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The Role of FDI in Developing Knowledge-Based Competitiveness in European Regions

Explore the latest trends and developments in Foreign Direct Investment (FDI), investment policies, and regional competitiveness in European regions. Learn about the impact of FDI on competitiveness, harnessing FDI for regional competitiveness, and enhancing investment promotion strategies with the right incentives for investors. Stay informed and upgrade competitiveness based on relevant types of FDI.

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The Role of FDI in Developing Knowledge-Based Competitiveness in European Regions

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  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

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