October 20, 2021
Introduction
In recent years, companies from developing economies have increasingly invested abroad, seeking business opportunities outside their home countries. This is a recent trend, as until the turn of the century firms from developed economies dominated global cross-border direct investment. Because developing economies are the source of these investments, understanding the impact of such Outward Foreign Direct Investment (OFDI) on the home economies where these firms are headquartered is of great importance. OFDI can contribute to sustainable developmental outcomes, by generating home country effects which promote trade, employment, upgrading, growth and other aspects of economic development in source economies. Yet, the precise nature and characteristics of OFDI home country effects remain little understood. Moreover, even less is known about the most effective policies and measures governments can introduce to leverage OFDI for sustainable development. As a result, investment policymakers in developing countries have both limited knowledge about the links between OFDI and home country sustainable development outcomes and remain hesitant to introduce policies to harness OFDI for sustainable development.
This session addressed these knowledge and policy development constraints by presenting and discussing the first draft of a ground-breaking, innovative OFDI for Home Country Sustainable Development Policy Toolkit that United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP) and the World Economic Forum (WEF) have jointly developed and will launch in early 2021. It was followed by the presentation of the Toolkit and an interactive panel discussion with investment policymakers from both developed and developing countries and the private sector. The aim of the panel discussion was to learn from the experiences of these countries in introducing OFDI policies, and the extent to which economies and firms are able to benefit from these policies and measures in support of home country sustainable development.
Issues addressed:
- How can OFDI contribute to sustainable development outcomes in the home country source markets?
- How can government policies and measures promote and maximize sustainable development outcomes from OFDI? What lessons can we learn from those countries that have successfully implemented OFDI policies targeting home country sustainable development?
- What issues are most relevant for the firms engaging in OFDI for policymakers to consider when implementing home country development OFDI strategies, and adopting policies and measures?
Session Highlights
The session discussed the need for OFDI Policy Toolkit for sustainable development. Post COVID-19 pandemic every entity is looking to expand. Not only domestically but grow in the international market as well. Companies from developing economies are increasingly investing abroad, seeking business opportunities outside their home countries. In the last 48 months, India on its way through a pandemic has seen a whopping 80 percent increase in its OFDI. With such investments flowing into the market, the Panellists shared the idea of understanding OFDI in the home countries where these entities are headquartered. This is where the toolkit comes into the picture. It is developed for all stakeholders working on sustainable development issues e.g. Policymakers, International Organisations, Companies, Researchers, Analysts, stakeholders with an interest in OFDI. The toolkit helps to understand OFDIs effects and measures, relation with competitiveness, ways to leverage OFDI, and challenges for sustainable development. It provides a collection of common practices, a major source of key information and policy advice. It is the go-to analytical tool, to maximize the sustainable outcome of FDI, especially developing countries that are trying to encapsulate investments. After a brief discussion on the Toolkit, and the ways to programme it in the home country, the attendees were walked through the toolkit. It is available at https://artnet.unescap.org/ofdi/.
The toolkit as spoken by one of the panellists is very user friendly, and easy to incorporate by the countries. As described by the panellists, it is divided into six (6) sections, namely, Home Country effects, Influencing factors, Home country measures, Targeting, Potential risk factors and lastly what can Governments do? The sections start with the introduction to the chapter, and further sections are bifurcated into subsections. It ranges from Introduction to domestic investment to the potential risk factors for the countries, along with the references. The Toolkit is color-coded for ease of use. Further, it provides great opportunities to the private sector. As one of the panellists remarked, the toolkit will extend Support to the countries and is a very important element. India, along with both the private and public sectors will be using it to attract sustainability and OFDI, which are the core elements of interest to India. As the entities are looking to expand, it is becoming helpful and creates a level of trust and information for mushrooming entities, especially start-ups.
Panellists emphasised collaborations among host and home countries and the idea of benefiting mutually from each other. It should become the story of two-way investment and not one. It is Important to Build a Global Culture and learn with each other rather than from each other. Support each other in building sustainable growth. The role of private entities was embarked upon by the panellists in the session. Not only the government but also the private entities should play a role in the market. It enhances competition and allows industries to learn and grow with each other domestically, further allowing more competition in the international market and FDIs. This has been Successful in Brazil and UK, and India is building alongside. Lastly, the session aimed at discussing the experiences from the panellists, belonging from different sectors and their experiences of introducing OFDI in their Home Countries. It spoke in length about the benefit of such policies and measures supporting Home Country sustainable development.
Opening
- Ms. Heather Taylor-Strauss, Economic Affairs Officer, Investment and Enterprise Development Section, Trade, Investment and Innovation Division, UNESCAP
- Sheikh Ali Alwaleed Al-Thani, CEO, Investment Promotion Agency, Qatar;
- Mr. Deepak Bagla, Managing Director and CEO, Invest India;
- Mr. Adalberto Netto, Chief Investment Officer, Apex Brasil, and Former CEO, Invest in Paraná;
- Mr. Anuj Mathew, Head of Investment Promotion and Policy Analysis and Senior Advisor, UK Department of International Trade;
- Mr. David Mellor, CEO, Crowe Global;
- Ms. Aba Schubert, CEO, Dorae;
- Mr. Matthew Stephenson, Policy and Community Lead for International Trade and Investment, World Economic Forum;
- Mr. Jan Knoerich, Senior Lecturer, King’s College London;
- Ms. Heather Taylor-Strauss, Economic Affairs Officer, Investment and Enterprise Development Section, Trade, Investment and Innovation Division, UNESCA
On the panel were: