Developing world is now a bigger source of global FDI flow as South-South investment picks up, World Bank says
Source: Pan Asian Media for AIM , Author: Posted by BI-ME staff
Posted: Tue April 10, 2018 4:46 pm

UAE. Foreign direct investment from developing countries has increased 20-fold in the last 20 years, accounting for nearly 20 percent of the global FDI flows by 2015, according to the Global Investment Competitive Report published by World Bank.
 
For many developing countries, foreign direct investment (FDI) has become the largest source of external finance, surpassing official development assistance (ODA), remittances, or portfolio investment flows. In 2016, more than 40 percent of the nearly $1.75 trillion of global FDI flows was directed to developing countries, providing much-needed private capital, the report said..
 
While larger developing countries, especially the BRICS, are driving this phenomenon, about 90 percent of developing countries of all sizes and income levels are now undertaking outward foreign direct investment (OFDI). Both domestic policy choices in developing countries and global economic conditions have shaped changes in the investment landscape. 

“Yet the financing required to achieve the Sustainable Development Goals (SDGs) remains prohibitively large and largely unmet by current FDI inflows — especially in fragile and conflict-affected situations (FCS). To maximise the development impact of FDI and thus help meet the SDGs, private investment will have to expand into areas where it has not yet ventured, notwithstanding the associated risks. The benefits of FDI extend well beyond attracting needed capital,” the report said.
 
Peter Kusek, Senior Economist, Macroeconomics, Trade and Investment, World Bank Group and a co-author of the report, said, “Governments must de-risk investment climate by ensuring proper business-friendly environment firmly backed by legal protection from political risk and by creating an effective predictable environment where foreign investors could feel safe.
 
“China’s outward FDI stock jumped from 12 percent 20 years ago to a third of the global outward FDI stock in recent years. Multi-national companies in the developing countries are more willing to target higher risks compared to their counterparts in the developing world.
 
“De-risking business environment to reduce uncertainty and unpredictability goes a long way in accelerating the flow of FDI in a country, the report finds.”
 
Jamal Al Jarwan, Secretary-General of the UAE International Investors Council (UAEIIC), said, political stability and regulatory environment are very crucial for all the investors.
 
“I have been on the board of several companies in Africa and other markets where we invested and for us political stability, government’s vision, growth potential in that market as well as regulatory environment are very crucial in making investment decisions,” he said.
 
“Another major factor is corruption level in an economy and as an investor, we raise caution to our fellow investors of the downside risks in investing in a country that ranks very high in corruption perception indices.”
 
Paulo Portas Deputy Chairman of Portuguese Chamber of Commerce and a former Minister of State for Foreign Affairs, Portugal, said, “We are in the same market for the same pool of investors. So, we need to be competitive in our investment regulation and ease in doing business.”
 
Foreign investment also confers technical know-how, managerial and organisational skills, and access to foreign markets. Furthermore, FDI has a significant potential to transform economies through innovation, enhancing productivity, and creating better-paying and more stable jobs in host countries, in sectors attracting FDI as well as in the supportive industries.

Importantly, foreign investors are becoming increasingly prominent players in delivering global public goods, addressing climate change, improving labour conditions, setting global industry standards, and delivering infrastructure to local communities.
 
FDI can accelerate productivity gains in host countries. It brings foreign technology and frontier knowledge that, if successfully absorbed by local firms, can improve their productivity directly. FDI can also increase competition among firms in the local market by leading to a reallocation of resources away from less productive to more productive firms, thereby increasing aggregate productivity over the long run.
 
Peter Kusek says, incentivising investment works in certain cases. “However, de-risking political environment is more crucial than incentives,” he says. “For investors, security of their investment is more crucial than incentives.”
 
The three-day Annual Investment Meeting (AIM) congregation of high-profile officials that include 25 federal ministers, 19 mayors, eight organisation heads, one head of parliament and investors will see the signing of a number of agreements and announcements that will help countries boost the flow of Foreign Direct Investment (FDI).
 
This will make the AIM the largest such gathering of government leaders and private sector business leaders and investors, organised by Ministry of Economy. Last year, more than 19,000 visitors including VIPs, dignitaries and government delegations participated at the three-day conference. This year More than 20,000 investors and business visitors are expected to participated at the eventful three-day-long activities that will address issues related to global follow of Foreign Direct Investment (FDI).
 
Al Mansoori said, the Annual Investment Meeting became a regional and international landmark for Foreign Direct Investment and exchange of knowledge and best practices between emerging and developed markets, where it gains tremendous and continuous support from the leaders, decision makers and officials worldwide.
 
Governors and Mayors from the Federal Republic of Nigeria, Ukraine, Mayor of the Municipality of Timisoara, Romania, Governor of Kano State, The Federal Republic of Nigeria, Governor of the Perm region of Russian Federation, Mayor of Municipality of Adjovscina, Republic of Slovenia, Metropolitan Chief Executive of Republic of Ghana, Governor of Kilifi County Government, the Republic of Kenya and many other governors and mayors from Ecuador and other countries are going to attend AIM 2018.
 
More than 143 countries participate in the eighth session of the Forum and about 20 thousand investors and visitors from around the world.
 
A number of global ministers, inspiring business and thought leaders will lead interesting discussions on investment trends, public-private partnerships, sustainability, investment promotion, cryptocurrencies, and sovereign wealth fund at the forthcoming Annual Investment Meeting (AIM) to be held at the Dubai World Trade Centre from April 9 to 11, 2018.

Photo Captions:
1. (above)  AIM Session
2. (inset)    For illustrative purposes only (File photo)

About Annual Investment Meeting (AIM)
 Annual Investment Meeting (AIM) is the world’s leading platform for Foreign Direct Investment (FDI), aimed at facilitating strategic networking and promoting investments. It is the largest gathering of the international investment community, policy makers, business leaders, regional and international investors, entrepreneurs, leading academics and experts showcasing up-to-date information and strategies on attracting FDI.
 
It convenes key decision-makers from around the world, bringing together businesses and countries willing to engage in sustainable partnerships with investors. It offers a variety of features aimed at facilitating strategic networking and promoting investments while providing a worthwhile learning experience.

The eighth edition of the Annual Investment Meeting will be held on 9 - 11 April 2018 at the Dubai World Trade Centre. The theme is ‘Linking Developed and Emerging Markets through FDI: Partnerships for Inclusive Growth & Sustainable Development’.

In a span of three days, an array of activities are staged including a Conference, Exhibition, Capacity Building Workshops, Country Presentations, Investors’ Hub, Gala Dinner, Investment Awards, various G2G, G2B and B2B Networking Features, AIM Startup Innovation Showcase and Pitch Competition.

 

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