Chuck Handy United States Department of Agriculture - ERS Jack Bamford

1. Investment, Competitiveness and Trade Chuck Handy United States Department of Agriculture - ERS Jack Bamford Agriculture and Agri-Food Canada - EPAD March 1999

2. World FDI - Inflows and Exports FDI-Index Export-Index

3. NAFTA FDI - Inflows and Exports FDI-Index In FDI-Index Out Export-Index

4. 1990 1995 1996 1997 FDI Flows as a Percent of FDI Stocks INWARD Canada USA Mexico NAFTA World OUTWARD

5. Net FDI Flows in NAFTA Countries US $ Billions Canada USA Mexico NAFTA 1985- 1991 1992 1993 1994 1995 1996 1997 1990

6. World-wide Sales by US Affiliates Abroad vs US Exports of Processed Food US $ Billions Affiliate Sales US Exports

7. US Sales by Foreign-Owned Affiliates vs US Imports of Processed Food US $ Billions Affiliate Sales US Imports

8. Processed Food Sales by US Affiliates in Canada vs US Exports to Canada US $ Billions Affiliate Sales US Exports

9. Processed Food Sales by Canadian Affiliates in the US vs US Imports from Canada US $ Billions Affiliate Sales US Imports

10. Processed Food Sales by US Affiliates in Mexico vs US Exports to Mexico US $ Billions Affiliate Sales US Exports

11. Processed Food Sales by Mexican Affiliates in the US vs US Imports from Mexico US $ Billions Affiliate Sales US Imports

12. Distribution of Salesby US Foreign Affiliates, 1996 World-wide Canada Mexico $121.2 B Local Sales Exports to ROW Exports to the US $11.6 B $5.5 B

13. Nature of Investment attractiveness International Executives Top 5 Factors • Size of domestic market • Expected growth in domestic market • Ability to repatriate capital and remit profits • Productivity and work habits of workers • Infrastructure Additional Factors • Macroeconomic stability • Regulatory regime • Quality of infrastructure • Cost of labour

14. Attractiveness in Food Industries • Market size and growth prospects • Level of government intervention • Administrative and regulatory burden for business • Corporate and personal tax rates • Environmental policies and regulations • Political, economic and social stability • Raw material availability • Wage rates, unionization / labour costs and availability • Profit potential

15. Investment, Competitiveness and Trade Supply Capability • Land is limited — R&D for higher yields / quality • Processing capacity — substantial investment • Labour and management — salaries and benefits • Infrastructure — substantial investment Productivity • World scale plants • Increased capital/labour ratio • Highly skilled labour and management • Supply chain management

16. Investment, Competitiveness and Trade Regulatory Framework • Competitive business climate • Predictable regulatory framework • Adaptable to changing needs Market Access / Market Development • MNEs offer : • access to distribution networks • export market expertise • marketing / production know-how • intra-firm trade

17. Investment, Competitiveness and Trade Investment and Trade Trade FDI FDI Trade Economy Economy

18. Policy Issues • Regulatory harmonization • Competition policy • Investment policy • Trade policy • Intellectual property rights protections • Environmental regulations and standards • Labour regulations and standards • Education policies • Taxation policies

19. Analytical Capabilities • Agri-food systems analysis • Horizontal impacts of policies • Vertical impacts of policies • Chain level analysis • Policy linkages