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Financing for Development (FfD) Monterrey-Consensus

Financing for Development (FfD) Monterrey-Consensus. New development partnership based on a framework of mutual accountability between: Developed and developing countries Public, private and civil sector. Instruments (among others):.

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Financing for Development (FfD) Monterrey-Consensus

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  1. Financing for Development(FfD) Monterrey-Consensus New development partnership based on a framework of mutual accountability between: Developed and developing countries Public, private and civil sector

  2. Instruments (among others): • Establishing an investment climate to attract private capital • Mobilize domestic financial resources • Promote improved market access

  3. Private Sector(Definition) • Privatisation • Private-Public-Partnership (PPP) • TNE • Private capital flows • Business – Civil society engagement • Domestic private sector (SME)

  4. Business – Civil society engagement • EDF – McDonald‘s on solid Waste Management • Clean Clothes Campaign • WWF • Max Havelaar /Fair Trade etc. See IDR Reports Vol 17, No 1, 2001 (www.jsi.com/idr)

  5. Domestic private sector Small and medium enterprises (SME): • 80 % of all jobs. • Poor policies, institutions, lack of finance, many barriers (Hernan de Soto).

  6. Effective support of small scale enterprises • Reform and restructuring of the domestic banking system (micro-finance schemes) • Improvement in property rights • Effective public services (rural roads, electricity, water) • Targeted subsidy systems • Technical assistance

  7. Private Capital Flows Different forms of private flows: Bank Lending, Bond Financing, Equity flows (PFI), Foreign DirectInvestment (FDI)

  8. Long-term capital flows to poor countries

  9. External financial flows

  10. Foreign Direct Investment (FDI) • Resistance to crisis • Concentration:Top 10 countries: 73 %Top 30 countries: 93 %(Market size/Investment climate) • Regional concentrationChina: 90% of FDI in coastal regionsMexico: central states/bordering states to the USAIndia: 75% for the top 5 states (Maharashtra, Tamil Nadu, Karnataka, Andhra Pradesh, Delhi) • Free production zones • Reflows, Outflows

  11. FDI and Mergers in DC

  12. FDI as ratio to GDP

  13. FDI:Requests • Broader repartition • Backward and forward linkages • Greenfield Investments • Reinvesting earnings • Social and environmental standards • Transfer of technologies, Know-how • Training

  14. Privatisation • A cure for economic‘s ill? • Unproductive state enterprises with huge losses • Poor control mechanism: corruption • Poor competition level: new monopolies • Red carpet policies • Goal: raising large sums for

  15. Public-Private-Partnership (PPP) • Central Issue • Actors: UN, WB, REB, Bilateral donors, DC, etc. • Forms: - Commercial relations- Institutional cooperation- Normative-regulating cooperation- Strategic cooperation- Infrastructure

  16. PPP in infrastructure • Water, sanitation, environment, health, education, transportation, Telecoms etc. • Attracting private capital • New role for governments: retreat from former role as owners, new focus on regulator • Goals: improved efficiency, fiscal benefits, improved access, risk sharing

  17. PPP in infrastructure (2) • Forms: Management contract, Leases, Concession, Divestiture • Risks:- Complicated procedures- Corruption- Red carpet (subsidies)- Participation- No „free lunch“, costs must be paid by users or by taxpayers- Credibility of private partners- Rules of the game, regulation capacity

  18. PPP: requests • Civil society participation • Transparency • No conflicts, no opposition • No bad repudiated companies, corporate responsibility • Standards and codes • Technical assistance and capacity building • No high risks

  19. Global Compact • 9 principles agreed between UNO and the business community • Different interest: Undermining values and mission of the UN, creeping privatisation of the UN?) • Volunteer, no binding rules • PR/blue washing of TNE?

  20. OECD Guidelines for TNE • Guidelines for TNE, recommended by OECD countries to the TNE • Binding for OECD countries • Volunteer,not binding for TNE • Set by Northern countries • Lack of transparency

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