Publications

Investment facilitation is a key tool for governments to attract and secure investment and to encourage investors to expand their projects. It is particularly important for Sustainable Development Goal (SDG)-related investment, which often requires more proactive and more tailored services for investors than traditional investment. It calls for a “whole-of-government” approach in which different government entities work together to assist investors through the investment process.

The prospects for international investment looked extremely gloomy last year, with a cascading crisis of health, climate change and economic shocks causing investor uncertainty around the world. Rising inflation, fears of a recession and turbulence in financial markets put many investment plans on hold at the beginning of the year. In the end, international investment flows did suffer, but proved more resilient than expected. While global FDI declined by 12 per cent last year to $1.3 trillion, the slowdown was limited, investment flows to developing countries increased marginally, and investors finished the year announcing new projects in both industry and infrastructure.

Investment promotion is a government tool that can impact gender equality and women’s empowerment, embodied in Sustainable Development Goal (SDG) 5, by influencing the type of foreign direct investment (FDI) that is targeted and enhancing its benefits. At the same time, SDG 5 can strengthen a country’s enabling environment for FDI, by expanding the available talent pool and know-how, the local supplier base, entrepreneurial ecosystems as well as social cohesion, important for economic development and key determinants for foreign investors.

The global poly-crisis context has disproportionately affected investment flows towards critical sectors that contribute to the Sustainable Development Goals (SDGs) in the most vulnerable countries. Channeling transformative investment towards untapped opportunities in LDCs will require enhanced support from the international community, including in capacity-building in investment promotion and facilitation.

Investment promotion agencies (IPAs) have been adopting new ways of working online and using digital tools, a process accelerated by the COVID-19 pandemic. To date, most digital tools used by IPAs relate to their investment promotion functions, such as marketing and investor targeting. But, in line with wider e-government efforts, digital tools and processes are increasingly being used by IPAs across the whole investment cycle, including to facilitate site selection, streamline administrative tasks related to investment, support enterprise development and linkages with local suppliers, and to receive investor feedback and grievances. To remain competitive, IPAs need to enhance their digital investment promotion and facilitation efforts, but not all are on a leveled digital playing field. Those with low levels of preparedness, like many IPAs in LDCs, risk falling behind. This issue of the IPA Observer is part of UNCTAD's ongoing efforts to support these agencies, particularly from the poorest countries, in their digital transformation.

Global foreign direct investment (FDI) flows in 2021 were $1.58 trillion, up 64 per cent from the exceptionally low level in 2020. The recovery showed significant rebound momentum, with booming merger and acquisition (M&A) markets and rapid growth in international project finance because of loose financing conditions and major infrastructure stimulus packages.

As a result of increased demand and policy focus post-pandemic, investment promotion agencies (IPAs) are promoting new investments in the health sector. At the same time, they continue to be important actors in efforts by governments across the world to fight the sanitary crisis and mitigate its economic effects. All IPAs are promoting the health sector to some extent according to a recent survey conducted by UNCTAD of 53 IPAs. UNCTAD also monitored the online activities of 188 national agencies and found that 75% of agencies in developed countries and 42% in developing countries are promoting investment in health through virtual outreach and engagement. There is significant disparity among IPAs in the quality and quantity of information provided online, possibly reflecting not only different priorities, but differences in resources and digital capacity between agencies, as well in their ability to adopt a strategic approach to investment promotion in health.

Global flows of foreign direct investment have been severely hit by the COVID-19 pandemic. In 2020, they fell by one third to $1 trillion, well below the low point reached after the global financial crisis a decade ago. Greenfield investments in industry and new infrastructure investment projects in developing countries were hit especially hard.

Pandemic-induced changes to the universe of investment promotion, including digitalization of services and less travel, has increased the use of outreach partners like the foreign service. The pandemic also brought to light the importance of SDG sectors such as healthcare. This handbook for diplomats and commercial attachés focuses on the promotion of investment in the Sustainable Development Goals. It provides guidelines, best practices and tools, explains the investment promotion cycle, the functions of public and private sector actors, like IPAs, and the role that diplomats can play.

This report contributes to the literature and policy work on FDI, MNEs and gender equality by conceptualizing and presenting original evidence on the mechanisms through which MNEs can influence host-country workplace practices regarding women. On the basis of the high quality and original research the report formulates policy recommendations that help leveraging FDI to advance the position of women in host countries.