Geneva, 15 October 2014 (UNCTAD press release) - Investment and Regional Integration
Regional integration has a strong positive impact on foreign direct investment (FDI) flows. It increases FDI flows both within and from outside regions involved in a regional integration arrangement. Some regions have received more, and higher value-added FDI flows than others. It is therefore important to learn from the experience of different groups through more regular dialogue.
This exchange of views has to take into consideration the changing nature of regionalization, especially the relationship between intra-regional processes and inter-regional connectivity. These were some of the key findings of the High-level Inter-Regional Dialogue on Investment and Regional Integration at the World Investment Forum 2014, held in Geneva with the participation of a number of major regional and international organizations and private sector representatives, moderated by Ms. Courtney Fingar, Editor-in-Chief of fDi Intelligence.
Lim Hong Hin, Deputy Secretary General of ASEAN said: “ASEAN has been relentless in its effort to create a highly integrated and cohesive economy to support sustainable and inclusive economic growth in the region. In doing so, ASEAN has not only narrowed the development gap between its member States but also enhanced its competitiveness as investment destination and production networks in global supply chains. In this regard, regional integration has a role to play in attracting foreign direct investment.”
Mr. Urban Rusnak, Secretary General of the 54 member-country Energy Charter Treaty noted: “The adoption at regional level of common rules for energy security is the first step towards creating a favourable investment climate … The Energy Charter and UNCTAD share a common goal in ensuring sustainable development and energy security through the promotion and protection of trade and investment.”
Mr. Christian Friis Bach, Executive Secretary of the United Nations Economic Commission for Europe (UNECE) noted: “If we are to achieve the Sustainable Development Goals, they must be turned into concrete policy recommendations, common standards, binding agreements, investment opportunities and new partnerships. Here the regional level is a key platform where countries can engage and turn goals into action.”
Mr. Rommel Acevedo, Secretary General of the Latin American Association of Development Financial Institutions (ALIDE), an association of 70 development banks and financial institutions in the region mentioned: “State-owned development banks have also increased their cross-border links with intra- and inter-rregional financial institutions in the co-financing of projects of common interest, especially those undertaken by small and medium-sized enterprises (SMEs) facilitated by agreements between development banks to help expand trade and investment between SMEs of neighbouring countries.”
Dr. Zakaria Hejres, Chairman of the MENA Centre of Investment, Bahrain, added that during the negotiations of regional agreements, “the engagement of stakeholders should extend beyond the public sector and should include the private sector and civil society”. He also suggested that regional groupings establish a compensation fund for groups in society that would not gain or stand to lose from regional integration, for example through job displacement.
Mr. James Lockett, Vice President, Head of Trade Facilitation and Market Access, Huawei Technologies, brought in the business perspective. He noted that “Regional integration initiatives which promote cross-border innovation and which bring together key parts of global value chains become highly attractive to global investors, and this can play an important role in the evolving economic architecture. Regional integration initiatives can also facilitate companies such as Huawei being able to be closer to their suppliers and customers.”
The panellists agreed that regional groups aiming to promote sustainable development need to overcome major challenges in their common policy action. To meet the policy challenges, participants of the Dialogue agreed to establish an inter-regional network, supported by UNCTAD, for sharing their experience and good practices to help accelerate the positive impact of integration on sustainable forms of FDI. The network will be opened to all organizations of regional groupings to join. They also expressed their interest to establish further cooperation with UNCTAD through a variety of arrangements. They further agreed that the Dialogue itself would continue as a biennial event, to be held at future World Investment Forums.