UNCTAD, as one of the major institutional stakeholders in the Financing for Development process, is deeply committed to make a contribution on FDI.
Presently some developing countries are taking advantage of the opportunities offered by globalization. Most of the African countries constituting least developed countries (LDCs) and small, vulnerable economies remain relatively marginalized from global economic opportunities. In all cases a substantially increased availability of development resources is necessary for achieving the millennium development goals (MDGs) and for securing sustainable development.
Global flows to developing countries picked up in 2004.But concentration was on few countries. The concentration is even higher if one looks at quality FDI. For many low-income countries, including most LDCs, the issue is not only how to attract foreign direct investment but how to attract the kind of FDI that can contribute to economic growth and development.
In connection with facilitating FDI, two aspects have arisen that are now receiving special attention from the international community that is risk mitigation and home country measures.
Facilitating flows of FDI, including the technology transfer associated with it, may require the direct and active involvement of the home countries of transnational corporations (TNCs). UNCTAD research has found that providing tax breaks for small and medium-sized enterprises in developed countries that are willing to invest in developing countries could stimulate such flows. Home country incentive schemes to stimulate linkages between foreign affiliates and domestic firms in developing countries could also help developing countries benefit more from foreign direct investment.
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In terms of the impact of FDI, an important challenge is to encourage and facilitate the contributions that TNCs can make for attaining MDGs. Specifically; corporations should be encouraged to include information on their MDG contributions in their annual reports.
UNCTAD is examining the issue of maximizing the contribution of corporations to the economic development of host developing countries and minimizing costs. It is also committed to disseminating best practices in this matter.