4

5. Global FDI Quarterly Index, 2000-2009 Base 100: quarterly average of 2005 UNCTAD/CD-TFT 5

6. Cross-border M&A Sales & Int. Greenfield Projects, 2007-2009 UNCTAD/CD-TFT 6

7. Top Recipients of FDI Inflows Global FDI inflows, top 20 economies, 2007–2008 ($ billion) The US remained the largest recipient country, followed by France, China, UK & the Russian Federation. The fact that half of the top 20 recipients are emerging economies is symbolic of the changing FDI landscape of 2008. UNCTAD/CD-TFT 7

8. TNC’s Int. Investment Plans UNCTAD/CD-TFT 8

9. WIR & Global Investment Trends Monitor UNCTAD/CD-TFT 9

10. National Policy Trends: Overall more favourably to FDI National policy changes towards FDI 100% 90% 80% 70% 77.0 79.0 60% 88.0 94.0 50% 40% 30% 20% 23.0 21.0 10% 12.0 6.0 0% 1992-2002 2003-2004 2005-2007 2008 Less favourable More favourable However, in some countries a more restrictive FDI approach has emerged  Additionally: signs of increasing “covert” protectionism, e.g., – favouring domestic investment or invoking “national security” exceptions that stretch the definition of national security UNCTAD/CD-TFT 10

11. International Policy Trends: IIA Network Growing •In 2008: 59 BITs and 75 DTTs were signed; •1st half of 2009: 25 BITs were signed; •By 1st half of 2009, totals: 2.717 BITs and 2.825 DTTs. UNCTAD/CD-TFT 11

12. Other Int. Investment Agreements, 1957-2008 Growring 300 Number of IIAs other than BITs and DTTs 250 200 150 100 50 0 1957-1967 1968-1978 1979-1989 1990-2000 2001-2008 By period Cumulative UNCTAD/CD-TFT 12

13. Resulting in ... A Spaghetti Bowl of IIAs UNCTAD/CD-TFT 13

14. UNCTAD’s Quarterly Investment Policy Monitor UNCTAD/CD-TFT 14

15. Impact of FDI • FDI can improve the competitiveness of, e.g., • human resources, local firms, regions & countries • FDI can upgrade competitiveness, thr., e.g. • technology transfer, knowledge spillovers, local innovation, enhancing exports, infrastructure projects • Virtuous cycle: • FDI improves competitiveness while competitiveness also attracts FDI UNCTAD/CD-TFT 15

16. Harnessing FDI for (Regional) Competitiveness • Improving locational determinants of FDI, • both economic & policy determinants • Strengthening (regional) investment promotion • e.g. regional investment promotion agencies • Offering the right incentives for investors • e.g. tax incentives, special economic zones, science and technology parks UNCTAD/CD-TFT 16

17. To Conclude... • Upgrading competitiveness  focus on the relevant types of FDI • (Regional) policies  focus on these relevant types of FDI • Regional policy on FDI  interlinked & coherent with national policies UNCTAD/CD-TFT 17

18. Visit UNCTAD Websites www.unctad.org/diae www.unctad.org/wir www.unctad.org/fdistatistics UNCTAD/CD-TFT 18

19. Thank you for your attention! Elisabeth.Tuerk@unctad.org IIA@unctad.org UNCTAD/CD-TFT 19