UNCTAD/CD-TFT 1 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 2 Outline UNCTAD – some background Latest trends & developments FDI & investment policies FDI & (regional) competitiveness

Entrepreneurship Investment Policy Reviews Investment Trends and Policy Monitor ISAR IIAs Investment Information Systems Mission: Investment and Enterprise for Development Research & Analysis Technical Assistance Investment Facilitation Compact Consensu s Building WIRWIF UNCTAD – Some Background

UNCTAD/CD-TFT 4 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 5 Global FDI Quarterly Index, Base 100: quarterly average of 2005

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

UNCTAD/CD-TFT 7 Top Recipients of FDI Inflows 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 Global FDI inflows, top 20 economies, 2007–2008 ($ billion)

UNCTAD/CD-TFT 8 TNCs Int. Investment Plans

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

UNCTAD/CD-TFT 10 National Policy Trends: Overall more favourably to FDI However, in some countries a more restrictive FDI approach has emerged 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 11 International Policy Trends: IIA Network Growing In 2008: 59 BITs and 75 DTTs were signed; 1st half of 2009: 25 BITs were signed; By 1st half of 2009, totals: BITs and DTTs.

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

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

UNCTAD/CD-TFT 14 UNCTADs Quarterly Investment Policy Monitor

UNCTAD/CD-TFT 15 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 16 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 17 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 18 Visit UNCTAD Websites

UNCTAD/CD-TFT 19 Thank you for your attention!