Volatility in agricultural commodity markets continues to be a concern , but an important message from the Commodities Forum was the progress being made in stabilizing the impact of price volatility – on smallholder farmers in particular, but also on global trade generally.  One such stabilizing initiative is the Agricultural Market Information System that was endorsed by the G20 Cannes Summit and has since been implemented under the auspices of the FAO.  AMIS provides monthly market assessments along with a statistical database and assistance on capacity development, governance plus indicators and market monitoring for four major staples – wheat, maize, rice and soybeans.  We also heard presentations that were more directly focused on improving smallholder farmers’ efficiency.  Cargill, for example, has projects to enable and support smallholder farmer productivity improvements in such diverse agricultural products as palm oil, cocoa, cotton and grains.  We heard a lot about projects oriented to improving access to financing for smallholders through collaborative programs but also to risk management schemes in localized commodity exchanges.

Although we did hear from one expert who insisted that subsistence farmers don’t need any help with efficiency measures because they are mostly responsive to existing market signals, we were quite taken by the impressive outreach being done by the transformation of information flows for smallholder farmers as in the Ghana-based “Esoko”, a mobile phone service using the Swahili for “market” in its trade name.  The key point, perhaps, is that smallholder farmers do make decisions based on the market conditions they face and that the main priority should then be directed to improving those market conditions as a way to stimulate their willingness to risk increasing investments in inputs for higher productivity outcomes.   Overall, we heard many instructive messages on how smallholder farmers should and could strengthen their bargaining capacity and pooling of risk in agricultural supply chains outside of their immediate local communities and on how governments should pursue policies to encourage local entrepreneurs to move up the value chain by converting more primary commodities into processed or finished products.

From the CMBD News 25 March 2013

This past week was “UNCTAD Commodities” week in Geneva.  The theme was “Recommitting to commodities sector development as the engine for economic growth and poverty reduction”.   The event was focused primarily on agricultural commodities, but the agency also had informative sessions on the mining-related commodities of copper, zinc, aluminum and other minerals and metals and on the energy-related commodities of oil, gas and coal.  We attended two days of the UNCTAD Commodities Forum and two additional days of the Multi-Year Expert Meeting on Commodities and Development.  We sense a new direction on the appreciation by developing country policy-makers of the linkages between foreign direct investment and development in these commodities sectors – as well as interest in strategies for engaging more effectively in negotiating terms that can stimulate profit-making and economic growth for everyone concerned.  We also heard Director-General of the WTO Pascal Lamy praise the renewed commitment to commodities and the role of trade in commodities to stimulate economic growth and poverty eradication.  See his remarks here, also included in one of our News Alerts from last week.  However, the sessions did not directly address two underlying issues – corruption, for one, which remains a big problem in many commodities-dependent countries, and the other underlying issues of the resistance from some major NGOs to development strategies that are not necessarily compatible with other sustainability objectives, especially those relating to the environment.  We provide some commentary in this week’s newsletter on the messages we gleaned from the week,  in agriculture and in energy, minerals and mining.

From the CMBD News 25 March 2013

The UN Conference on Trade and Development held a press conference last week to announce the publication of a new report entitled GVCs and Development:  Investment and Value Added Trade in the Global Economy.  See the report here.  The issue of measuring trade as “value-added” rather than as imports and exports has also received the attention of the OECD and WTO, as we have reported previously.  So it was interesting to have the UNCTAD contribution to the subject.  One interesting statistic in the report shows that some 28 percent of the value of cross-border trade in goods and services – or about $5 trillion – is overstated as a result of double or multiple counting.  A raw material, such as cooper, gets counted at its export value when it is shipped from the country where it was extracted to another and then again and again as it progresses to upgraded copper to a finished product made of copper.  Another statistic in the report estimates that value chains administered by multinational enterprises now account for 80 per cent of global trade, such that global investment and trade “are thoroughly entwined in international production networks”.   Another interesting point is that almost half of the value added inputs to exports are from services sector activities, although the data on exports per se list services as constituting only 20 per cent of gross exports worldwide.   And a final key message:  Value-added trade contributes more to developing country GDPs on average than to developed country GDPs.  Thus, developing countries should pay attention to GVC strategies as part of their development policies and work on ways to upgrade their share of value-added activities in global trade.

The report launches a new UNCTAD database on the trade links between economies and especially the nexus between trade and investment.  The database is called the “UNCTAD-EORA-GVC Database” and is part of UNCTAD’s overall Information System for foreign direct investment, transnational corporations and global value chains.  The database has information on the distribution of value added, on income and employment resulting from trade and how patterns of value-added trade are influenced by global investment trends.  The new data will also be featured in the forthcoming World Investment Report 2013, an annual flagship publication which normally comes out during the third quarter of the year.  The hope is that the analysis of the data developed by UNCTAD will provide new insights into the evolving nature of global value chains and the balancing of opportunities and risks associated with them.

From the CMBD News 4 March 2013

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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

CMBD has prepared a matrix of annual flagship publications of interest to the business community from the many international organizations that we cover, available to our members.  We mention a few of them here to give readers an idea of how comprehensive and useful these in-depth reports can be.  The World Bank comes out with its annual World Development Report in September every year.   UNCTAD will be publishing its annual Trade and Development Report on 12 September.  World economic outlooks are published both by OECD and IMF somewhat later in the fall, but there will be an interim OECD report on 6 September for its November publication, while the IMF will be issuing its World Economic Outlookand its Global Financial Stability Report at the annual meetings of the Bank and Fund, on 9 and 10 October in Tokyo, Japan.   And the UN Department of Economic and Social Affairs and the UNCTAD jointly publish theWorld Economic Situation and Prospects in late November.   Of course, each of these flagship publications is subject to interim pre-publication or post-publication updates if the economic projections change significantly.   These are all useful publications for assessing the state of the global economy.

Other publications are more specific but also useful.  UNCTAD has flagship publications on technology and innovation, technology and the environment, and on the information economy in October and November.  The FAO has a State of Food Insecurity in the World report coming out in October, and the ILO has a Global Wage Report coming out in November.  The biannual World Health Report will also be coming out this October, with a focus on research for better health.  And the International Energy Agency issues its annual World Energy Outlook in November.  UNDP usually brings out its annual Human Development Report in November, too.  We will, of course, be highlighting key messages from many of these reports as they come out, but it is useful to look forward to the variety of reports that are usually well researched with up-to-date global, regional and national data and analysis.

From the CMBD News 20 August 2012

Food security is not so much a new issue as it is a new approach to an old issue, an approach that is in the forefront of new thinking about business in development.  The Rio+20 Summit on Sustainable Development in June, while many were disappointed in the level of commitments, will eventually be recognized as a landmark occasion for integrating social, economic and environmental aspects of sustainable development and for articulating the inter-linkages among these aspects.  And it is especially in the elevated attention given to food security and nutrition and sustainable agriculture where these inter-linkages are articulated.  The Rio Declaration calls for increasing sustainable agricultural production and productivity globally by “increasing public and private investment in sustainable agriculture, land management and rural development.”  The Declaration further notes the key areas for investment and support to include “sustainable agricultural practices; rural infrastructure, storage capacities and related technologies; research and development on sustainable agricultural technologies; developing strong agricultural cooperatives and value chains; and strengthening urban-rural linkages”.   This, then, is an area where business in development can and must play an instrumental role, and CMBD provides a forum for addressing the business engagement in supply chain responsibilities, linkages to smallholder practicalities and appreciating the distinctions between global and local markets, as well as the broader policy issues involving poverty eradication, nutrition and health promotion.

As a facilitator of cross-cutting policy dialogues, CMBD is organizing a special event in October in Rome to coincide with the meeting of the Committee on Global Food Security and to renew acquaintances with key officials at the Food and Agriculture Organization, the International Fund for Agricultural Development and the World Food Programme.  In Geneva, too, CMBD offers opportunities for networking with policymakers on nutrition and food safety at the World Health Organization, on commodities and rural development at the UN Conference on Trade and Development, on agricultural trade liberalization at the World Trade Organization, on eliminating child labour (see a separate report on child labour below) and enhancing smallholder livelihoods at the International Labour Organization, and on the right to food at the Human Rights Council.  It is the inter-linkages among these diverse approaches to food security, nutrition and sustainable agriculture that provide a panoramic guide to the challenges and opportunities for business to contribute to the “new” economic thinking about business in development.

The UN Conference on Trade and Development hosted an intergovernmental meeting of experts on Competition, Law and Policy last week, promoting the view that competition is a foundation for democracy, growth and innovation strategy.   See the programme here.  Efficient and competitive markets encourage creation of jobs, competitive prices and offer a wider range of services to consumers.  Anti-competitive practices damage economies, stifle innovation and allow inefficiencies.  In 1996 competition policy was included as one of the “Singapore issues” promoted by the European Union to be a part of the WTO trade negotiating agenda.   In 2001 it was part of the Doha Development Agenda.  In 2004, however, competition policy was dropped from the negotiating table in the WTO.  Since then competition policy has become a center of activities at UNCTAD.

The key challenges moving forward concerns how to give institutions the status to get more competition policies adopted and effectively implemented.   The meeting provided participants with a set of case studies to facilitate a peer review of competition policy and to identify opportunities for enhanced cooperation involving cross-border mergers, international cartel investigations and effective leniency programmes.  Competition agencies must continue to enforce competition policies.  The challenges for young competition agencies in developing countries include access to information, effective remedies, credible enforcement and coordination.   To begin to respond to the current situation, competition agencies are reflecting on cooperation and mutual recognition of decisions.  The emerging guidelines do not include detailed sets of rules but underlining principles like openness, transparency, freedom of commerce, and respect for the rule of law.   UNCTAD, it was argued, should also establish a data bank on competition policies.  This could facilitate cooperation among competition agencies.   Regional agreements and informal cooperation with experienced competition agencies should also be encouraged.  The Agreed Conclusions at the end of the meeting endorsed the need for continuing guidance from UNCTAD on the model law and handbook on competition legislation.  See the Conclusions here.

From the 16 July 2012 edition of the  CMBD News

The 2012 World Investment Report from the UN Conference on Trade and Development introduces a new framework and index along with its comprehensive overview of foreign direct investment trends.  With a lead title of “Toward a New Generation of Investment Policies”, the annual flagship report introduces the new Investment Policy Framework for Sustainable Development.  The report notes that international investment policymaking is in flux because of the emerging new paradigm of a broader development policy agenda, something that we have been writing about since the Busan High-Level Forum on Aid Effectiveness last November.  This new paradigm is influencing FDI policies and trends through an increasing emphasis on inclusive and sustainable development goals.  The new IPFSD is being offered as an important tool for the international investment community and sets out the core principles for investment policymaking, guidelines for national investment policies and options for the design and use of international investment agreements.   See the full report here.

The new FDI Contribution Index measures the significance of FDI and foreign affiliates in terms of value added, employment wages, tax receipts, exports, research and development expenditures and capital formation.   It comes up with some surprises:  Hungary, Belgium, Czech Republic, Romania, Hong Kong, Malaysia, Poland, Estonia, Bolivia and Colombia are in the top ten.   See the report with the listings on p. 195 here.  Switzerland, Sweden and Singapore are the next three – the three countries that are listed at the top of the Global Innovation Index (see the briefly noted section below).

The 2012 World Investment Report also contains the usual and useful overview of FDI trends both globally and by region.  The report notes that 2011 was a recovery year, with FDI back up to pre-financial crisis levels, at $1.5 trillion overall.  However, it also notes that the first half of 2012 has shown a significant decline and thus there is a projected leveling off at $1.6 trillion for this year.   There appear to be a variety of restrictive measures influencing specific sectors, such as more restrictive entry policies in agriculture and pharmaceuticals and ownership requirements in the extractive industries.  Many governments seem to be taking a more critical approach to FDI and assessing it from the perspectives of inclusive growth and sustainable development.  One could argue that this is a constructive approach to integrating investment policy into development strategy.  These policy shifts are seen to be part of a new generation of investment policies, along with the expectations of responsible investment behavior and corporate social responsibility principles.  On the other hand, from the point of view of prospective investors, the report points out that the major transnational corporate investors are holding record levels of cash and that this is attributable to the continued instability in international financial markets.  It is interesting to note, by the way, that Sanofi, Exxon Mobil and Unilever, all served by the CMBD, are among the top TNCs – illustrative respectively of the pharmaceutical, extractive and agricultural sectors.  See the chapter on international trends here.

This article originally appeared in the 9 July 2012 CMBD News

On the heels of the World Summit on the Information Society (WSIS) conference, which brought geeks galore to Geneva, to swap tales of tech advance and opine about policies and regulations on security, freedom of speech, access, band width, women and ITC, green ITC, and a host of other matters; our attention turned to the meetings of the Commission on Science and Technology for Development — the CSTD. The fifteenth session of the CSTD met from 21-25 May, to review and follow-up on progress made at the WSIS ( the outcomes document is available here ), to include a special focus on improvements to the Internet Governance Forum (CSTD meeting details are available here).  Priorities of the CSTD were elaborated in two areas:

• Innovation, research, technology transfer for mutual advantage, entrepreneurship and collaborative development in the information society
• Open access, virtual science libraries, geospatial analysis and other complementary information and communications technology and science, technology, engineering and mathematics assets

We watched a parade of spokesmen and women expound on the achievements and progress of their countries — particularly in providing access to the internet, in moving toward universal cell phone coverage, and in promoting ITC technology for development in many areas, some quite innovative.  The speed at which even the poorest of the least developed countries have advanced in these areas is at once staggering and impressive.

There is an elephant in the room, however, and it is called Governance.  The less developed and emerging economies are calling for an international governmental organization, under the UN umbrella, to replace the current multistakeholder format of the Internet Governance Forum.  The IGF they claim gives the large developed economies along with big business interests far too much say in Internet issues, and less developed and emerging economies too little.  Wrapped up in this debate is wariness among the Western stakeholders that an international governmental approach would stymie Internet freedoms and innovation. In addition, the smaller nations say they are being left out when it comes to technological advances, which take too long to reach their level and at too great an expense. These issues are not to be resolved in any definitive way by the CSTD, to be sure, but the meetings of the Commission provide a useful review of WSIS outcomes and serve as a forum for the airing of concerns.  And these can be and are taken up by the Multistakeholder Advisory Group (MAG) as it advises the Secretary General and host country (Azerbaijan this year) of the IGF on the programme and schedule of the Internet Governance Forum meetings.

From the CMBD News 29 May 2012