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Development Account Projects

Support for decision-making and policy formulation on foreign direct investment in the context of the Millennium Development Goals and the Monterrey Consensus

Background:

The majority of developing countries receive modest inflows of foreign direct investment (FDI). The least developed countries are not attracting the levels or the type of FDI that would help their economies integrate into global markets, benefit from the opportunities of the global trading and financial system and progress towards the achievement of the Millennium Development Goals. This can be attributed partly to an inadequate business environment, poor institutional frameworks and lack of political stability, among other factors. The lack of relevant, reliable and timely information on FDI and transnational corporation activities and insufficient capacity to analyse such information, is also part of the problem, preventing a number of developing countries (particularly least developed countries) from assessing accurately the impact of FDI and the activities of transnational corporations on their economies, making appropriate decisions and formulating development-oriented policies regarding FDI, and properly monitoring their progress towards Millennium Development Goal 8. The project will be managed and implemented by UNCTAD, in association with regional organisations.

Objective:

To build the capacity of developing countries to analyze and formulate policies on FDI and transnational corporations in the context of achieving their overall development goals.

Expected accomplishments:

  • Enhanced capacity of government officials to effectively assess the impact of FDI and activities of transnational corporations on their economy, monitor FDI-related development objectives and formulate appropriate development-oriented policies
  • Enhanced capacity of institutions, investment promotion agencies and national statistics offices to establish and maintain knowledge management processes and structures.

Implementation status:

A national workshop on FDI Statistics and activities was organized in Hanoi to assist officials dealing with statistical issues related to FDI in implementing the UNCTAD Common Survey and in establishing an effective survey system to collect and disseminate data on FDI flows and stock and activities of foreign affiliates of TNCs. The workshop, attended by around 120 officials, prepared the ground for the next stage in the area of establishing and improving FDI and TNC statistics including developing national strategies in the area of FDI data compilation and dissemination, and setting up the compilation and data dissemination systems for internationally comparable FDI and TNC statistics. The common survey on FDI data and activities of TNCs was implemented in 9 countries of COMESA.

The national workshop in the Democratic Republic of the Congo raised awareness of internationally accepted standards and guidelines regarding the compilation of data on FDI and the activities of TNCs, initiated networking among national authorities involved in FDI data compilation and established a national team which would identify work in the next stage on conducting FDI surveys.