Article by Ken Davies in China Daily, Hong Kong Edition on November 1, 2013
Some of the poorest countries in the world are sitting upon a fortune in natural resources. Instead of squandering these overnight in a failed development attempt, they should follow Hong Kong's -- and China's -- examples of diversification and investment in human capital.
On September 6, 2013, G-20 Leaders endorsed an OECD-launched initiative to encourage the flow of institutional investment towards longer-term assets, such as infrastructure and renewable energy projects, in order to strengthen the global economy.
On August 6, 2013 the OECD, the WTO and UNCTAD launched their joint report entitled Implications of Global Value Chains for Trade, Investment, Development and Jobs. The report was prepared for this week's G-20 Leaders summit in Saint Petersburg at the request of G-20 leaders at their Los Cabos Summit in June 2012.
Value chains have become a dominant feature of the world economy,
involving countries at all levels of development, from the poorest to the most
advanced. The production of goods and services is increasingly carried out
wherever the necessary skills and materials are available at competitive cost and
quality. This growing fragmentation of production across borders has important
implications for trade and investment patterns and policies and offers new
prospects for growth, development and jobs.
The essay below is published as part of the continuing discussion on the feasibility and desirability of a multilateral framework for investment.
Nicolle Graugnard, ‘Toward a multilateral framework for investment’ Columbia FDI Perspectives, No. 103, September 2, 2013. Reprinted with permission from the Vale Columbia Center on Sustainable International Investment (www.vcc.columbia.edu).
“Axel Berger, ‘The futile debate over a multilateral framework for investment,’ Columbia FDI Perspectives, No. 102, August 26, 2012, is reprinted with kind permission from the Vale Columbia Center on Sustainable International Investment (www.vcc.columbia.edu).
The futile debate over a multilateral framework for investment
It's time to slay the sacred cow that the internet is a force only for good
by Chandran Nair
[This article was published in The Guardian on Friday August 9th, 2013. It represents the opinion of the author and is published on the Growing Capacity Blog unchanged by permission of the author.] In recent months the world has been consumed by the tit for tat internet spying allegations between the US and China. Then came the news that the NSA has worked with some of the internet's leading companies to not only spy on American citizens but those of Europe and Hong Kong as well. Much of the ensuing debate has thus been about the erosion of privacy by the state and by large corporations increasingly using big data to "understand" customers and the behaviour of their staff. But in the midst of this obsession with the privacy issue there has been little attention to other equally corrosive impacts of the internet revolution. Part of the problem is that until very recently, but hopefully no longer, the debate was framed in such a way as to cast any and all critics of the internet as either luddites or somehow anti-freedom.
The World Bank's World Development Report 2014, due out later this year, will be subtitled Managing Risk for Development.
Everyone who runs a country or a business has to deal constantly with risk. If you think risk is only a problem for gamblers, think again.
Attempts to evade risk, for example by detailed central planning of an economy, have often increased, instead of decreased, risk.
Risk needs to be recognised. It needs to be investigated, analysed and understood. Strategies then must be devised for managing it.
The World Development Report 2014 promises to show how this can be done, not only to "reduce the negative impacts of shocks and hazards", but also "to enable people to pursue new opportunities for growth and prosperity."
UNCTAD has just ( on June 26, 2013) published its annual World Investment Report, this year on the subject Global Value Chains: Investment and Trade for Development.
Below I cite text selectively from the Key Messages section at the beginning of the report, interspersed with my own commentary from the point of view of Growing Capacity, Inc. (in bold). I won't attempt to summarize the wealth of data on sectoral flows, major deals, and the analysis of greenfield and M&A FDI.
The launch of the Global Forum on Responsible Business Conduct (RBC) by the OECD comes at a time of unprecedented international convergence and coherence on what constitutes responsible business conduct. The Global Forum will strengthen the international dialogue on responsible business conduct and contribute to the effective implementation of the OECD Guidelines for Multinational Enterprises.
OECD Secretary-General Angel Gurría
The Rana Plaza tragedy will be addressed as a matter of priority at the Global Forum with the participation of a high-level delegation from Bangladesh led by the Minister of Foreign Affairs, Her Excellency Dr. Dipu Moni. This session will focus on the challenges facing the textile industry, how to co-ordinate the actions of countries adhering to the Guidelines and the development of collective responses under the Guidelines’ active agenda.
The Global Forum will bring together government, business, trade union, civil society and international organisation representatives to address the core challenge of how to do well while doing no harm in an effort to contribute to sustainable development and enduring social progress.
[Article by Ken Davies published in the OECD Observer on May 31, 2013]
Will China’s growth slowdown last and what does it mean for the rest of us?
The gradual US recovery is still not strong enough to pull up the rest of the world economy. Abenomics has not yet worked its magic in Japan, if it ever will. And Europe is clearly out for the count. So can China be the new engine of the world economy?
Indonesia is one of the world's economic success stories of recent years, though the country still has a long development path ahead of it.
After several false starts and having suffered the worst economic collapse of all the countries involved in the 1997-1999 Asian economic crisis, the country has in the past decade and a half succeeded in achieving a sustained recovery.
Annual GDP growth in real terms has been around 6% for the past eight years. While this is not as high as, for example, China, it is nevertheless one of the highest growth rates in the world.
The Organisation for Economic Co-operation and Development (OECD) is about to publish an update on China's inward and, in particular, outward investment policies, based on official sources, some of which have not previously been made available outside China. This will be in the form of a Working Paper under my authorship. The working paper continues the series of three Investment Policies of China that I wrote and published from 2003 to 2008.
What was in those Reviews? What will be in the forthcoming update?
My former OECD colleague John West has kindly shared with us his assessment of the opportunities that China's economy provides for the United States. The US economy is wobbling slowly forward. Europe is just plain wobbling. And China has moved onto a slower growth path. But China's role in the global economy is also changing fundamentally, providing America with new growth opportunities, a "Chinese dream".
A new IFC and World Bank report launched on May 2, 2013 in Kigali, capital of Rwanda, shows that in
2011/12 all five economies of the East African Community (EAC)—Burundi, Kenya,
Rwanda, Tanzania, and Uganda—implemented at least one institutional or business
regulatory reform improving the business climate for local entrepreneurs.
Doing Business in
the East African Community 2013 compares business regulations and identifies
good practices across the EAC in 10 areas covered by the joint World Bank and
IFC annual global Doing Business
report. From June 2011 to June 2012, the five EAC economies implemented a
combined nine regulatory reforms across eight areas measured by Doing Business.
The World Bank and the International Monetary Fund (IMF) have jointly published the Global Monitoring Report 2013, which assesses progress towards the Millennium Development Goals (MDGs).
This year's report bears the title Rural-Urban Dynamics and the Millennium Development Goals and claims to provide "an in-depth analysis on [sic] urbanization as a force for poverty reduction and progress towards the MDGs in the developing world".
The United Nations Economic Commission for Africa (UNECA) this week launched its Economic Report on Africa 2013, Making the Most of Africa’s Commodities: Industrializing for Growth, Jobs and Economic Transformation.
The report is well worth reading because it contains a wealth of data and analysis detailing the context of the struggle for human development in Africa, including a macroeconomic diagnosis, an examination of the development funding contributions of foreign direct investment (FDI), aid and exports, and much else. It also goes into detail on important policies such as encouraging linkages, supported by valuable concrete examples from several African countries.
At the same time, there is a noticeable penchant for government intervention and a tendency to underestimate the potential contribution of FDI, given a better policy environment.
A report just published by the Royal Society for the encouragement of Arts, Manufactures and Commerce (RSA) finds that mid-sized manufacturing firms in the UK are likely to end the offshore outsourcing of production to Asia over the next ten years, slashing the trade deficit by GBP20 billion and creating 200,000 jobs at home.
While the RSA is correct in identifying a new "onshoring" trend, it may understate the role of large multinational corporations (MNCs) in this process. The report also focuses almost entirely on the consequences for merchandise trade and fails to see the impact on global foreign direct investment (FDI) flows. This is an important omission from the point of view of developing countries, for whom this new trend provides an opportunity to improve their development strategies.
On 29 April 2013 the Australian governments' Climate Commission released a report entitled The Critical Decade: Global Action Building on Climate Change.
The report shows that the world's two largest economies, those of China and the United States, which together produce around 37% of global emissions, are both on track to meet their international commitments to tackle climate change. The two countries have just reached an agreement to co-operate on this. While they can not solve the problem alone, they are acting as important drivers of change. Here are some of the other main findings of the report and a link to the full report:
The US-China Business Council (USCBC)'s 2013 report China and the U.S. Economy: Advancing a Winning Trade Agenda is further subtitled "What Americans Should Know about the US-China Commercial Relationship. The report questions pessimistic assumptions about this important economic relationship and advances an action plan that includes working with China on major challenges and also making important improvements in the US economy. It includes a list of the top 10 commercial issues reported by USCBC members in China in 2012. As the USCBC is more familiar with China than many people in Congress, the report strongly rebuts the charge that China's exchange rate is the cause of America's trade deficit and high unemployment and also the complaint that China's ownership of US government debt is a problem. A strong case is made for promoting Chinese investment in the United States to help create jobs there.
The first U.S.-China
Manufacturing Symposium will be held in November in the United States. The event, co-sponsored by the Asian Manufacturing
Association (AMA) and SoZo Group, follows a collaborative effort between the
two organizations at AMA’s 6th annual conference in Beijing last
December, during which SoZo delivered Live Dialog sessions between the Chinese delegates
and U.S. Congress (video). SoZo also produced two highly successful Alabama
China Partnership Symposiums - focused on bridging the business and culture gap
in recruiting Chinese investment in the U.S.
Yi Gang, the head of China's foreign-exchange regulator is among the critics of the Bank of Japan's easing program. A weak yen would hurt Chinese exports. But Ken Davies, president of Growing Capacity says China and other countries will benefit if Japanese demand comes back. "If Japan's economy does revive, then it's good for China because Japan is such an important market. A potential effect is that Japan may relocate manufacturing from China to Japan, and Japan becomes much more competitive in other areas such as tourism. In the long run, everyone will benefit if it works. But the question is will it work?"
HKTDC’s Largest US Services Promotion Set for June in New York and Los Angeles
March 26, 2013 –The largest Hong Kong promotion ever to take place in the United States will be held this summer to showcase Hong Kong’s advantages for American companies looking to tap new business opportunities in Asia, particularly on the Chinese mainland.
“Think Asia, Think Hong Kong” will feature symposiums in New York and Los Angeles, June 11 and 14 respectively. Speakers will include CY Leung, Chief Executive of the Hong Kong SAR Government, and more than 60 prominent senior executives from global companies. The event is organised by the Hong Kong Trade Development Council (HKTDC), with support from 14 Hong Kong partners and close to 100 US organisations.
UNCTAD (United Nations Conference on Trade and Development) today published a special edition of its Global Investment Trends Monitor on The Rise of BRICS FDI and Africa. The original BRIC definition excluded South Africa, but it has very sensibly now been put in, hence the capital "S".
Here's what's in the report and how to access the whole thing online:
Is FDI a good thing? Almost every country in the world has an investment promotion agency to attract foreign direct investment (FDI). Countries lacking basic facilities crave FDI to build them. And the most developed economies continue to absorb massive quantities of FDI. So FDI is generally viewed positively, as contributing to economic development and job growth. But does it? An alternative view is that FDI "crowds out" domestic investment, for example by monopolizing whole sectors of the economy or by discouraging domestic innovation. This blog post summarizes a study that was conducted in 1997 but which is still highly relevant. It suggests that FDI can play a positive role in promoting growth, but only under certain conditions which can be affected by government policy actions.
There isn't room on this blog to include all the many useful and interesting articles and movies on investment for development and related topics produced by other people.
Doing so would take for ever and make the blog difficult to navigate.
Instead, I put links to them into tweets several times a day.
If you want to be sure of seeing these tweets, just follow @GrowingCapacity on Twitter.
That way you can be sure of not missing many items you might otherwise overlook.
The OECD is currently launching its 2013 China Economic Survey. This is the third survey, the first was published in 2005 and the second in 2010.
This year's survey focuses on five policy areas:
Financial sector reform
Competition and innovation
Relations between levels of government
In this post, I give you a candid assessment of this report based on my years of experience at the OECD working directly with the Chinese government. At the bottom I give you a link so you can read the whole report free of charge.
ADB Asian Development Bank
APEC Asia-Pacific Economic Cooperation
ASEAN Association of Southeast Asian Nations
BPO business process outsourcing
DAC Development Assistance Committee (at the OECD)
DfID Department for International Development (UK government)
ECOSOC United Nations Economic and Social Council
EU European Union
FAO Food and Agriculture Organization (United Nations)
Impact investment is investment that is intended to create positive impact beyond financial returns. That sounds good. But how does this differ from other investment, such as ordinary capital investment, socially responsible investment or ethical investment? Where and when did impact investment start? How much has been invested this way so far? Who is investing in what? What are the prospects? Let's take a look.