Experts Group Meeting on Enhancing the Role of Foreign Investment for Structural Economic Transformation in LLDCs
New Delhi, India
Background
Landlocked developing countries (LLDCs) face special economic and development challenges, arising from their lack of territorial access to the sea and geographical remoteness from international markets. Although significant attention has been paid to LLDCs’ trade disadvantages stemming from their geographical vulnerabilities, there is a wide knowledge gap with regard to the disadvantages that these countries confront while attracting foreign direct investment (FDI) flows.
Under the right circumstances, FDI flows can deliver powerful development dividends for developing countries. Investment in dynamic manufacturing and services industries can enable the creation of jobs, support productive capacity development, strengthen integration in regional and global value chains and aid structural transformation. Similarly foreign investment in the form of international project finance can drive the development of infrastructure and domestic services. In LLDCs, however, FDI flows have been tepid for many years falling since the all-time high of $35.2 billion in 2011. According to UNCTAD, FDI flows to landlocked developing countries declined by 31 per cent from $22.3 billion in 2019 to $15.4 billion in 2020, the lowest level in 15 years. Only 5 LLDCs1 accounted for more than half of FDI flows in 2020. Moreover, a significant proportion of FDI to LLDCs is directed to natural resources and extractive industries, which denies these countries the ability to enhance domestic value addition and capitalize on their natural resource endowments. In addition, this has prevented the transfer of technology, development of innovative capacities and training of local labour forces.
The success of the post-COVID-19 recovery efforts in LLDCs would depend to a large extent on investment in productive manufacturing and services activities that can strengthen LLDCs’ integration in global trade networks and supply chains. In addition, international project finance, that targets infrastructure, utilities and domestic services sectors is also of critical importance for LLDCs considering their large infrastructure development needs. These type of investment flows have been on the rise recently due to liberal financing conditions and post-COVID infrastructure development schemes. However, LLDCs have yet to tap into international project finance for their development needs.
The Vienna Programme of Action (VPoA) for LLDCs for the Decade 2014-2024, which is also an integral part of the 2030 Agenda for Sustainable Development, acknowledges the importance of structural economic transformation (Priority Area 5) in addressing LLDCs’ development challenges. Structural economic transformation – a gradual increase in value addition of the output of a given economy – lies at the center of developmental advancements. FDI flows have a critical role in structural economic transformation as they can catalyze economic activity in high value-added sectors. Priority Area 6 of the VPoA on the Means of Implementation also underscores the critical importance of foreign investment for both productive manufacturing and services activities that can result in wealth creation and transfer of technology, as well as the development of infrastructure. It is against this background that UN-OHRLLS will convene an Expert Group Meeting on Enhancing the Role of Foreign Investment for Structural Economic Transformation in LLDCs.
Further, the General Assembly of the United Nations, in its resolution 76/217 adopted in December 2021, decided to hold the Third United Nations Conference on LLDCs in 2024 with the mandate to undertake a comprehensive review of the implementation of the VPoA and to formulate and adopt a renewed framework for international support to address the special needs of LLDCs. Discussion and outcome from this expert group meeting will contribute to the preparatory process of the Conference.
Objectives of the meeting
The main objective of the meeting is to review how LLDCs can best attract and utilize foreign investment for supporting structural transformation of their economies and to provide recommendations in this area that can advance the implementation of the Vienna Programe of Action and support the achievement of the SDGs by the LLDCs. In this regard, the meeting will review FDI trends in LLDCs in the last few years; analyse reasons for low foreign investment and a natural resource-oriented investment profile; and identify policies and strategies to increase foreign investment, including both greenfield investment in manufacturing and services, and project finance in infrastructure for structural economic transformation in LLDCs. The meeting will share experiences and effective practices from LLDCs and other developing countries. The meeting will also review the forthcoming report of UN-OHRLLS on Enhancing the Role of Foreign Investment for Structural Economic Transformation in LLDCs. Inputs from the meeting will lead to the finalization of the Report on Enhancing the Role of Foreign Investment for Structural Economic Transformation in LLDCs.
Meeting Documents
Expected outcome
The meeting will make policy recommendations on accelerating structural economic transformation in LLDCs through higher foreign investment flows and will provide inputs to the report on Enhancing the Role of Foreign Investment for Structural Economic Transformation in LLDCs. The recommendations from the meeting will also feed into the preparations for the outcome document of the ten-year review of the implementation of the Vienna Programme of Action.
Format of the meeting
The meeting will consist of several sessions focused on discussing the key issues. For each session, there will be a panel of experts as well as delegates from member states that will make brief presentations to kick start the interactive discussion. The panel presentations will be followed by an interactive dialogue with members of the audience.
Working Language
The working language of the Expert Group Meeting is English.
Organizers
The meeting is being organized UN-OHRLLS jointly with UN-ESCAP's Subregional Office for South and South-West Asia. The meeting will feature experts from Academia, the United Nations system, Multilateral Development Banks and LLDCs. The primary audience for the event will be investment promotion experts from LLDCs.
Background Documents
- Vienna Programme of Action for Landlocked Countries for the Decade 2014-2024
- Draft report on Enhancing the Role of Foreign Investment for Structural Economic Transformation in LLDCs (Coming soon!)
- UNCTAD World Investment Report 2022
- 2022 Report of the Secretary-General on the Implementation of the Vienna Programme of Action for Landlocked Developing Countries for the Decade 2014-2024 (A/76/267)
Events
Upcoming Meetings
