We benefited last week from a high-level panel on investment trends in which the UNCTAD Secretary-General Supachai Panitchpakdi was joined by his investment expert James Zhan, the ever-provocative Jeffrey Sachs from the Earth Institute and Columbia University, and the steady and articulate advocate of sustainable development in Geneva, Mark Halle.   Carrying forward with our thematic interest in the Business Role in Development, we picked up some significant messages for our members to take note of.  First, Mr. Zhan provided an overview of FDI trends that showed a recovery in FDI flows in 2011 but a loss of momentum in 2012, largely due to the sovereign debt crisis.  As Mr. Zhan pointed out, there are record cash holdings of some $5 trillion in earnings overseas that businesses are not investing.  Once those holdings start to move again, assuming a favorable global economic climate, the rate of FDI is expected to go up considerably.  While there has been a steady growth in international investment agreements, many developing and emerging countries are starting to renegotiate them to “re-balance” the relationship with investors.  The 2012 UNCTAD Investment Report (which we wrote about in August) includes a recommendation for governments to adopt an Investment Policy Framework for Sustainable Development.   The Framework tracks the interest in a holistic approach to investment, both foreign and domestic, to encourage sustainable development priorities, to introduce regulations and investment-related policies, and to assess policy effectiveness in terms of impact on sustainable development.

Mr. Sachs argued that FDI is to be welcomed as an important contributor to sustainable development but that large multinational companies have become too powerful, especially in the extractive and infrastructure industries.  He also mentioned land-grabbing in the agricultural sector.  The imbalance, he argued, needs to be corrected with rules that more responsible businesses should welcome.  Business does not know, he said, what sustainable development entails and does not appreciate the macroeconomic consequences of their business dealings.  Thus he is working with the UN Secretary General on a Sustainable Development Solutions Network.  Stay tuned for that!

Our Geneva friend Mr. Halle chimed in with praise for UNCTAD’s Investment Policy Framework for Sustainable Development.  He specifically mentioned the need for re-balancing investment contracts in the extractive and agricultural development sectors while also reaffirming that foreign investment is important for realizing sustainable development.  This was further reinforced by the Costa Rican Minister of Foreign Trade Ms. Anabel Gonzalez, who described the success of her country in attracting FDI and cited political stability, a good workforce, location (including good airports) and a friendly business climate as the key factors.   This summary is based on our own impressions, but there is also a report of this dialogue available here.

From the CMBD News 1 October 2012

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On 12-13 March, the Economic and Social Council convened its annual high-level dialogue with the World Trade Organization and the Bretton Woods institutions, on “Coherence, Coordination and Cooperation in the context of Financing for Development”.  See the agenda here, and an extensive background note from the UN Secretary-General here.  Access to all meeting documents can be found here. We note that H.E. Mr. Anthony Mothae Maruping (Lesotho), President of the UNCTAD Trade and Development Board and President of the Preparatory Committee for UNCTAD XIII was a featured speaker.  The financing of sustainable development is a major topic here, as it is at UNCTAD XIII, along with “sustained, inclusive and equitable economic growth, job creation, and productive investment and trade”.  This is all very ambitious, but again we sense a momentum for the financing and FDI issues.  We are also interested to note that the World Bank is preparing its World Development Report 2013 on “Jobs”. Look for a follow-up article on the outcomes of the ECOSOC meeting in an upcoming issue of the CMBD News.