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Development Account Projects

Networking of expertise on foreign direct investment in the countries of ESCWA Regional States

Background:

The modest level of FDI and the disparity in its distribution among the ESCWA Member States is caused by several factors, including a deficient regulatory framework, an inadequate business environment, weak policies, poor institutional frameworks, unsatisfactory market access, unfavourable comparative costs and lack of political stability. Often, several government agencies deal with foreign investment projects, depending on which economic sector is involved, highlighting the fact that data reporting systems need improvement.

This project attempts to fill the existing data gap with regard to FDI in the region by assisting the member States in adopting a system for data compilation.

Objective:

  • To enhance the capacity of government agencies in the ESCWA Member States in the compilation, dissemination and analysis of data on FDI through implementing international methodological standards, so that these countries will be able independently to maintain quality and accurate databases
  • To increase the inflows of foreign direct investment (FDI) to ESCWA Member States, with a view of contributing to their economic development and integration into the global trading and financial system
  • To strengthen the networking among investment promotion offices and concerned agencies in the region, with the purpose of facilitating the exchange of expertise and experience
  • To assist ESCWA Member States in formulating suitable policies and adopting adequate measures likely to promote inflows of FDI

Expected accomplishments:

  • Strengthened capacity of ESCWA Member States to apply internationally accepted methodology and standards with respect to compiling FDI data
  • Establishment of a database on FDI flow
  • Increased exchange of expertise with investment promotion offices and related agencies

Effects and Impact:

An increase in awareness by Member States of the need to implement the internationally accepted methodology for the compilation and reporting on FDI data and statistics. This was due mainly to the organization of regional as well as country training workshops where more than 90 officials received training and the dissemination of manuals related to the FDI statistics and the operations of transnational corporations. The feedback from the participants was positive as indicated by their replies to the evaluation forms. This was reflected in the preparation of the first surveys of enterprises with FDI participation in the three countries namely Bahrain, Oman and Saudi Arabia. These surveys were based on the methodology learned during the training workshops held in these countries. Furthermore, activities undertaken have increased understanding of the complexity of the issues related to the methods of calculating FDI statistics from both Balance of Payments and Balance sheets of FDI enterprises. The project, which was the first attempt by member countries to address the complexity of the issues related to the compilation of FDI statistics in the region;

Training workshops facilitated the upgrading of the skills of data collection officers and the members of the national teams in the participating member countries. These officials are more aware of the issues related to FDI, which will have a positive impact in their analysis of the policies adopted to promote the inflows of FDI to these countries. Their satisfaction with the training was reflected in the evaluation forms. All this will have a positive impact on future activities related to data collection and reporting techniques in these countries as well as on the policy analysis related to FDI issues.

Regular updating of the FDI surveys, which will provide for accurate and verifiable FDI statistics based on internationally accepted methodology. All countries agreed to undertake the survey of enterprises with FDI participation on regular bases and hence future data on FDI will be based on the same method of compilation which will continue to provide for a similar type of statistics.