FDI Trends Developments European Regional Economic Forum 2010

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

Outline • UNCTAD – some background • Latest trends & developments • FDI & investment policies • FDI & (regional) competitiveness UNCTAD/CD-TFT 2

WIR II As Inve Polic stment y Re view s Investment Information Systems Investment Facilitation Compact UNCTAD – Some Background Consensu s Building Research & Analysis s nd or e t Tr oni t en y M m c t es oli v P In nd a R ISA Technical Assistance Entrepreneurship Mission: Investment and Enterprise for Development WIF

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

Global FDI Quarterly Index, 2000 -2009 Base 100: quarterly average of 2005 UNCTAD/CD-TFT 5

Cross-border M&A Sales & Int. Greenfield Projects, 2007 -2009 UNCTAD/CD-TFT 6

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

TNC’s Int. Investment Plans UNCTAD/CD-TFT 8

WIR & Global Investment Trends Monitor UNCTAD/CD-TFT 9

National Policy Trends: Overall more favourably to FDI q. However, in some countries a more restrictive FDI approach has emerged q 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

International Policy Trends: IIA Network Growing • In 2008: 59 BITs and 75 DTTs were signed; • 1 st half of 2009: 25 BITs were signed; • By 1 st half of 2009, totals: 2. 717 BITs and 2. 825 DTTs. UNCTAD/CD-TFT 11

Other Int. Investment Agreements, 1957 -2008 Growring UNCTAD/CD-TFT 12

Resulting in. . . A Spaghetti Bowl of IIAs UNCTAD/CD-TFT 13

UNCTAD’s Quarterly Investment Policy Monitor UNCTAD/CD-TFT 14

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

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

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

Visit UNCTAD Websites www. unctad. org/diae www. unctad. org/wir www. unctad. org/fdistatistics UNCTAD/CD-TFT 18

Thank you for your attention! Elisabeth. Tuerk@unctad. org IIA@unctad. org UNCTAD/CD-TFT 19